KUALA LUMPUR: Integrated building material provider Chin Hin Group Bhd, en route to a listing on the Main Market of Bursa Malaysia on March 8, expects the expansion of its manufacturing capacity to drive earnings growth this year, said managing director Chiau Haw Choon.
He said the company plans to use RM15 million raised from the initial public offering (IPO) to expand production capacities of its precast concrete products and Starken autoclaved aerated concrete (AAC) products, which are expected to be completed by end-2016.
“Our manufacturing plants are currently running at almost full capacity. We believe the construction sector will remain robust with several large construction contracts keeping job flows in 2016,” he said after the IPO prospectus launch yesterday.
“As such, we think the capacity expansion is timely and will ready us for the booming construction jobs in the coming years,” he said.
“Having reviewed and analysed various options, we decided on a vertically integrated business model through the manufacturing of building material products, which are less labour-intensive and could command higher margins, compared with distribution of third-party products,” said Chiau.
“In this regard, we decided to manufacture our own precast concrete and AAC products. This is because AAC products have growth potential, as a substitution for cement and clay bricks, while manufacturing our precast concrete products will allow us to penetrate into the infrastructure sector,” he added.
Of the total proceeds of RM41.08 million raised, RM15 million will be used for expansion of existing manufacturing facilities, and purchases of new equipment and machinery, RM15 million to repay borrowings, RM7.1 million for working capital and RM4 million for listing expenses.
The IPO exercise entails a public issue of 63.2 million new shares and an offer for sale of 65 million existing shares at an issue price of 65 sen per share.
http://www.theedgemarkets.com/my/article/chin-hin-sees-manufacturing-driving-growth
