Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on November 25, 2015.

 

KUALA LUMPUR: Healthcare furniture and equipment manufacturer LKL International Bhd is eyeing an ACE Market listing on Bursa Malaysia to fund its capital expenditure (capex) requirements to expand operations.

According to its draft prospectus uploaded on the Securities Commission Malaysia’s website, the group will be issuing a total of 113 million new ordinary shares of 10 sen each, whereby eight million will be made available for the public, 13.2 million for its eligible directors and employees, 42.2 million for placement and 49.6 million for bumiputera investors.

The total amount of proceeds it expects to raise from the initial public offering (IPO) exercise was not disclosed.

LKL said 41.79% of the proceeds will be used for capex, 19.67% for repayment of bank borrowings, and 26.25% for working capital, while the balance of 12.29% will be used to cover its listing expenses.

The allocated amount for capex will be used for the purchase of new machines, which includes a CNC laser shearing machine, CNC laser cutting machinery, a CNC punching machine and a conveyor line.

The asset purchases are in line with the group’s goal of increasing automation in its manufacturing processes.

“The acquisition of the new machinery and conveyor line is expected to increase our production efficiency to facilitate our growth plans and strategies. In addition, with faster and more precise shearing, cutting, shaping and punching processes, wastage will be minimised and [this] will contribute to better cost control and savings for our group,” it said.

Accordingly, the group aims to expand its manufacturing plant to cater for the greater automation of its processes, through the amalgamation of two pieces of properties where its head office, manufacturing plants and warehouse are located.

“The increase in automation and storage capacity will enable us to expand more aggressively,” LKL said.

Besides that, the group said it will continue to seek opportunities in the domestic market to strengthen its presence in Malaysia, as the group expects the medical bed, peripheral and accessory industry to grow positively, driven by growth in demand for healthcare services.

It also intends to grow sales in its existing export markets, leveraging on its international track record and its relationships with overseas agents. The group will also continue to participate in international trade shows and exhibitions.

“Through these approaches, we anticipate greater accelerated growth as we are able to increase our visibility in international markets. This is expected to contribute to long-term growth of our group’s business, as well as enhance the results of our operations and financial performance,” said LKL. The group currently exports to over 30 countries, and said that it has received enquiries from agents and customers from new markets such as Ethiopia, Suriname, Uganda, Rwanda and Iran.

LKL is led by co-founder and managing director Lim Kon Lian, co-founder and executive director Mok Mei Lan and Tan Sri Adzmi Abdul Wahab as its independent non-executive chairman.

For the financial year ended April 30, 2015, the group reported net profit of RM5.96 million, slightly lower than RM6.01 million in the preceding year. Revenue for the year was marginally higher at RM39.04 million, compared with RM38.89 million a year earlier.

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