Senheng to open new stores with IPO proceeds

by ANIS HAZIM / pic credit: Senheng FB

MALAYSIA’S biggest electronics retailer Senheng New Retail Bhd is planning to develop a new brand distribution, set up new stores, upgrade its existing stores and warehouses with the RM267.5 million raised from its IPO.

Senheng executive chairman Lim Kim Hen said the group will expand and upgrade its physical stores to enhance customer experience.

“This as well will increase our capabilities in online platforms and back-end operations to future-proof our omnichannel strategy,” Lim said in his speech during the listing ceremony yesterday.

Lim is confident to expand the group’s brand distribution business further after its cookware brand, Delighto, successfully launched in August last year.

“Since its launch, we have sold almost RM2 million worth of Delighto’s products, which shows strong market acceptance.

“This gives us the confidence to expand our brand distribution business further by investing RM22 million from our IPO proceeds within three years from our listing,” he noted.

Moreover, he said Senheng will also continue to identify suitable brands of kitchen appliances, personal and beauty care appliances, home electricals and Internet of Things products.

Senheng stock, which was listed on the main market of Bursa Malaysia yesterday, fell 21.5 sen on its debut to close at 85.5 sen in active trade.

Some RM22 million from the IPO proceeds will be used to develop its new brand distribution business and RM160.5 million will go towards setting up new stores and upgrading existing stores into bigger stores.

“The group aims to upgrade or set up 61 new and existing stores from 2022 to 2024 to elevate the shopping experience of its customers,” Senheng said in a statement accompanying its listing.

A further RM29.7 million will be used to expand and upgrade its warehouse and logistics network and boost the group’s digital infrastructure.

The remaining RM55.3 million will be utilised to repay bank borrowings and defray listing expenses.

Senheng targets to distribute at least 30% of net profit as dividends to shareholders.

“In the past few years, getting double-digit growth for us is common. After the IPO, we foresee that we will be able to grow much better. I believe it’s not difficult for us to achieve this (dividend plan),” Lim told a press conference after the listing ceremony.

According to him, Senheng’s financial performance for the nine months ended Sept 30, 2021, showed an increase in revenue by 12.3% year-on-year.

“Despite two months of closures due to the Movement Control Order our revenue still increased, which is faster than the industry’s 6.8% growth in total electrical and electronic (E&E) products retail monthly average sales,” he added.

Lim said the group is confident of its prospects especially with its growth strategies in place.

The IPO involved the public issue of 250 million new Senheng shares and an offer for sale of 139.5 million existing shares at an offer price of RM1.07 a share.

Rakuten Trade Sdn Bhd has ‘Buy’ call on Senheng with a target price of RM1.27 based on 20 times price-earnings ratio (PER) for the financial year 2023 (in line with retailer chain peers’ calendar year 2023 PER), premised on stores expansion, growing demand in consumer E&E products.