ACE Market-bound Tri-Mode to raise RM26.4m in IPO

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KUALA LUMPUR (April 18): ACE Market-bound Tri-Mode System (M) Bhd, an integrated logistics provider, is looking to raise as much as RM26.4 million from its initial public offering (IPO) exercise.

The group expects to enlarge its market capitalisation of about RM101.3 million upon its listing on May 11.

As part of the IPO exercise, Tri-Mode will offer to the public 43.21 million new shares at a retail price of 61 sen per share.

The final retail price is subject to a bookbuilding process.

Its group managing director Datuk Hew Han Seng said out of the total IPO proceeds, RM15.5 million or 58.8% will be allocated for its business expansion via the construction of proposed headquarters and distribution hub, and purchase of prime movers and trailers over the next 30 months.

Hew added about 8.9% of the proceeds will be used for working capital.

"A further 19% of the proceeds will be allocated for the repayment of bank borrowings and the balance of about 13.3% will be utilised to defray estimated listing expenses," he said at the company's prospectus launch today.

Tri-Mode's IPO involves an institutional offering of 30.71 million shares, 24.9 million of which are allocated to institutional and selected investors via private placement, and the remaining 5.81 million to Bumiputera investors approved by Ministry of International Trade and Industry.

Meanwhile, the IPO's retail offering involves the issuance of 12.5 million shares, 8.3 million of which are available for application by the public and 4.2 million for eligible directors and employees.

"Becoming a listed entity will create greater opportunities for us to enhance the company's business.

"It provides us with the needed financial impetus to pursue our business expansion strategies to establish market awareness of our brand within the logistics industry," he said.

For the financial year ended Dec 31, 2017 (FY17), Tri-Mode's net profit rose 28.48% to RM5.99 million, against RM4.67 million in a year ago driven by higher sales orders.

Revenue was 19.79% higher at RM85.51 million compared to RM71.38 million in a year ago.

As at Feb 28, its cash pile stood at RM3.26 million and total borrowings amounted to RM23.48 million — RM9.57 million were short-term liabilities while RM13.92 million were long-term debts.

Sea freight and marine insurance is the main contributor to Tri-Mode's revenue at 59%, followed by container haulage at 34.2%, airfreight (5.4%), warehousing (0.9%) and freight forwarding (0.3%).

Geographically, Tri-Mode's operations in Malaysia account for 91.3% of its revenue, while the remaining 8.7% is derived from its overseas operations, including Asian countries, Europe, Australasia, North America, Africa, Central and South America.

Going forward, Tri-Mode aims to venture into the e-commerce logistics industry in Malaysia by providing courier services for the goods purchased by its customers through selected e-commerce platform.

Hew said the e-commerce platform will be launched in the third quarter of 2018 (3Q18).

However, he declined to comment on the details of the e-commerce platform for now.

"We will venture into e-commerce and launch our e-commerce platform by 3Q18. It is not an appropriate time now to give you the name, but when the right time comes we will announce (it).

"This e-commerce platform [has] been used overseas and we had signed an agreement to use this platform and launch it in Malaysia. We believe this platform will be useful," he said.

On Sept 1, 2017, Tri-Mode's wholly-owned subsidiary Landbridge Haulage had been issued a non-universal service licence by the Malaysian Communications and Multimedia Commission to operate the e-commerce platform, according to its prospectus.

Founded on Nov 19, 1991, Tri-Mode's principal activities include the provision of sea freight, container haulage, airfreight, freight forwarding, warehousing and marine insurance services.

Tri-Mode is controlled by Hew with a 67.7% stake, and his wife Datin Sam Choi Lai with a 27.4% stake. Post-listing, their stakes will be reduced to 50.1% and 20.3%, respectively.