CE-bound Flexidynamic targets RM15m proceeds from IPO

The company plans to repay bank borrowings, renovate new factories and purchase machinery and equipment

By HARIZAH KAMEL / Pic source flexidynamic.com

FLEXIDYNAMIC Holdings Bhd is aiming to raise RM15.05 million from its IPO on the ACE Market of Bursa Malaysia Securities Bhd, which it will be listed on March 30.

The company plans to allocate RM6.38 million to repay bank borrowings drawn to fund acquisition of new factories, RM420,000 for the renovation of the new factories and around RM1.63 million have been allocated for the purchase of machinery and equipment.

The remaining RM3.62 million of the proceeds will be allocated for working capital, while another RM3 million will be utilised to defray estimated listing expenses.

The IPO involves a public issue of 75.231 million shares at the issue price of RM0.20 per share, of which, 14.2 million shares will be available for application by the public, 4.3 million shares will be allocated for eligible employees and persons who have contributed to the group’s success and 56.8 million shares will be offered via private placement to selected investors.

Flexidynamic’s principal advisor, sole placement agent, sole underwriter and sponsor in relation to the IPO is M&A Securities Sdn Bhd.

The group is principally involved in the design, engineering, installation and commissioning of glove chlorination systems, as well as the design and installation of storage tanks and process tanks for the glove manufacturing industry.

In a virtual press conference yesterday, MD Tan Kong Leong said as the leading player in the glove chlorination industry with a 37.7% market share in Malaysia, the group is in a good position to capitalise on the growth in the country’s rubber glove manufacturing activities.

“We are ready for the next step as we expand our capacity to cater to an increasing number of projects. Our expansion will help us take advantage of the opportunities arising from the usage of protective gear namely rubber gloves in the wake of the Covid-19 pandemic.

“We do not expect demand for rubber gloves to fall in the future and we are positive of Flexidynamic’s growth prospects for years to come from increased demand.

“With our expansion plan, we also reduce the risks from depending on subcontractors for the manufacturing of parts and components of our on-line glove chlorination system,” he said.

Flexidynamic’s orderbook as of Feb 10, 2021, stood at RM84.63 million, of which RM17.48 million is expected to be recognised during this financial year, while another RM62.3 million is to be recognised as revenue by the financial year ending Dec 31, 2022.

The group has clients in Vietnam, Thailand, Indonesia and Sri Lanka, but pointed out that Malaysia is still its main geographical contributor over the last several years.

“Our customers, namely Hartalega Holdings Bhd, Ever Global (Vietnam) Enterprise Corp, Sri Trang Group, Kossan Rubber Industries Bhd, Riverstone Holdings Ltd, and HLT Global Bhd, have announced expansion of production capacity and/or are venturing into the glove manufacturing business.

“This will contribute to an increasing demand for glove dipping lines, and consequently the demand for glove chlorination systems and our other products,” said Tan.

Part of the proceeds from Flexidynamic’s IPO is for the expansion of its current manufacturing capacity in Banting, Selangor.

The group is in the process of acquiring two new factories which will provide additional spaces for centrifugal fan production and will start operations in the third quarter of 2021.

“These new factories will be used to carry out in-house manufacturing works for the parts and components of our on-line glove chlorination systems that we currently outsource to our subcontractors,” he added.

However, the group’s production capability is not limited by its manufacturing capacity for centrifugal fans.

Additional centrifugal fan capacity can be done via temporary rearrangement of the space in its factory and outsource to subcontractors.