Advancecon Holdings Berhad IPO

Advancecon Holdings Berhad, an earthworks and civil engineering services specialist  is scheduled to be listed in Main Market of Bursa Malaysia on the 10th July 2017.

The Initial Public Offering (IPO) consists of 123 million new ordinary shares and offer for sale of 33 million existing shares at an IPO price of RM0.63 per share. 88 million shares will be for institutional investors, private placement & selected investors and the remaining 35 million shares made available to the eligible directors and employees of Advancecon Holdings Berhad and Malaysian Public.

The IPO will raise about RM56.7 million in proceeds. Out of this, RM29.7 million is for capital expenditures, RM12.5 million for repayment of bank borrowings, RM10.7 million for working capital and the remaining RM3.8 million is for listing expenses.

On the RM29.7 million capex, the company plan to purchase new and higher-capacity construction machinery and equipment, as well as construction of a new workshop to carry out in-house repairs and maintenance services for the machinery and equipment.

The group recently secured two earthworks and infrastructure contracts worth RM345 million for the West Coast Expressway and Pan Borneo Highway projects, which are expected to take 30 months to complete.

After the IPO, the company is optimistic of attaining more large-scale contracts going forward by leveraging on enlarged balance sheet.

As at May 19, 2017, the group has a strong order book of RM572.5 million that will keep it busy for the next two years.

This year, the group has tendered for more than 20 projects worth RM496.4 million, which are mostly for national projects, and is hoping to secure more projects going forward.

The group is optimistic of its performance in the current financial year ending Dec 31, 2017 and expects to maintain the profit margin of between 10% and 12% it has registered for the last three years.

More information regarding the company can be found in Advancecon webpage.

Advancecon Holdings intends to distribute at least 20 percent of the groups Profit After tax as dividend. Base on year 2016 figures and IPO price of RM8.00, this constitute 3.1 percent dividend yield or 1.3 sen per share.

The table below is the financial summary of Advancecon Holdings.

FYE 2014  FYE 2015  FYE 2016
Revenue (RM’000)  199,809  264,307  234,668
Profit after Tax (RM’000)  21,411  29,940  26,448
Earnings per Share (sen)*  5.33  7.45  6.58
Price Earnings Ratio (x)*  11.83  8.46  9.58

* Based on number of shares post IPO
RHB Investment Bank Bhd is the principal adviser, underwriter and placement agent of the IPO.

On the Moratorium on shares, as per Securities Guidelines, the promoters of Advancecon Holdings IPO will not be able to sell, transfer or assign any part of their shareholdings for six months from the date of listing.

For those who are interested in Advancecon Holdings IPO, you may subscribe at ATM machines or via Internet Banking.

The retail subscription period is opened until 28th June 2017 at 5pm. Tentative balloting date is on 30th June while the allotment date is on 6th July 2017. Advancecon Holdings stock name in Bursa Malaysia is “ADVANCECON”.

View Advancecon Holdings prospectus in Bursa Malaysia webpage.

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