KUALA LUMPUR: Eversafe Rubber Bhd, a tyre retreading solutions provider which is planning an ACE-Market debut, plans to grow its export sales by establishing its footprint in new overseas markets outside the Asean region, like South America, once its initial public offering (IPO) is realised.

According to its draft prospectus, in the financial year ended Dec 31, 2015 (FY15), the group enjoyed a 181% growth in export sales due to growing demand for tyre retreading materials in the Americas.

The year also marked its first foray into Brazil, in which demand for its products is expected to grow progressively in the foreseeable future.

As such, the group plans to use its IPO proceeds, together with its own internally generated funds, to trademark its brand in several countries in the South American region. “We view the protection of our trademarks as an important step towards becoming an international player,” it said.

Besides exploring options to either set up representative offices and a warehouse or work with local distributors to help market and service its customers in South America, it is also looking at the feasibility of forming a joint venture with its South American customers to establish a tyre retreading plant there in 2017.

Financially, its revenue slipped 6.8% from RM80.8 million in FY13 to RM75.3 million in FY15, which resulted in its profit after tax declining by 11.1% from RM6.55 million to RM5.83 million. Its FY15 earnings per share were at 2.4 sen, while its gearing ratio was at 0.3 times. Overseas markets made up 55% of its FY15 revenue, compared with 40% in FY13.

In Malaysia, it said, it has a 22% market share in the development, manufacturing and distribution of tyre retreading materials.

Its IPO involves the issuance of up to 78 million shares, 48 million of which will be public issues — whereby 12.5 million will be for the Malaysian public; 11.5 million for eligible directors, employees and persons who have contributed to the success of Eversafe; and 24 million will be for institutional and selected investors by way of private placement.

The remainder is made up of an offer for sale of up to 30 million existing shares to institutional and selected investors (six million) and bumiputera investors (24 million).

It is not known yet how much it intends to raise, but the majority or 67.4% of the proceeds to be raised will be used for investments in new manufacturing lines and manufacturing automation systems within two years.

Some 10.4% will be used to establish intellectual property and overseas branding initiatives, while the remaining 22.2% will be used to defray expenses related to the IPO exercise.

Mercury Securities Sdn Bhd is the principal adviser, sponsor, managing underwriter and the lead placement agent for the IPO.