ACO to raise RM16m from ACE Market IPO


ACO Group Bhd plans to raise RM16.2 million from its IPO on the ACE Market of Bursa Malaysia Securities Bhd scheduled for March 18, 2020.

The listing exercise will enable the electrical products and accessories distributor to capitalise on market opportunities, group MD Tang Pee Tee @ Tan Chang Kim said.

“Our future plans will see us further expanding across Peninsular Malaysia. Over the next three years, there will be new ACO sales outlets and distribution centres in other towns within Johor and other states such as Negri Sembilan, Kelantan, Terengganu and Pahang,” he said at the launch of the group’s IPO prospectus in Kuala Lumpur (KL) yesterday.

Upon its ACE Market debut, ACO will have a market capitalisation of RM84 million based on an issue price of 28 sen and enlarged share capital of 300 million shares.

Of the total IPO proceeds, RM4.2 million or 25.9% will be used to set up new sales outlets and concept stores, while RM2.5 million (15.4%) will go towards the set-up of a new head office and distribution centre in Johor.

Another RM2 million (12.3%) will be used to purchase new trucks and upgrade information technology (IT) systems, RM4.2 million (26.1%) will be for working capital and RM3.3 million (20.3%) will defray estimated listing expenses.

The group’s current market reach includes its base in Johor and Melaka, as well as KL and Selangor.

It will focus on enhancing customers’ convenience and buying experience by widening its product range of third-party brands and own brands, in addition to upgrading its enterprise resource planning system and two online ordering systems.

“We will also tap into opportunities in the building and construction industry, including the renovation and interior fit-outs segment, as we set up new lighting concept stores,” Tang added.

About 71% of the group’s customers are from its direct distribution channel which involves selling products directly to end-users in the industrial sector, such as electrical contractors and electrical product manufacturers.

The remaining 29% are from the indirect distribution channel, which entails selling products to intermediaries who will resell the products to their respective customers.

The group’s revenue grew to RM134.4 million in the financial year ended Feb 28, 2019 (FY19), from RM114.5 million in FY17, representing a two-year compounded annual growth rate (CAGR) of 8.3%.

Profit after tax rose to RM7.4 million in FY19 from RM4.5 million the year before, at a two-year CAGR of 29%.