This article first appeared in Capital, The Edge Malaysia Weekly on April 7, 2025 - April 13, 2025

SPECIALITY chemical manufacturer SumiSaujana Group Bhd will make its debut on the ACE Market of Bursa Malaysia on Wednesday, April 9. The group is primarily involved in the manufacturing of oil and gas (O&G) speciality chemicals, trading of speciality and industrial chemicals, and the provision of technical-related support services.

The initial public offering (IPO) involves a public issue and an offer for sale, amounting to 400 million shares or 27.71% of its enlarged share capital of 1.44 billion post-IPO.

Of the 400 million IPO shares, the public portion comprises 310 million new shares, or 21.48% of its enlarged share base. Some 72.5 million shares (5.02%) were made available to the Malaysian public via balloting, of which 36.25 million shares were allocated to bumiputera investors. About 122.65 million new shares (8.5%) were made available to identified institutional and selected investors for application via private placement.

Meanwhile, 90.45 million new shares and 90 million offer shares, equivalent to 12.5% of the enlarged share capital, was allocated to bumiputera investors identified and approved by the Ministry of Investment, Trade and Industry for application via private placement.

Some 24.4 million new shares (1.69%) were reserved for eligible persons, such as the company’s directors, employees and other people who have contributed to the company, for application via the pink form.

Post-IPO, Atreon Holdings Sdn Bhd — the promoter, substantial shareholder and selling shareholder — will hold a 64.95% stake in SumiSaujana. Atreon is owned by Norazlam Norbi (45%), Toh Chee Seng (45%) and Ramli Mohamad (10%).

Based on the IPO price of 24 sen per share, SumiSaujana will have a market capitalisation of RM346.5 million upon listing. This values the company at 11.32 times the group’s earnings per share of 2.12 sen for the financial year ended Dec 31, 2023 (FY2023), derived from its net profit of RM30.62 million.

Of the RM74.4 million to be raised from the IPO, RM40.2 million will be used to acquire a new warehouse and corporate office in Puncak Alam, Selangor, while RM18.9 million has been earmarked for the purchase of its existing Puncak Alam factory. About RM7.6 million is slated for the expansion of its research and development division, RM2 million for capital expenditure and the remaining RM5.6 million to defray its listing expenses.

SumiSaujana, which was established in 2011, serves customers in the O&G industry. Specifically, it is a manufacturer of O&G speciality chemicals such as drilling fluid chemicals and production and refinery chemicals for the upstream, midstream and downstream segments of the industry.

The group’s speciality chemical manufacturing segment accounts for over 80% of its total revenue, with the remainder contributed by its trading and related support services segments.

For the financial period ended Sept 30, 2024 (FPE2024), its speciality chemical manufacturing segment contributed RM112.84 million or 86.3% to the group’s total revenue, while its trading and related support services segments added RM17.87 million or 13.6%. The largest contributor in the manufacturing segment is its drilling fluid chemicals division, which contributed RM104.36 million (79.8%) to the total revenue, while the production and refinery division added RM8.48 million (6.5%).

SumiSaujana’s largest market is Malaysia, representing about 20% to 30% of its total revenue. Other major markets include Thailand, Indonesia, Saudi Arabia and the US.

The group says in its prospectus that it plans to continue with its existing business activities and leverage its core competencies to address potential opportunities in foreign markets as part of its localisation in these countries. Its strategy to grow its business overseas includes deepening its reach in the North America and Middle East regions by establishing new production facilities in countries outside of Malaysia.

The group says the expansion plan will be implemented by way of investment, including joint ventures with local partners, depending on the opportunities, suitability and financial attractiveness. However, its market expansion plan is still in the preliminary stage at this juncture, it adds.

In a March 24 report, Mercury Securities says it likes SumiSaujana for its strong growth potential driven by its robust market expansion plan and operational capacity expansion. The research firm has a fair value of 28 sen based on 15.7 times its FY2026 forecast earnings per share.

“This valuation implies an upside potential of 15% from the current price of 24 sen. Our target multiple represents a 10% premium to the one-year forward price-earnings average of its closest domestic peer,” it says.

Mercury Securities says that while the premium is partially mitigated by the looming global economic uncertainties, it believes that it is justified due to the group’s strong fundamentals.

“SumiSaujana operates in a niche segment in the O&G industry — the manufacturing of speciality chemicals — a space with no direct listed [competitor] in Malaysia. As such, we benchmarked it against local upstream O&G player Dialog, being the only peer primarily focused on this segment,” it notes.

Mercury Securities says SumiSaujana’s premium valuation is warranted, underpinned by its unique business model, which has delivered superior double-digit profit margins compared with its industry peers, and its robust earnings potential of 11% to 28% over FY2025 to FY2027 that is supported by its domestic and international market expansion plans, along with its capacity growth initiatives. 

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