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This article first appeared in The Edge Financial Daily on April 19, 2018

KUALA LUMPUR: Integrated logistics provider Tri-Mode System (M) Bhd, en route to be listed on the ACE Market of Bursa Malaysia on May 11, is looking to raise as much as RM26.4 million from its initial public offering (IPO).

The group expects to increase its market capitalisation to RM101.3 million upon listing.

The IPO exercise entails the issuance of 43.21 million new shares at 61 sen per share. The final retail price is subject to a book-building 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, distribution hub, and purchase of prime movers and trailers over the next 30 months.

Another 8.9% of the proceeds will be utilised 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 told reporters at the launch of the company’s prospectus yesterday.

Under the IPO, Tri-Mode is offering 30.71 million shares to institutional investors by way of private placement, with 24.9 million for institutional and selected investors, and the remaining 5.81 million for bumiputera investors approved by the ministry of international trade and industry.

At the same time, the group is issuing 12.5 million shares to retail investors, of which 8.3 million will be 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 28.5% to RM5.99 million compared with RM4.67 million in FY16, driven by higher sales orders from customers. Revenue rose 19.8% higher to RM85.51 million, from RM71.38 million the previous year.

As at Feb 28, its cash pile was at RM3.26 million. Total borrowings stood at RM23.48 million, of which RM9.57 million was short-term liabilities and RM13.92 million was long-term debts.

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.

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

Hew said the e-commerce platform will be launched in third quarter of 2018 (3Q18). However, he declined to comment on the details of the e-commerce platform as it is bound by the prospectus.

“We will venture into e-commerce and launch our e-commerce platform by third quarter of 2018. It is not an appropriate time now to give you the name, but when the right time comes we will announce.

“This e-commerce platform has been used in overseas and we have 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 was 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.

Hew has a controlling 67.7% stake in Tri-Mode and his wife Datin Sam Choi Lai holds a 27.4% stake. Post-listing, their shareholdings will be reduced to 50.1% and 20.3% respectively.

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