This article first appeared in Capital, The Edge Malaysia Weekly on March 10, 2025 - March 16, 2025

COME Thursday, Saliran Group Bhd (KL:SALIRAN) will make its debut on the ACE Market of Bursa Malaysia at an offer price of 27 sen per share. This will be the 10th listing thus far this year, following the likes of Oriental Kopi Holdings Bhd (KL:KOPI) and Colform Group Bhd (KL:COLFORM) earlier. 

The pipes, fittings, flanges and steel products supplier’s initial public offering (IPO) entailed a public issue of 80.4 million new shares, of which 19.15 million were made available to the Malaysian public via balloting, 7.66 million to eligible directors and employees of Saliran and its subsidiaries, 47.86 million by way of private placement to selected bumiputera investors approved by the Ministry of Investment, Trade and Industry (Miti) and 5.7 million by private placement to selected investors.

An offer for sale of 38.3 million shares was also made to selected investors.

According to its issuing house Tricor Investor & Issuing House Services Sdn Bhd, shares of Saliran were oversubscribed by 76.03 times.

In a press statement, the oil and gas (O&G) pipe supplier said it received 12,926 applications for 1.47 billion issued shares worth RM398.19 million from the Malaysian public. For the bumiputera portion, a total of 4,848 applications for 465.02 million issued shares were received, representing an oversubscription rate of 47.58 times. As for the public portion, a total of 8,078 applications for one billion issued shares were received, representing an oversubscription rate of 104.49 times.

Saliran added that the 7.66 million issued shares made available for application by eligible persons were also fully subscribed.

The IPO raised about RM32 million from the issuance of the 80.4 million new shares and 38.29 million existing shares at 27 sen each, offering up to a 31% stake in the company.

At the IPO price of 27 sen per share, Saliran would have a market capitalisation of RM103.38 million, and is valued at 10.42 times its trailing earnings.

Saliran, which services the O&G, petrochemical, power generation and general industries sectors, said it planned to utilise the proceeds raised through the listing exercise to drive its expansion into Indonesia — including the establishment of a new sales office in south Jakarta (RM1.2 million) — as well as new equipment acquisition (RM1.44 million), repayment of bank borrowings (RM7 million) and general working expenses (RM3.7 million). The balance will be used to defray listing expenses.

The new office will house a dedicated sales team tasked with building customer relationships and driving business growth in the region, a key market for the company’s ongoing expansion efforts.

“About RM1.44 million [will be used] for purchasing machinery and delivery trucks, RM7 million for repayment of bank borrowings, RM8.37 million for general working capital and RM3.7 million for estimated listing expenses,” the group said.

Saliran, which was established on March 14, 2011, has more than 19,000 unique products used in the O&G industry to support processing, refining and manufacturing activities.

Wholly-owned units under the group include Saliran Industrial Supplies Sdn Bhd, which serves as the trading and stockholding division specialising in steel pipes, fittings and flanges and Saliran Flanges & Fittings Sdn Bhd, the trading division for the former; Saliran Precision Engineering Sdn Bhd, an ISO 9001:2015 certified manufacturer of flanges, fittings and other steel-related products; and Saliran Industries Sdn Bhd, one of the trading arms for Saliran Industrial Supplies Sdn Bhd in Ipoh. Currently, the group does not have a dividend policy.

Addressing the potential impact of the 25% tariffs imposed by the US on all steel and aluminium imports into the powerhouse economy, Saliran managing director Dennis Liaw Choon Wei said the matter was not of concern because its operations are based primarily within Southeast Asia and that the company will continue to expand its presence in the region where demand remains strong.

According to Saliran’s prospectus, the group’s main market is Malaysia, which contributes the lion’s share of revenue to the group (70.8%), followed by Indonesia and Singapore. Saliran also delivers to clients in China, South Korea and Vietnam.

“We are dependent on the Harmoni Group, our major customer, with revenue contribution of 13.6%, 24.73%, 39.09% and 36.87% of our total revenue in the past three financial years and financial periods as well as PT Promatcon Tepatguna, which contributed substantially to our total revenue at 15.27% and 26.8% in FYE [financial year ended] 2023 and FPE [financial period ended] 2024, respectively,” Saliran Group said in its prospectus.

According to the companies’ websites, Harmoni Group is a Petronas-licensed one-stop solution oil and products supplier and steel fabrication player supplying to Petronas’ projects in Malaysia and clients across the Middle East, while PT Promatcon Tepatguna is an Indonesia-based multinational corporation with a core business in the sale of control equipment for pressure vessels, plates, pipes, and fittings and valves.

Saliran’s headquarters, storage and manufacturing facilities are located in Puchong, Selangor, and it has a sales office in Ipoh, Perak.

Malacca Securities Sdn Bhd is the principal adviser, sponsor, underwriter and placement agent for the IPO. 

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