This article first appeared in The Edge Financial Daily, on April 20, 2016.

KUALA LUMPUR: Car leather upholstery supplier Pecca Group Bhd made a strong debut on Bursa Malaysia yesterday, surging 20% in active trade, despite the overall weaker market.

Opening at RM1.71 or 29 sen or 20.42% above the initial public offering (IPO) price of RM1.42, the stock traded between RM1.65 and RM1.74 before closing back at RM1.71. It was the second most active counter of the day with 59.6 million shares traded.

In contrast, the FBM KLCI closed the day 0.38% or 6.53 points lower at 1,711.15.

Pecca’s gain compares with the 26.15% first-day increase registered by recently listed Chin Hin Group Bhd, and 6.36% rise by another recent IPO, Bison Consolidated Bhd.

Speaking to reporters, executive director Michael Tan said Pecca plans to open 50 concept retail stores nationwide over the next two years, using its SmartFit technology.

The “in-car installation” stores will allow customers to bring their car to the store and get it fixed without the need to take the vehicle back to the company’s factory, said Tan.

Tan added that Pecca also plans to establish an entity in Thailand as part of the group’s effort to expand its international market.

In addition, the company is also seeking to diversify its business by supplying its products to the aviation sector.

Pecca has been a leading automotive leather upholstery supplier for the original equipment manufacturer (OEM) and pre-delivery inspection (PDI) passenger vehicle segment in Malaysia since 2013.

“As at 2015, we are the largest and leading supplier for this OEM and PDI segment, commanding 67.7% market share for 2015,” said Tan.

Pecca’s IPO saw its retail offering register an oversubscription rate of 13.11 times, the highest subscription rate to date for 2016.

The IPO raised total gross proceeds of RM129.4 million, comprising the public issue of RM67.87 million and offer for sale of RM61.53 million.

Its market capitalisation upon listing is about RM266.96 million, based on the IPO price of RM1.42 per share.

Independent non-executive chairman Datuk Mohamed Suffian Awang said the RM67.87 million raised from the public issue will be used to expand Pecca’s business.

He said RM26.397 million of the amount will be used for working capital, RM17.1 million for repayment of bank borrowings, RM7.55 million for purchasing new machinery, RM5 million for additional production area and RM3.75 million for opening retail outlets.