KUCHING: Heng Huat Resources Group Berhad (Heng Huat), an integrated manufacturer of oil palm and coconut biomass products in Malaysia, plans to grow its sales of briquette to meet the potential increase in demand in the China market.
H’ng (fourth left) along with directors of Heng Huat, K&N Kenanga Holdings Bhd and WYNCORP Advisory during Heng Huat’s listing ceremony yesterday.
The group debuted on the ACE market of Bursa Malaysia at 61 sen, for a premium of 16 sen, over its offer price of 45 sen. The share closed at 56 sen yesterday.
At the listing ceremony yesterday, co-founder and managing director H’ng Choon Seng said that Heng Huat intended to tap into the vast growth potential for alternative energy sources, especially in areas where environmental issues are increasingly coming to the fore.
“The higher environmental awareness globally has led to increasing government legislations to curb pollution, such as the recent ban on new coal-fired plants in several cities in China.
“These developments are likely to spur greater demand for cleaner alternative energy sources including briquette.”
Mindful of this growing market, we commercialised our briquette in 2013 for use in industrial boilers and furnaces. We have experienced encouraging response thus far, with the majority of our briquette currently sold to domestic industrial users and a small amount exported to China.
To accelerate customer adoption, we are fine-tuning the quality of our briquette, with a view towards capturing more demand from the domestic and international markets.”
Heng Huat has two briquette production lines with an annual production capacity of approximately 36,200 metric tonnes. For the financial year ended Dec 31, 2013 (FY2013), Briquette contributed to RM1.8 million or 2.5 per cent of the group’s total revenue.
The majority of the group’s revenue for FY2013 of RM73.7 million was attributed to the biomass materials and related products segment (excluding sales of briquette), which contributed to RM52.3 million or 70.9 per cent, while the mattresses and related products segment made up the remaining RM19.6 million or 26.6 per cent.
H’ng elaborated the group’s intentiond to improve the moisture level and density of its briquette, allowing them to be marketed to a wider range of industrial users that demand better quality and environmentally-friendly energy sources.
“With these product improvement efforts, together with our initial success in the local and China markets, we believe that Briquette will contribute positively to our Group’s revenue stream going forward.”
Heng Huat’s IPO entailed the public issue of 46.5 million new ordinary shares of RM0.10 each, and an offer for sale of 14.66 million existing Shares, at an issue/offer price of RM0.45 per Share.
Of the public issue of 46.5 million new Shares, seven million Shares were available for application by the Malaysian public; while 5.0 million Shares were allocated to eligible employees and persons who have contributed to the success of the Group. 12.2 million Shares were allocated through private placement to identified investors, and 22.3 million Shares were available for application by Bumiputera investors approved by the Ministry of International Trade and Industry.
The 14.66 million existing Shares under the offer for sale were allocated by way of private placement to identified investors. Heng Huat’s IPO raised RM20.93 million in proceeds for the Group, of which RM4.00 million will be allocated for capital expenditure and RM4.55 million for working capital. The remaining RM9.38 million and RM3.00 million would be allocated for the repayment of bank borrowings and defraying listing expenses respectively.