Senheng to raise RM267.5m from IPO

by BERNAMA / pic by TMR FILE 

KUALA LUMPUR – Consumer electrical and electronics retailer, Senheng New Retail Bhd (Senheng) plans to raise RM267.5 million in net proceeds from its initial public offering (IPO) on the Main Market of Bursa Securities to fund its next transformation phase and shape the nation’s new retail landscape.

Senheng is expected to list on the local bourse on Jan 25, 2022, and its IPO exercise entails the public issue of 250 million new shares and an offer-for-sale of 139.5 million existing shares at an issue price of RM1.07 per share.

Executive chairman Lim Kim Heng said 60 per cent or RM160.5 million of the proceeds from the public issue would go towards the setting up of new stores, as well as the upgrading of existing stores into bigger, enhanced concept stores.

“We ultimately aim to deliver better service quality to our customers, grow our base of loyal PlusOne customers, and reinforce our position as the number one partner to suppliers and brand owners,” he said in a speech at the launch of Senheng’s virtual prospectus here today.

The group aims to upgrade or set up 61 existing and new stores between 2022 to 2024 to elevate the shopping experience of its customers.

On regional expansion, Lim said the group has no intention to expand regionally at the moment as it plans to focus its operations in the country.

“We foresee that we still have a big room to grow here. In terms of home appliances, we aim to capture about 30 per cent of the market share by 2025,” he added.

Meanwhile, the company said 19.3 per cent or RM51.7 million from the IPO proceeds would be used to strengthen its back-end capacities and capabilities, including developing a new brand distribution business, expanding and upgrading the warehouse and logistics network, and boosting its digital infrastructure.

The remaining 20.7 per cent or RM55.3 million would be utilised to repay bank borrowings and defray listing expenses, it added.

Based on an issue price of RM1.07 per share, Senheng will achieve a market capitalisation of RM1.6 billion upon its listing. 

Senheng’s annual revenue consistently exceeded RM1 billion from the financial year ended Dec 31 2018 (FY2018) to 2020 (FY2020).

Despite store operation disruptions due to COVID-19-induced lockdowns, Senheng’s revenue in financial year (FY) 2020 grew by 13.1 per cent to RM1.3 billion from RM1.1 billion in FY2019.

This was achieved after the group upgraded its stores by increasing floor space, offered larger product variety and leveraged its PlusOne loyalty programme, digital marketing and personalised telemarketing initiatives.

Lim noted that Senheng is targeting dividend payouts of at least 30 per cent of the net profit attributable to shareholders.

Meanwhile, of the 250.0 million new shares, 149.5 million shares will be placed out to institutional and selected investors, and 48.0 million shares will be placed out to Bumiputera investors approved by the Ministry of International Trade and Industry (MITI).

Another 22.5 million shares will be made available for application by eligible directors, employees, and persons.

The remaining 30.0 million new shares will be made available for application by the Malaysian public via balloting, while 139.5 million offer-for-sale shares will be placed out to Bumiputera investors approved by MITI.

Applications for Senheng’s IPO are open on Dec 29, 2021 and will close on Jan 10, 2022.