KUALA LUMPUR (April 29): WTEC Group Bhd (KL:WTEC) slipped on its first day of trading on the ACE Market of Bursa Malaysia, amid tepid interest for its shares and broader investor caution.
Shares of WTEC opened unchanged at 25 sen on Tuesday, the same as its initial public offering (IPO) price, before closing 1.5 sen or 6% lower at 23.5 sen.
The decline extends the string of first-day flops amid global market turmoil. Before WTEC Group, Bursa Malaysia hosted six ACE Market IPOs since March, all of which sank below their IPO prices amid international trade tensions.
Demand for WTEC’s IPO shares were weak, with applications from public investors barely higher than the amount of shares available for subscription. Shares set aside for private placements to Bumiputera were also undersubscribed and reallocated to other investors.
The company, which manufactures foam and fabric products, raised RM33 million from the sale of both and existing shares. Together, the share sale put up close to 28% of the company — which is headquartered in Semenyih, Selangor — to investors.
The public issue of new shares raised proceeds of RM22.54 million, and WTEC Group plans to spend 41.8% for the purchase and renovation of a new factory, 13.1% for acquisition of new equipment, 4.4% for sales and marketing expenses, and 22.7% for working capital.
The rest is to defray estimated listing expenses.
WTEC Group mainly manufactures foam products made from plastics with air-filled pockets used in industries from automotive to electronics. The company also makes non-woven fabric parts, used as padding for armrests in cars and lining for car seats.
An offer for sale of existing shares, meanwhile, grossed RM10.8 million, which went entirely to managing director and co-founder Tan Kok Kheng, group executive director Andy Tiow See Yen, and Wansern Marketing Sdn Bhd.
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Wansern Marketing is equally owned by brothers Eu Tian Chiek, Eu Tiong Nam, and Eu Tiong Lai, as well as their brother-in-law Kam Tang Lim.
Alliance Islamic Bank is the principal adviser, sponsor, sole underwriter and placement agent for the IPO.
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