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KUALA LUMPUR (June 7): Industrial brush manufacturer Yew Lee Pacific Group Bhd (YLPG) closed at 29 sen on its ACE Market debut, one sen or 3.6% higher over its initial public offering (IPO) price of 28 sen.
The stock traded between 30 sen and 28.5 sen throughout the day before finishing at 29 sen, which translates to a market capitalisation of about RM154.4 million. Some 162.38 million shares were traded, making it the second most-active stock on Bursa Malaysia on Tuesday (June 7).
Commenting on its debut on the ACE Market, YLPG chief operating officer and executive director Amber Ang Poh Yee said the group will continue to focus on business growth and expansion.
“We are happy as we are now a newly listed company and we thank our shareholders for their support and faith in us. Moving forward, we will continue to focus on our business growth and expansion in order to create more value for our shareholders,” Ang said in a virtual press conference on Tuesday.
The company raised RM37.27 million in total from its listing exercise, in which M&A Securities Holdings Bhd acted as adviser, sponsor, underwriter and placement agent.
“We will be getting about RM37 million from the utilisation of proceeds and most of the funds will be used to buy much more advanced machinery to upgrade our machine capabilities and to produce more diverse products for our business segments such as semiconductors and glass manufacturing,” she said.
The company has earmarked RM10.9 million to purchase machinery and equipment, and RM8.9 million for the repayment of bank borrowings.
Another RM7.3 million will be used for the construction of new warehouse facilities and office buildings, RM1.8 million for the renovation of a new three-storey office, RM4.57 million for working capital requirements, and the remaining RM3.8 million for listing expenses.
Ang stated that challenges faced by the company this year include fluctuation in raw material prices and the increase in minimum wage to RM1,500 from May 1.
“As for fluctuations in the raw materials during the beginning of the year, the challenge was to control the raw material prices. As for now, raw materials are stabilising at the second quarter (of this year), so we project improvement in the profit margins.
“The next challenge is to increase the minimum wage. We hope that after the acquisition of the new machines from the utilisation of proceeds, then we will reduce overhead costs to cut down labour,” she said.
Even though the demand for rubber gloves is slowing down and average selling prices are on a decline, Ang said orders from its glove clients had remained stable.
“Our orders remained consistent as of now. Overall, gloves are strongly related to healthcare and there is always a demand. What we can see is that there are a number of new glove makers coming up and it is a good opportunity for us to expand our customer base,” she said.
The glove industry contributed between 77% and 88% of the company’s top line growth between FY18 and FY21, with the remainder from other industries.
YLPG’s customers include Top Glove Corp Bhd, Hartalega Holdings Bhd, Careplus Group Bhd and Riverstone Holdings Ltd.
Its revenue leapt in FY20 to RM41.97 million from RM29.21 million in FY19, and net profit doubled to RM10.38 million from RM5.2 million, owing to higher sales of industrial brushes to customers within the rubber glove manufacturing industry following the Covid-19 outbreak.
For FY21, revenue grew by 7.8% to RM45.53 million, but net profit declined slightly to RM10.11 million.
Profit-after-tax margin grew from 17.8% in FY19 to 24.7% in FY20 before easing to 22.2% in FY21.
Incorporated in 1992 in Ipoh, Perak as a trader of industrial hardware and machinery parts, YLPG ventured into manufacturing custom-made industrial brushes in 2004. It now manufactures brushes in Perak, as well as in Padang Besar, Thailand and Medan, Indonesia. Its industrial hardware and machinery parts manufacturing is based in Ipoh, Perak and Klang, Selangor.