by S BIRRUNTHA / Pic by TMR
SENG Fong Holdings Bhd made its debut on the Main Market of Bursa Malaysia this morning, opening at an offer price of 75 sen per share with 10.8 million units traded.
Chairman Ng Ah Bah @ Kok Yee said the listing provides the rubber processor producer and trader with the opportunity to realise its immediate objectives, as well as invest in environmental, social and governance (ESG) initiatives.
He added that going forward, the group will be well-positioned to capture opportunities arising from the increasing demand from its existing customers, as well as from new customers as it ramps up production through the hiring of more people for a second shift and implementing ESG initiatives to make its business more sustainable.
“Building a sustainable business also requires the support of our shareholders.
“We intend to distribute at least 50% of our annual net profit as dividend to shareholders, subject to the approval of the board of directors and shareholders,” Ng said in a virtual media briefing after the company’s listing this morning.
Meanwhile, Seng Fong non-independent ED Jimmy Er is confident that demand for rubber will increase, as the global economy continues to recover from the pandemic impact.
He also believes the demand for automotive vehicles and tyres is also set to increase.
“Block rubber is driven by the automotive industry with approximately 70% of global natural rubber being used for tyre manufacturing.
“With the increase in vehicle production and sales of automotives, as well as replacement of worn-out tyres, demand for tyres is expected to increase and consequently demand for block rubber will also increase as well,” he said in the same briefing.
Seng Fong is raising RM68.1 million from the IPO.
From the proceeds, RM19.7 million has been allocated for working capital requirements including the purchase of raw materials and the hiring of additional workers; RM37.9 million for the repayment of bank borrowings that includes the partial funding for the solar system units; RM6.3 million to fund the installation of the biomass system units; and RM4.2 million for listing expenses.
The installation of the solar system is estimated to achieve cost-savings of approximately RM2.6 million per annum from electricity costs and a further RM3.5 million per annum from diesel costs through the installation of the biomass system.
For the financial year ended June 30, 2021, the group’s export market share of block rubber stood at 11.8% based on its export output of 121,404 metric tonnes (MT) against the country’s total export volume for block rubber of 1.03 million MT in 2021.
Seng Fong’s revenue is almost entirely derived from exports, with the primary markets being China, Hong Kong, Singapore and Taiwan.