KUALA LUMPUR: TCS Group Holdings Bhd made a stellar debut on the Ace Market yesterday, closing 96% higher at 45 sen compared to its initial public offering (IPO) price of 23 sen.
The construction services provider, which listed its shares at an undemanding price-earnings (PE) multiple of 5.75 times, has future plans to further grow its building construction activities and expand into the infrastructure construction services.
Speaking at a press briefing after the listing ceremony yesterday, TCS managing director Datuk Tee Chai Seng is confident of the group’s favourable prospects in the building construction industry.
“This is backed by the implementation of various government measures and economic stimulus packages, our competitive strengths, as well as continuous efforts in expanding our services and capabilities.
“With the proceeds raised from the listing, we can now accelerate the execution of our future plans in expanding our foothold in the high-rise, purpose-built (private hospitals and schools) and institutional buildings (government hospitals) segments.
“Another priority for us is to form a new infrastructure project team to expand our infrastructure construction services to include major roads, highways and bridges, ” he said.
TCS’ existing infrastructure activities are limited to the construction of roads, water and sewerage treatment plants, electrical substations, water tanks and reticulation systems, some of which form part of the group’s building construction projects.
TCS believes that the experience gained from its past civil work projects has equipped the group with the knowledge and technical skills to handle and complete infrastructure construction projects.
TCS also looks to participate in infrastructure projects in East Malaysia, particularly Sarawak, which has greater demand and budget allocation to build more roads.
For the financial year ended Dec 31,2019, TCS posted a net profit of RM15.67mil on the back of RM358.42mil revenue.
Almost 80% of the group’s revenue is derived from construction work for residential developments, while 20% are from commercial buildings.
Following the IPO, TCS has successfully raised a total of RM20.7mil from the public issue. The bulk of the proceeds at RM13mil or 62.8% has been earmarked for the acquisition of new construction machinery and equipment.Meanwhile, RM4.2mil or 20.3% will be used for TCS’ working capital to partly finance existing projects and future projects.
The remaining RM3.5mil or 17% of proceeds will be used to defray listing expenses.
As of April 30, TCS has an order book totalling RM463mil, which will last the group until 2023.
The group is currently tendering for construction jobs amounting to RM2.13bil.
Generally, TCS has a success rate of 20% to 30% of winning job tenders.
TCS opened at 58.5 sen or 154% above its offer price, on a volume of 19.32 million shares.
Its initial public offering of 90 million new shares to the public was oversubscribed by 33.39 times.
It had received a total of 5,825 applications for 371.4 million shares with a value of RM85.4mil.