K SENG Seng Corp Bhd (KSSC Group), a supplier of secondary stainless steel products, will ride on its strength and 25 years of technical expertise to expand business locally and internationally.
Chairman and managing director Koh Seng Kar says the expansion plans will get a boost from its listing on the main market of Bursa Malaysia scheduled this month.
At the end of last year, the company launched its initial public offering (IPO) prospectus and has targeted Jan 19 for listing.
“We have decided that now is the right time to list and expand our business and, at the same time, uplift the company's status,” he says in an interview.
Koh also expects this listing exercise to provide the group access to the capital market to raise funds for future expansion and growth.
KSSC Group's main revenue stream comes from processing secondary stainless steel flat and long products, which involves incorporating slitting and shearing of steel sheets, as well as cutting of secondary stainless steel long products including round bars, flats and angles.
Koh says over the years, the group's capabilities have also extended to manufacturing of stainless steel tubes and pipes, stainless steel industrial fasteners, rigging accessories and components. For the financial year ended Dec 31, 2009, KSSC Group recorded a net profit of RM7.15mil on the back of RM80.08mil revenue.
“After 25 years in the business, the group has grown to become a one-stop supply centre for secondary stainless steel products with our manufacturing facilities in Balakong, Selangor,” he says, adding that secondary stainless steel products are used in many industries such as shipping, construction, stainless steel fabricators and automobile.
“Hence, we are able to service a large customer base for various industries locally and overseas,” he says.
Based on the information in the company's IPO prospectus, the group's overseas market includes Indonesia, Singapore, Britain, Brunei and Papua New Guinea.
Going forward, the group plans to expand its products, market and manufacturing facilities. These include a new range of stainless steel tubes and pipes under product expansion. For market expansion it is eyeing the Philippines, Thailand and Vietnam besides planning to purchase new machinery and equipment as part of expanding its manufacturing facilities.
Currently, Koh says the group's manufacturing and processing business is complemented by its trading operations which involve some 10,000 active stock keeping units of industrial products including marine hardware and consumables and other industrial hardware.
“The group is currently serving about 1,000 customers locally and internationally,” he says.
On competition, Koh says the impact of competition from new entrants is mitigated by entry barriers in the industry.
“The barriers of entry include the importance of having an established track record for manufacturing quality secondary stainless steel products, capital investment requirement and competent technical skills and knowledge to manufacture and process stainless steel products,” he says.
“Our competitive strengths include our long-established track record, our extensive range of products, long-standing and close business relationships with our major suppliers and major customers as well as our wide customer base,” he says.
He adds that the group is servicing manufacturers, stainless steel fabricator, shipbuilders, architects and building contractors and industrial hardware wholesalers and retailers.
“Our extensive customer base will provide us with significant growth opportunities as well as mitigate any over-dependency on any single customer,” Koh says.
For the IPO exercise, the group plans to raise RM11.47mil via an offer of 20.12 million new shares of 50 sen each, priced at 57 sen a share.
The group has earmarked RM3.31mil of the proceeds to buy machinery for the development and production of a new range of secondary stainless steel products. It will utilise some RM6.26mil to fund working capital, while the remaining will be used to fund listing expenses estimated at RM1.9mil.
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