Smart Asia makes strong debut on ACE Market

(From left): Smart Asia Chemical Bhd independent non-executive director Ang Hock Seng, Smart Asia independent non-executive director Yap Yung Chien, Smart Asia independent non-executive director Tan Suat Hoon, Smart Asia non-independent executive and chief operating officer Lim Kok Beng, Smart Asia managing director Goh Chye Hin, Smart Asia non-independent executive director Kee Hui Lang, Smart Asia independent non-executive chairman Yau Yin Wee, Mercury Securities Sdn Bhd managing director Chew Sing Guan, Mercury Securities head of corporate finance Eric Chong, and Bursa Malaysia Bhd chief regulatory officer Julian Mahmud Hashim.

KUALA LUMPUR: Smart Asia Chemical Bhd (Smart Asia) made a strong debut on the ACE Market, opening at 50 sen per share, representing a 25% increase over its initial public offering (IPO) price of 40 sen.

The share price of the industrial paint and coating manufacturer closed at 46 sen with an intra-day high of 50.5 sen.

It was also the most active stock with 74.07 million shares changing hands.

Based on the favourable outlook of the real estate sector and the increasing need for painting supplies, Smart Asia is optimistic about the paint industry’s prospects for this year.

Smart Asia managing director Goh Chye Hin admitted that it could be difficult to capture a portion of the growth, given the industry’s escalating competitiveness.“Our current market share is 0.59%, which is very low due to our limited production capacity, which is why we are building our plant in Batu Gajah, Perak,” Goh said.

“If we fully utilise the plant capacity, our market share could increase to 2.6%,” he told a press conference after the company’s listing yesterday.

Smart Asia chief operating officer and executive director Lim Kok Beng shared that full utilisation of the Perak plant would increase the group’s production of water-based decorative paints and protective coatings by about threefold.

Lim said the Perak plant would produce more than three times its current production capacity of 8.7 million litres at its factory in Johor.

Meanwhile, commenting on fluctuating raw material prices, Lim shared that the group is not dependent on one single source for its raw materials.

“We have a wide spread of suppliers with a minimum of two suppliers for every single component of raw materials for producing paint”.

However, not much can be done to combat the price fluctuations of titanium dioxide, a type of pigment that is most commonly used in the production of paint and coatings, Lim said.

“The price of titanium dioxide fluctuates with the demand and supply in the market,” he added.

With the total of RM37.4mil gross proceeds raised from the IPO, Smart Asia will utilise 42.78% of the gross proceeds (or RM16mil) to part-finance the construction of the Perak plant.

It will allocate 29.41% or RM11mil for the purchase and commissioning of an automated paint production system.

Meanwhile, 13.37% or RM5mil will be earmarked for the purchase of 250 sets of Smart Colour POS Tinting Machine.

The remaining proceeds will be utilised for working capital and listing-related expenses.

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