By LYDIA NATHAN / Pic By ISMAIL CHE RUS
DPI Holdings Bhd debuted on the ACE Market of Bursa Malaysia Securities Bhd yesterday, the first listing of 2019 in the local equity market.
The aerosol paints manufacturer posted a 9.5 sen premium at the opening bell from its initial public offering (IPO) price of 25 sen.
The Muar, Johor-based manufacturer wants to build on the success of its IPO, which was was oversubscribed by 23 times.
“The strong response (to the IPO) is a vote of confidence in our business model and ability to grow further,” said executive chairman Peter Chai.
“With the listing, we also have plans to expand new products, new machineries and another factory, in addition to the one in Johor,” he said after the company’s listing in Kuala Lumpur yesterday.
The company raised RM31.6 million from the IPO.
Peter said the group had allocated RM1.3 million to develop the new products as the company sought to enter new markets.
The remaining RM23.5 million would be used for capital expenditure to expand its production capacity, while another RM3 million is for marketing and advertising activities.
“We are negotiating to enter Cambodia, Vietnam, Philippines and Myanmar. We look forward towards increasing our range of products, whether (it is) the introduction of new colours, or complementary products to aerosol paints,” Peter said, adding that the target is to meet the demands abroad.
DPI currently exports to seven counties including Australia, New Zealand, Japan and Singapore.
Peter said the export market contributes about 18% to the group’s revenue as certain products deliver higher value in markets abroad.
Meanwhile, DPI deputy MD Adam Chai said the group’s business strategy is to export their own brand, anchor to other countries, and produce parts and equipment for another manufacturer, also known as an original equipment manufacturer (OEM).
“We do OEM for countries that have very high compliance requirements, which make it costly for them. So, companies outsource to us to manufacture and we send it back. It is good that we have these capabilities, hence we are not just in one particular market,” he said.
Adam said the export growth will also largely depend on their capacity, but the group sees plenty of opportunities for OEMs in other countries.
The company expects the new machine could be measured to see the increase in capacity, while the new factory is expected to commence by the first half of 2020.
“Hopefully in the next three to five years, we will be able to build up our capacity and tap into these markets along with other companies that require our products,” Adam said.
At 5pm, DPI closed the first day trading at 27 sen with a market capitalisation of RM131.4 million.