KUALA LUMPUR (Aug 13): Building materials supplier Chuan Huat Resources Bhd (KL:CHUAN) plans to raise as much as RM5.5 million through a private placement to fund the expansion of its wire mesh production capacity in Nilai, Negeri Sembilan.

In a bourse filing on Thursday, Chuan Huat proposed to issue up to 33.7 million new shares, equivalent to 20% of its issued share capital, to third-party investor(s) at an issue price to be determined later.

About 87.2% of the proceeds, or RM4.8 million, will be used to part-finance the purchase of a new wire mesh production line, according to the filing. The new line is expected to cost about RM8 million, with the balance to be funded through bank and cash balances, internally generated funds and/or borrowings.

Chuan Huat said its current wire mesh production line is operating at full capacity, with an average output of about 3,000 tonnes a month. The new line is expected to lift total production capacity to 4,500 tonnes a month.

The group added that the private placement would allow it to raise funds without taking on additional interest expense or principal repayment obligations associated with bank borrowings, helping to ease cashflow commitments.

As at March 31, 2026, Chuan Huat’s cash and bank balances stood at RM23.6 million.

The group noted that it had incurred losses in each of the financial years ended June 30, 2023, 2024 and 2025, as well as the nine months ended March 31, 2026. This could make it more difficult to secure new financing facilities, it said.

The proposed placement would therefore give the group greater flexibility to preserve its cash reserves for day-to-day working capital needs.

Barring unforeseen circumstances, the exercise is expected to be completed by the first quarter of 2027. Malacca Securities Sdn Bhd has been appointed principal adviser and placement agent.

Chuan Huat shares closed half a sen or 2.44% higher at 21 sen on Thursday, valuing the group at RM34.58 million. The stock has declined about 30% over the past 12 months.