KUALA LUMPUR: Senheng New Retail Bhd debuted on the Main Market at 90 sen per share, which was 16% below its issue price of RM1.07, amid broad market weakness.
The stock hit a high of RM1.04, but before ending the day at 85.5 sen, on a volume of 163.55 million shares.
Executive chairman Lim Kim Heng said the timing of the consumer electrical and electronics (E&E) retailer’s initial public offering (IPO) had coincided with the turmoil in global financial markets, caused by investor concerns about the US Federal Reserve potentially hiking interest rates.
“However, as for the fundamentals of our business, we are on the right track as can be seen from our recent third quarter results,” said Lim.
For the nine-month ended Sept 30, 2021 (FY’21), Senheng New Retail posted a 21.2% jump in net profit to RM41.1mil, compared to RM28.1mil in the same period in 2020, as group revenue rose on higher sales.
Revenue for the nine-month of FY’21 was 12.2% higher to RM987.7mil from RM879.6mil in the same period previously, as sales were driven up by ongoing experiential retail store expansions and upgrades.
The group also attributed the higher revenue to its telemarketing automation application that enabled continuous sales generated by employees even as stores were physically closed, as well as targeted digital marketing efforts to increase the number of customer visits to online stores.
“With our seamless New Retail platform, Senheng has a resilient business model that has proven able to withstand and even outperform the competition.”
“Our financial performance for the nine months of FY21 shows this clearly – despite two months of closures due to the movement control order, our revenue still increased at a faster rate than the industry’s 6.8% growth in total E&E retail monthly average sales. With our growth strategies in place, we are confident of our future prospects,” said Lim.
The group is aiming to more than double its market share in the sales of home appliances, from 13% presently to 30% by 2025.
Lim said with the IPO proceeds, the group would be able to grow faster.
“With our plan on being a territory champion, investing in Grand Senheng or Senheng Elite, or senQ stores, improving the logisitics, and also information technology infrastructure, I believe it is not so difficult for us to achieve the target (30% market share by 2025),” he said.
Senheng raised RM267.5mil in IPO proceeds, of which RM22mil would be for developing its new brand distribution business, and RM160.5mil for setting up new stores as well as upgrading existing stores into bigger, enhanced concept stores.
The group aims to upgrade or set up 61 new and existing stores from 2022 to 2024.
The group has plans for 20 new and upgraded stores this year.
A further RM29.7mil would be used to expand and upgrade its warehouse and logistics network and boosting the group’s digital infrastructure.
The remaining RM55.3mil would be used to repay bank borrowings and defray listing expenses.
Senheng targets to distribute dividends of at least 30% of net profit to shareholders.
It started its brand distribution business in 2020 when it was awarded the exclusive distributorship of international brands Robam kitchen appliances and Jimmy vacuum cleaners and hair dryers.
Senheng also launched its in-house cookware brand Delighto in August 2021.
“We have sold almost RM2mil worth of our in-house Delighto products within five months of its launch, which shows strong market acceptance. We continue to identify suitable brands of kitchen appliances, personal and beauty care appliances, home electricals and Internet of Things products,” he said.