From left: Hong Chong Chet, Deputy Chief Executive Officer of LAC Med; Goh Teck Hong, Independent Non-Executive Director; Giam Teck Eng, Substantial Shareholder; Tommy Har, Executive Director, Co-Head, Corporate Finance of RHB Investment Bank; Liew Yoon Poh, Group Chief Executive Officer of LAC Med; Alex Liew Yoon Kit, Non-Independent Non-Executive Chairman; Teoh Chu Lin, Group Chief Corporate and Institutional Banking Officer of Alliance Bank Malaysia; Chan Yue Mun, Non-Independent Non-Executive Director of LAC Med; Datuk Ng Wan Peng, Senior Independent Non-Executive Director; Lim Su May, Independent Non-Executive Director; Thean Yain Peng, Chief Financial Officer
PETALING JAYA: Main Market-bound LAC Med Bhd
's expansion plans in Indonesia aim to replicate what it has built in Malaysia and establish a sizable presence there.
Group chief executive officer Liew Yoon Poh however said the expansion into Indonesia might take some time to bear results. “We are hiring local Indonesian talent to help grow the business.
Currently, we have an office that is operational in Jakarta. We have already started seeing revenue coming in from the third quarter,” he said in a media briefing following the company’s prospectus launch here. LAC Med is principally involved in the supply and integration of medical devices. Its products include radiography, ultrasound, consumables and software solutions.
It is an authorised distributor of 11 global brands in Malaysia and Indonesia, with long-term partnership with companies like Samsung and Philips. Since 2023, LAC Med has added distribution of new brands such as Stryker, LG, Abbott and Bayer.
In December 2024, as part of its expansion strategy, LAC Med incorporated PT Fairmed to capture business opportunities in Indonesia. Currently, PT Fairmed operates from a rented office in Jakarta.
The group is allocating RM8mil to expand its core business in the supply and integration of medical devices in Indonesia. This will be done through the setting up a branch office each in Sumatra, Surabaya and Kalimantan within the next three years.
Liew acknowledged LAC Med's net profit has been flat despite higher revenue. He said this was because the group has been ramping up its resources internally, “investing heavily in building capacity and capabilities”, after expanding from two principal suppliers to 11.
When asked if LAC Med’s flat net profit was due to most of its distributorships being non-exclusive, Liew said this is actually a global practice among most multinational companies, in that they typically do not grant exclusive distribution rights to any company in any country.
“We do not see any risk from that because we have been renewing the contracts with them for multiple years, some since 2013. We still maintain a very strong relationship with them,” he said. As part of its listing exercise, LAC Med is expanding into an asset-owner business model to provide equipment-as-a-service (EaaS) where it will own the integrated medical equipment system and charge a fee for the use of the facilities.
It will also be expanding its software and system for its healthcare facilities segment by introducing new software solutions which include medical device asset management services (MEAMS), as well as incorporate tracking technologies such as radio-frequency identification and barcodes to locate and monitor assets in real-time, as well as maintenance management.
LAC Med has set a dividend policy to distribute at least 30% of its annual audited net profit. The company expects to raise RM55.6mil from the sale of new share and plans to use RM12mil (21.6%) for the setting up of a new head office and warehouse.
A further RM8mil (14.4%) of the proceeds will be used for the expansion of its Indonesian business, while RM8mil will be allocated for the establishment of the EaaS and MEAMS segments.
A further RM6.1mil has been set aside for working capital needs. RM16mil of the proceeds raised will be used to repay bank borrowings. LAC Med’s IPO entails a public issue of 74.20 million new shares at an offer price of 75 sen per share.
Some 20 million shares will be made available to the Malaysian public while 4.2 million shares will be offered to its eligible directors, employees and individuals who have made contributions to its success.
A total of 30 million shares will be sold to selected investors through a private placement. A total of 50 million shares will be sold to bumiputera investors who have received approval from the Ministry of International Trade and Industry through private placements.
The existing shareholders of the company will also make an offer for sale of 30 million existing shares to selected investors by way of private placement.
With an enlarged share capital of 400 million shares, LAC Med will have a market capitalisation of RM300mil upon listing on the Main Market of Bursa Malaysia, scheduled for Dec 10. The IPO values the company at a price-to-earnings multiple of 14.7 based on the financial year ended Dec 31, 2024 net profit of RM20.4mil.
RHB Investment Bank is the lead adviser, joint underwriter, and placement agent, with Alliance Islamic Bank as joint underwriter.
