Unitrade Industries Bhd has successfully launched its prospectus during a virtual event today in conjunction with its upcoming listing via an Initial Public Offering (“IPO”) exercise on the ACE Market of Bursa Malaysia Securities Bhd
Selangor-based Unitrade is a wholesaler and distributor of building materials, with an extensive range of 6,319 stock-keeping units such as pipes, valves, fittings, and accessories for mechanical and electrical (M&E) works, as well as steel products and other building materials for civil works.
It has a vast network of 483 local and overseas suppliers, serving 1,232 active customers which include M&E contractors, building contractors, traders, manufacturers, and retailers.
With an issue price of 32 sen per share and an enlarged share capital totalling 1.56 billion shares, the Group will have a market capitalisation of RM500.0 million on listing. Accordingly, Unitrade is set to become the largest listing on the ACE Market of Bursa Securities since the market’s inception in 2009.
In a statement, its managing director, Mr. Nomis Sim Siang Leng said, “Our imminent listing exercise is taking place at an opportune time. With Malaysia transitioning into the endemic phase, we are witnessing the economic recovery in motion with building materials orders improving by the day on the back of increased construction activities.
The ready storage space, along with the expected RM100.0 million proceeds coming in will allow us to swiftly capitalise on the ongoing industry uptrend. Thus, we plan to set aside RM50.5 million for working capital purposes to increase our inventory count and product varieties.”
“Apart from that, our Group is also allocating RM5.0 million to build a new pipe fabrication centre. Upon completion, we will be able to provide end-to-end pipe services with the entire fabrication process being conducted off-site at our new industrial complex.
The added service is set to help our customers free up space at their construction sites, reduce the need for manpower, and potentially expedite construction progress. With that, the comprehensiveness of our service offerings will be further elevated.”
The expected RM100.0 million proceeds to be raised are set to be utilised in the following manner: Utilisation of proceeds RM million % Working capital 50.5 50.5 Repayment of bank borrowings 39.8 39.8 Capital expenditure for pipe fabrication centre 5.0 5.0 Estimated listing expenses 4.7 4.7 Total 100.0 100.0
Unitrade has registered a profit after tax and non-controlling interest (“net profit”) growth over the past two years, locking in a compound annual growth rate (“CAGR”) of 23.3%.
The Group’s net profit rose from RM18.9 million in the financial year ended March 2019 (“FY2019”) to a historic high of RM28.8 million in FY2021. The growth momentum extended to its 8-month financial period ended November 2021 (“FPE2022”) after reporting a bottom line of RM28.1 million, almost equalling its record performance of FY2021 with four more months to go before the financial year concludes.
“The strong financial performance during the pandemic was indicative of our inventory management expertise, robust business model, and industry experience accumulated over the past 4 decades. Meanwhile, looking ahead, the Ministry of Finance has projected the construction industry’s gross domestic product to grow by 11.5% in 2022. Under a more conducive operating environment, we expect to do even better in the upcoming periods and look forward to seeing the rise of Unitrade’s industry stature post-listing,” Mr. Sim added.
Unitrade’s IPO entails a public issue of 312.5 million new Shares, representing approximately 20.0% of the enlarged share capital, along with an offer for sale of 125.0 million existing shares in the following manner: • Public issue of 312.5 million new Shares: – o 78.1 million new Shares available for the Malaysian public; o 63.5 million new Shares available for the eligible Directors, employees and persons who have contributed to the success of the Group; o 117.2 million new Shares by way of private placement to Bumiputera Investors approved by the Ministry of International Trade and Industry (“MITI”); and o 53.7 million new Shares by way private placement to selected investors. • Offer for Sale of 125.0 million existing shares: – o 78.1 million existing shares by way of private placement to Bumiputera Investors approved by MITI; and o 46.9 million existing shares by way of private placement to selected investors.
Pursuant to the launch of Unitrade’s prospectus, applications for the public issue are open from today and will close on 30 May 2022 at 5:00 p.m. The Group is scheduled to be listed on the ACE Market of Bursa Securities on 14 June 2022.