KUALA LUMPUR: Building materials manufacturer Chin Hin Group Bhd intends to float shares on the Main Market of Bursa Malaysia, to raise fresh capital for its expansion, including adding new capacity.
Based on its draft prospectus, the company’s initial public offering (IPO) will comprise a total issuance of 63.2 million shares, representing 12.5% of its enlarged issued and paid-up share capital.
Out of the total, 25.3 million shares will be for the Malaysian public, 6.4 million shares for its directors and employees, while 31.5 million shares will be placed out to identified investors.
The company did not disclose the IPO price and the amount expected to be raised in the draft prospectus.
Chin Hin said 36.5% of the proceeds from the listing will be used for the expansion of its existing manufacturing facility and the purchase of new equipment and machinery for its autoclaved aerated concrete (AAC) manufacturing plants.
“The total cost of expansion and installation of new machinery in our existing manufacturing facilities in G-Cast Concrete and Starken AAC is expected to be RM15 million, which shall be fully funded via the IPO proceeds,” it said.
Post-expansion, G-Cast’s annual production capacity will increase to 67,500 tonnes from 45,000 tonnes, while Starken AAC’s production will increase to 600,000 cu m from 375,000 cu m.
Meanwhile, 36.5% of the proceeds will be used to repay bank borrowings, 17.2% to fulfil its working capital requirements, while 9.8% will be for listing expenses.
Chin Hin also plans to expand its export markets, focusing on the Asia-Pacific region.
“The management believes the Asia-Pacific markets present vast potential for our wire mesh and AAC products, which are ideally suited to developed countries where labour-saving materials are used extensively,” it said.
The company added that it had secured maiden purchase orders for its AAC products from customers in Taiwan, Australia, Hong Kong, Singapore and Indonesia.
The company expects its expansion plans to be implemented within two years from the date of its listing.
Chin Hin is led by group managing director Chiau Haw Choon, Datuk Nik Norzrul Nik Hassan as independent non-executive chairman and Datuk Chiau Beng Teik as deputy and group executive chairman.
This article first appeared in The Edge Financial Daily, on May 8, 2015.