KUCHING: Sabah-based sustainable forest resource company Jawala Inc (Jawala) launched its initial public offering (IPO) on Thusday in conjunction with its proposed listing on the Catalist Board of the Singapore Exchange Securities Trading Ltd (SGX).
The Invitation of 18,000,000 Invitation Shares at an Issue Price of S$0.25 or about RM 0.74 each represents 15.2 per cent of the group’s post-Invitation share capital of 118,474,000 shares. The invitation comprises a public offer of 400,000 Offer Shares at S$0.25 each; and a placement of 17,600,000 Placement Shares at S$0.25 each, payable in full on application.
Based on the Issue Price of S$0.25 per Invitation Share, Jawala expects its post-IPO market capitalisation to be approximately S$29.6 million or about RM87.8 million. The Invitation will close at 12.00 noon on 30 May 2018. Jawala’s shares will commence trading at 9.00 a.m. on 1 June 2018.
Datuk Jema Khan, executive director and CEO of Jawala, said the IPO on the Catalist Board marks the beginning of a new chapter for Jawala as it pursues regional expansion, leveraging on the good reputation of the Singapore Exchange.
“Besides our solid business fundamentals and high-growth operating environment, we are proud to work alongside an experienced management team with decades of industry expertise under its belt,” he said in a statement.
“Moving forward, we will dedicate our efforts to ensuring the sustainability of our business and generating maximum returns for our shareholders.”
The IPO is expected to raise gross proceeds of S$4.5 million (abotu RM13.3 million) whereby Jawala will use the proceeds to develop its plantation site and for working capital. UOB Kay Hian Private Ltd is the sole sponsor, issue manager, underwriter and placement agent for the IPO.
As the first Malaysian company of its kind to list in Singapore, Jawala manages a Class II Commercial Forest Reserve of approximately 11,043-hectares in Sabah’s Sapulut Forest Reserve pursuant to the terms of the Sustainable Forest Management Licence Agreement entered into with the Government of Sabah.
The agreement, which came into effect on August 12, 2015 and ends December 31, 2115, is subject to a potential extension of another 100 years at the discretion of Sabah’s Chief Minister.
Jawala is authorised by the Sabah Government to process, convert and sell timber. The logs and timber from salvage logging within the Licensed Area are sold to customers for the production of sawn timber, veneer and plywood, among others.
Despite only commencing log sales in October 2016, the group achieved revenue of RM12 million in the financial year ended July 31, 2017 (FY17). Profit after tax for FY2017 rose to RM2.5 million in FY17 from a loss after tax of RM0.4 million in the preceding financial year.
More recently, the group recorded revenue of RM10.5 million for the three month period ended October 31, 2017 (1Q18), up by RM8.7 million, or 486.6 per cent, from RM1.8 million for 1Q17.
Profit after tax increased to RM4.2 million in 1Q18, as compared to RM0.6 million in 1Q17, and almost double the RM2.5 million profit after tax recorded for FY17.
Although Jawala does not currently have a fixed dividend policy, the Board of Directors intends to recommend and distribute dividends of not less than 20 per cent of the group’s net profits attributable to shareholders for the financial years ending 31 July 2018 and 2019.
On future plans, Jawala said it intends to develop its plantation site within the Licensed Area in preparation for harvesting in 2026.
It will implement a planting programme from 2018 to 2025, andcontinually source for seeds for potential tree species to plant.
It will also increase log production by acquiring new plantations within forest management units to increase sale and sustainable wood flow, as its log production is currently derived entirely from salvage logging.
The group will strive to strengthen its reputation as a trusted and ethical supplier of sustainable timber by building marketing alliances with domestic buyers. It plans to engage a forestry certification consultant to expedite the process of obtaining international certification for its forest management unit.
In addition, the group will continue investing in research efforts to improve yields, wood quality and sustainability practices. It will also seek to grow the business through acquisitions, joint ventures or strategic alliances, strengthening its market position and potentially achieving greater economies of scale, as well as driving future growth.
The group expects its own growth to be underpinned by strong demand for certified sustainable timber from China, Japan and India, especially amid increasing international awareness of sustainability and crackdowns on illegal logging. Sabah constitutes 32.87 per cent of the log production in Malaysia.