KUALA LUMPUR: SDS Group Bhd expects to raise RM23.99 million from its proposed initial public offering (IPO) on Bursa Malaysia’s ACE market slated for Oct 7, 2019.
At the launch of the group’s prospectus yesterday, the homegrown bakery product manufacturer and distributor said it would be issuing 104.29 million new shares, priced at 23 sen per share.
“Based on the enlarged share capital of 405.82 million shares, SDS Group is expected to have a market capitalisation of RM93.34 million,” it said.
According to the prospectus, of the nearly RM24 million proceeds expected to be raised from the IPO, RM6.0 million or 25 per cent would be used to expand its business presence in Peninsular Malaysia, with the rest for general working capital requirements (RM7.79 million), repayment of bank borrowings (RM7.0 million) and to defray listing expenses for the IPO (RM3.2 million).
Speaking to reporters at a press conference later, executive director Tan Kee Jin said of the RM6 million proceeds, RM2 billion would be used to expand its wholesale business by setting up two new depots in Bukit Mertajam, Penang and Sungai Petani in Kedah.
“We will also purchase 16 new lorries to support the distribution of our wholesale bakery products,” he said, adding that the group already has 250 lorries.
Marketed under the trademarked brands of Top Baker and Daily’s, the wholesale business covers the mass market across peninsular Malaysia and Singapore, Tan said.
Meanwhile, the remaining RM4 million would be used to expand its retail business by opening eight new food and beverage (F&B) outlets in established residential areas within the Klang Valley over two years, he noted.
“The outlets could be bakeries, bakery cafes or cafes,” he said, adding the group has 33 F&B outlets in Johor.
Tan believed with the rise in the number of F&B outlets, the expansion plan would provide business growth in terms of revenue increase and earnings contribution, although he refused to provide the post-IPO growth forecast.
Based on the prospectus, SDS recorded a higher net profit of RM7.85 million for the financial year ended March 31, 2019 (FY19) from RM5.89 million in FY18, while revenue improved to RM187.13 million in FY19 from RM174.20 million previously.
“And the company does not have any formal dividend policy,” it said.
It said M&A Securities Sdn Bhd is the advisor, sponsor, underwriter and placement agent for the IPO exercise.
“M&A Securities will underwrite 104.29 million new shares, comprising 20.29 million shares available for the public and 23.13 million shares for its eligible directors, employees and business associates. The remaining 60.87 million new shares are earmarked for private placement to selected investors,” it said.
The prospectus said the IPO is open for subscription from yesterday to Sept 23, 2019. — Bernama