Unitrade to raise RM100m in record ACE Market listing

PETALING JAYA: Unitrade Industries Bhd, en route to a listing on the ACE Market of Bursa Malaysia Securities Bhd, plans to raise RM100 million in its initial public offering (IPO) exercise.

With an issue price of 32 sen per share and an enlarged share capital totalling 1.56 billion shares, the building materials wholesaler is expected to have a market capitalisation of RM500 million on its debut on June 14, making it the largest listing on the ACE Market since the market’s inception in 2009.

The group’s managing director Nomis Sim Siang Leng commented that with Malaysia’s transition into the endemic phase, the building materials sector is seeing a recovery as orders improve by the day on the back of increased construction activities. He stated that it has moved into a new warehouse that is more than twice the size of the previous one. The ready storage space and the proceeds from the listing will allow Unitrade to capitalise on the industry’s uptrend.

“Thus, we plan to set aside RM50.5 million for working capital purposes to increase our inventory count and product varieties. Our group is also allocating RM5 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,” he said in a statement.

Sim said the added service is set to help its customers free up space at their construction sites, reduce the need for manpower, and potentially expedite construction progress. Consequently, Unitrade’s service offerings will be further elevated.

Apart from that, RM39.8 million or 39.8% of the proceeds from the exercise will be used towards the repayment of bank borrowings and RM4.7 million or 4.7% will be used to defray the estimated listing expenses.

In the two years leading up to the listing, the group had delivered commendable net profit despite the Covid-19 pandemic, with a compound annual growth rate of 23.3%. For its financial year ended March 2021, the group’s net profit rose to a record high of RM28.8 million from RM18.9 million reported in FY2019.

Sim commented that the strong performance during the pandemic was indicative of its inventory management expertise, robust business model, and industry experience accumulated over the past four decades.

“Meanwhile, looking ahead, the Finance Ministry 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 postlisting.”

Its proposed IPO will see a public issue of 312.5 million new shares, representing 20% of the enlarged share capital, along with an offer for sale of 125 million existing shares.

Of the new shares, it had allocated 78.1 million shares for the Malaysian public, 63.5 million to eligible directors, employees and persons who have contributed to its success and 117.2 by way of private placement to approved bumiputra investors approved by the Ministry of International Trade and Industry as well as a 53.7 million shares to selected investors via a private placement.

As for the offer sale of existing shares, 78.1 million will be made available to Miti-approved bumiputra investors and 46.9 million shares for selected investors, both via a private placement. The application for the shares is open from April 28 to May 30.

Unitrade intends to distribute up to 30% of its net profits to shareholders.

M&A Securities is the adviser, sponsor, underwriter, and placement agent for the exercise.