KUALA LUMPUR (April 15): Leform Bhd, a steel product manufacturer, is seeking a listing on the ACE Market of Bursa Malaysia to raise funds to build a new headquarters, a warehouse storage facility and workers’ accommodation, besides the repayment of bank borrowings and working capital.
According to its draft prospectus posted on Bursa Malaysia's website, Leform is planning to issue 311.01 million new shares under its initial public offering, of which 74.05 million shares will be made available for application by the Malaysian public, while 29.62 million will be set aside for eligible directors, employees and those who have contributed to the company's success.
Another 185.1 million new shares will be made available for selected Bumiputera investors approved by the Ministry of International Trade and Industry, while 22.21 million others will be placed out to institutional and/or selected investors.
The IPO will also involve an offer for sale of 74.05 million existing shares by way of private placement institutional and/or selected investors.
Leform said the group intends to expand its warehouse storage facility to cater for growth in its production output by constructing a new facility with additional warehouse storage, in anticipation of more orders from customers.
The new facility, located adjacent to one of its existing facilities, will have a built-up area of 285,547 sq ft and will include its new HQ and workers’ accommodation.
“We intend to relocate our existing headquarters and workers’ accommodation to the new facility. The additional warehouse storage facility will provide us with a larger space for our processing facilities, and thus create an environment for our machinery and equipment to perform to their capacity,” it said.
The plan also allows the group to consolidate its delivery operations to this “one stop centre”.
Moving forward, Leform said it plans to expand its range of steel pipes to include thicker gauge steel pipes, which will be more than 5mm thick and can be used for infrastructure pipes or large structural poles in construction.
“This would not only be a new revenue stream but will also enable us to expand our customer base. We plan to begin manufacturing these thicker gauge steel pipes once our proposed new facilities are complete in the first quarter of 2025,” it said.
For the financial year ended Dec 31, 2021 (FY21), Leform posted a profit after tax of RM45.41 million, over six times the RM7.14 million it made in FY20, as revenue rose to RM373.97 million from RM354.71 million, with PAT margin jumping to 12.1% from 2% previously.
The group's revenue is mainly supported by contributions from its manufacturing segment consisting of steel pipes, guard rails, and flat steel products. Besides Malaysia, Leform's sales come from the exports of its steel products to markets such as New Zealand, Singapore and Cambodia.
The group is controlled by managing director Law Kok Thye, who holds a 66% direct stake in the company and 34% indirectly via Tianwen Holdings. On completion of the IPO, Law's direct stake will be trimmed to 23%, while his indirect stake will rise to 51%.
MIDF Amanah Investment Bank Bhd is the principal adviser, sponsor, underwriter and placement agent for the IPO.