Econframe to raise RM18m in IPO

The firm registers its brand, Duroe, in China as a platform for the company to tap into the international market


ECONFRAME Bhd is aiming to raise RM18.2 million from its listing on Bursa Malaysia’s ACE Market for expansion to acquire new customers and cater for larger orders from existing clients.

The total door systems solution provider offers products that are complete with metal door frames, fire-resistant door sets, wooden and metal doors and ironmongery such as locksets and hinges.

Its group MD Lim Chin Horng (picture) said the listing exercise, which falls on Oct 27, will elevate the group’s position and enhance its brand’s presence as it becomes the first company in the industry to be listed.

“We want to win in our local market first before embarking overseas,” he told reporters after the launch of the company’s prospectus in Kuala Lumpur yesterday.

Lim said Econframe had registered its brand, Duroe, in China as a platform for the company to tap into the international market.

“Over the last two years, our fire-resistant door and ironmongery have been growing at an expansionary pace. Moving forward, we plan to produce wooden doors in the fourth quarter this year as it is a big market for us to explore. We are expecting to produce 100,000 wooden doors a year,” he said.

The group has so far maintained a positive business performance this year as other industries struggle to cope with the impact of the Covid-19 pandemic, Lim said.

“Demand for wooden door and door system products is constantly growing and demand is also increasing even in the face of the current market slowdown.

“Econframe’s growth underpinned by unfulfilled purchase orders of RM47.01 million as at Sept 6, 2020, expected to be fulfilled by end of 2021,” he added.

The group’s products are supplied on a project basis to a diversified portfolio of property developments including residential, commercial, mixed and industrial developments.

Since its establishment in 2001, Econframe has supplied products to property developments by notable developers including Aset Kayamas Sdn Bhd, Eco World Development Group Bhd, Gamuda Bhd, IJM Land Bhd, IOI Properties Group Bhd and LBS Bina Group Bhd.

From its IPO exercise, RM5 million (27.5%) will be allocated for land acquisition and the construction of a new manufacturing facility.

Lim said the group intends to acquire a new piece of land and subsequently construct a manufacturing plant to house all its facilities under one roof in Kapar, Selangor, to improve operational efficiency and productivity, instead of having four separate factories.

“Apart from that, we will be investing in automation as a means to further improve operating efficiency. We plan to accomplish this by equipping our facilities with advanced robotic technology, we expect to improve our annual operating capacity by 35% for both our metal door frames and fire-resistant door sets.

Of the total fund, RM4 million (22%) will be used for the investment in manufacturing automation, RM6.2 million (34.1%) for working capital needs, while the remaining RM3 million (16.4%) will be used for estimated listing expenses.

In terms of financial performance, the group’s revenue grew from RM35.49 million in the financial year ended Aug 31, 2017 (FY17), to RM44.09 million in the financial year ended Aug 31, 2019 (FY19), representing a two-year compound annual growth rate (CAGR) of 11.5%.

According to Smith Zander International Sdn Bhd’s Independent Market Research report on the metal door frame and door industry in Malaysia, the metal door frame and fire-resistant door industry has been growing steadily in Malaysia at a CAGR of 9.36% from 2016 and 2018.

Meanwhile, the metal door frame and door industry which comprises metal door frames, fire-resistant door sets, wooden doors, metal doors and ironmongery, in Malaysia grew at a CAGR of 4.85% from 2016 to 2018 and stood at RM1.99 billion in 2018.

Econframe’s IPO exercise entails an issuance of 65 million new shares and an offer for sale of 32.5 million existing shares at an issue price of 28 sen per share.

M&A Securities Sdn Bhd is the advisor, sponsor, underwriter, and placement agent for the IPO exercise.