Samchem IPO to be the first for the year

KUALA LUMPUR: Samchem Holdings Bhd, en route to listing on the Bursa Malaysia main board next month, aims to double its overseas revenue contribution to 10%, or over RM40mil, in three years from 5% now.

Group managing director Ng Thin Poh said the group continued to see rising demand for industrial chemicals in the medium and long term, especially in the emerging markets of South-East Asia.

“We want to expand on our distributorship in Vietnam, China and Indonesia moving forward,” he told reporters at the launch of the company’s prospectus yesterday.

On the expected response to the company’s initial public offering (IPO) amid the volatile trading environment, Ng said: “We believe this is the best time to go for listing on Bursa and are confident the market will continue to improve.”

The equity market had progressively recovered and most industries had now stabilised, he said.

Despite improvement in market sentiments, Ng said the group would not be expecting double-digit growth this year due to lower first quarter earnings, which he did not disclose.

“We are, however, confident that this year’s earnings will still be comparatively better than the previous year’s, thanks to the wide range of industries we distribute to,” he said, adding that Samchem registered compounded annual growth rate of 17.5% since 2006.

Ng was confident the group, scheduled for listing on June 23, would achieve double-digit growth in revenue next year.

Samchem’s IPO, which is the first for the year, involves a public issue of 21.36 million new 50 sen shares and offer for sale of 19.5 million existing 50 sen shares at an issue price of 71 sen each.

Of the public offer, 6.8 million shares will be made available to the Malaysian public, 3 million to eligible directors, employees and business associates of Samchem, 8.1 million for private placement to approved bumiputra investors and 3.4 million for private placement to identified investors.

Depending on investors’ appetite, the group would raise a minimum of RM11.04mil or a maximum of RM15.2mil from the IPO. It would also raise RM13.85mil for promoters in the offer-for-sale shares.

Of the proceeds raised, RM4mil would be allocated for working capital, including financing its new marketing office and warehouse in Vietnam, RM3mil for acquisition of plant and machinery, RM500,000 for purchase of trucks and RM3.5mil to defray the listing expenses.

Meanwhile, Samchem also planned to construct a chemical blending and drumming plant as well as a drum recycling plant in Telok Gong, Klang by the end of next year.

The former is to cater to the demand for customised solvents and the latter to enable the group to produce its own reconditioned drums.

“Both plants would create a new revenue stream for the group,” said Ng.

With direct presence in Malaysia, Vietnam, China and Indonesia, the group currently markets over 400 industrial chemical products to over 2,500 clients in the region.

Samchem posted net profit of RM12.23mil and revenue of RM355.37mil for the year ended Dec 31, 2008.

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