From left are Phang Sze Fui, Gary Loon, Danny Wong, Gary Ting, Por Teong Eng, Tajul Arifin Mohd Tahir, Datuk Bill Tan and Leong Peng Phooi at the listing of Mestron Holdings Bhd on the ACE Market on Tuesday, June 18, 2019.
KUALA LUMPUR: Steel pole manufacturer Mestron Holdings Bhd
made a strong debut on the ACE Market on Tuesday, opening at 20 sen, which four sen above its offer price of 16 sen amid the cautious broader market.
At 9.02am, it was trading at 20.5 sen. It was the most active stock with 86.83 million shares done.
The FBM KLCI fell 1.87 points or 0.11% to 1,636.53. Turnover was 116.84 million sharesvalued at RM32.09mil. There were 64 gainers, 52 losers and 162 counters unchanged.
Mestron raised RM25.28mil from the issue of 158 million new shares at 16 sen per share from the exercise.
About RM13mil, or about half of the proceeds would be used to expand its main manufacturing plant and to purchase more machinery and equipment.
The retail portion was oversubscribed by 17.53 times. There were 5,720 applications for 731.97 million new shares valued at RM117.12mil for the retail portion.
Mestron managing director Por Teong Eng said the company would leverage on the government’s push for broadband network convergence to boost its revenue stream from specialty poles business.
He said broadband network convergence (including 5G technology) would create demand for specialty pole such as high mast and telecommunication monopoles.
“The inevitable growth in broadband infrastructure is in line with Mestron’s plan to expand its revenue stream from the sales of specialty pole due to higher gross profit margin as well as to expand its clientele in the telecommunication industry,” he added.
Maxis, Celcom and Digi have already begun their 5G technology trial in Cyberjaya in April.
Por said Mestron would benefit from the growing demand for the light emitting diode (LED) outdoor lighting products which had higher specifications and quality when compared with traditional light bulbs and would fetch higher sales value.
He added these LED products, which are more expensive, have higher specifications and quality and last longer compared with the traditional light bulbs.
Importantly, the government wants all streetlights to be LED lamps starting September 2019, in a move to save energy by as much as 50%. The announcement will create demand for LED outdoor lighting products.
Currently, about 80% of streetlamps in Malaysia use other forms of lighting apart from LED, which are known to be more energy-efficient and environmentally friendly than incandescent bulbs.
Mercury Securities accorded a target price of 20 sen for Mestron.
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the listing exercise.
Among those present at the listing were Mestron's independent non-executive director Phang Sze Fui; executive director Gary Loon; chairman Tajul Arifin Mohd Tahir; Por and independent non-executive director Leong Peng Phooi.
M&A Securities Sdn Bhd was represented by its managing director of corporate finance Datuk Bill Tan, head of corporate finance Gary Ting and deputy head of corporate finance Danny Wong.
Limited time offer:
Just RM5 per month.
