by SHAZNI ONG / pic by BLOOMBERG
MR DIY Group (M) Bhd is set to become the largest listing on Bursa Malaysia in three years as it seeks to raise RM1.5 billion from its IPO to strengthen and expand its presence in the local home improvement market.
With the offer price of RM1.60 a share, Mr DIY will have an estimated market capitalisation of RM10 billion when it lists on the Main Market of Bursa Malaysia on Oct 26, 2020.
The valuation will also place the company among the top 40 largest listed companies by market capitalisation on Bursa Malaysia.
The last time Malaysia saw such a large listing was three years ago when Lotte Chemical Titan Holding Bhd raised RM3.77 billion in July 2017.
“By focusing on the growth market of Malaysia in particular, we expect to do well. Our market is a fast-growing market. We have the benefit of independent market surveys which suggest this market will grow in the order of 20.2% between 2019 and 2024.
“There is a lot of growth in this market for us and clearly in the past, as you have the chance to look at our IPO documents, we’ve executed very well to this growth market and we expect to continue with our performance,” Mr DIY CEO Adrian Ong said at the company’s virtual IPO prospectus launch yesterday.
Post-listing, Ong said Mr DIY has adopted a dividend policy that targets to return 40% of its earnings to shareholders.
The IPO of up to 941.49 million Mr DIY shares comprises an offer for sale of up to 753.09 million existing shares and a public issue of 188.4 million new shares.
The 941.49 million shares, which represent 15% of the enlarged issued 6.28 billion shares, will see a retail offering of 161.53 million shares, of which 125.53 million shares are available for application by the Malaysian public and 36 million shares are reserved for application by directors, employees and persons who have contributed to the success of the group.
“We are confident about the retail offering portion, relative to the size of the entire transaction (2.6% out of an entire 15% enlarged offering). The response for us indicates so,” he added.
The institutional offering is up to 779.96 million shares, of which 470.75 million shares are allocated to Bumiputera investors approved by the Ministry of International Trade and Industry (MITI).
The remaining 309.21 million shares will be offered to Malaysian institutional and selected investors (other than Bumiputera investors approved by MITI), foreign institutional/selected investors outside the US and qualified institutional buyers in the US.
The IPO will see Mr DIY raise RM301.4 million, of which RM276.1 million will be for the repayment of bank borrowings. The remaining RM25.3 million will be used to defray the estimated listing expenses.
The repayment of the borrowings will give rise to an interest savings of RM15.2 million per annum.
Mr DIY chairman Datuk Azlam Shah Alias said the company stands out among its peers both on a domestic and international basis, in a capital market starved of quality issues offering a more than decent growth and return profile.
“Mr DIY is a market leader with an estimated 29.1% market share in the country in 2019, according to
Frost & Sullivan. It has a strong track record of growing its store network with plans to open an aggregate of 307 new stores across all its brands in 2020 and 2021, expanding its portfolio by 52% from 593 stores as at Dec 31, 2019,” he said.
Based on its unaudited consolidated management accounts, Mr DIY posted an aggregate revenue of RM465.6 million for the two months of May and June 2020 in the post-Movement Control Order period, 12% higher than the aggregate revenue of RM416.1 million recorded in the two months of January and February 2020.
From the financial year ended Dec 31, 2017 (FY17), to FY19, the company’s compound annual growth rate (CAGR) for revenue was 36.1% from RM1.23 billion to RM2.28 billion and its net profit increased at a CAGR of 23% from RM210 million to RM317.6 million.