KUALA LUMPUR (May 17): Industrial brush manufacturer Yew Lee Pacific Group Bhd (YLPG) on Tuesday (May 17) said it aims to raise gross proceeds of RM37.27 million via its initial public offering (IPO) on Bursa Malaysia’s ACE Market.

The Perak-based company said the proceeds from the IPO will mainly be utilised for the purchase of machinery and equipment at RM10.9 million (29.2%), the repayment of bank borrowings at RM8.9 million (23.9%) and the construction of new warehouse facilities and office buildings amounting to RM7.3 million (19.6%). 

The funds will also be used for the renovation of a new three-storey office with RM1.8 million (4.8%) allocated, followed by working capital requirements of RM4.57 million (12.3%), while the remainder is allocated for the listing expenses estimated at RM3.8 million (10.2%). 

YLPG, which is also involved in the trading of machinery parts and industrial hardware, is slated to be listed on the ACE Market on June 7 at an issue price of 28 sen.

In his speech in conjunction with the prospectus launch, YLPG managing director Ang Lee Leong said the company embarked on this IPO to expand its manufacturing capacity and increase automation to cater for its future business growth.

“With the addition of the new machinery, we will also be able to produce different types of customised industrial brushes based on our customers’ specific manufacturing requirements,” he said. 

YLPG has manufactured custom-made industrial brushes since 2004 and presently manufactures a total of six types of custom-made industrial brushes. 

“Besides accommodating the expansion of its manufacturing capacity, the bigger space for the manufacturing facilities will allow us to optimise the configuration of our manufacturing machinery and equipment and enhance the overall manufacturing workflow and efficiency,” added Ang.

The company’s IPO involves the issue of 133.1 million new shares and an offer for sale of 26.62 million existing shares by way of private placement to selected investors. 

From the public issue, 26.62 million shares will be made available for application by the Malaysian public and 15.97 million shares allocated for application by eligible directors and employees. 

Another 23.96 million shares will be allocated by way of private placement to selected investors and 66.55 million shares by way of private placement to identified bumiputera investors approved by the Ministry of International Trade and Industry.

M&A Securities is the principal adviser, sponsor, underwriter and placement agent for YLPG’s IPO, while Eco Asia Capital Advisory Sdn Bhd is the financial adviser.

M&A Securities deputy head of corporate finance Danny Wong said during the launch that the IPO proceeds will help YLPG capitalise on the post-Covid-19 demand recovery. 

For the financial year ended Dec 31, 2021 (FY21), 76.8% of the group’s total revenue was mainly derived from Malaysia, while the remaining 23.2% was derived from overseas markets primarily located in Thailand, Vietnam, Indonesia and Taiwan, representing approximately 7%, 5.8%, 3.3% and 5.8% respectively. 

In terms of the company's customer segment, the glove industry contributes between 77% and 88% of its top line growth, with the remainder from other industries. 

YLPG’s customers include Top Glove Corp Bhd, Hartalega Holdings Bhd, Latexx Manufacturing Sdn Bhd, Careplus Group Bhd, Riverstone Holdings Ltd and VRG Khai Hoan Joint Stock Company. 

YLPG, which has a factory in Ipoh, currently has 14 manufacturing lines producing at a 86% utilisation rate.  

Meanwhile, YLPG chief operating officer and executive director Amber Ang Poh Yee, who was present at the press conference, said the company is extensively diversifying its business segments to other industries like glass, wood, as well as electrical and electronics.

“Besides that, we are also actively looking to diversify into the semiconductor industry, which is now currently growing in the market. Looking forward, we hope to see that we can expand our business further in Thailand and Indonesia. 

“We have planned our IPO journey for quite some time but unfortunately we could not mark it as in where and when we can get it listed. 

“For this IPO journey, with the help and proceeds and everything, we would surely be very confident that our company would continue to grow and bring more value to our shareholders,” she said.