TMK Chemical Bhd IPO:
Business Model and Industry:
Operations: TMK Chemical Bhd specializes in the management and distribution of inorganic chemicals, serving various industries including water treatment, agriculture, and manufacturing.
Industry Growth: The chemical sector in Malaysia is poised for growth, with expectations of economic improvement bolstering demand for chemical products.
Revenue: For the financial year ended December 31, 2023, TMK reported a revenue of RM1.31 billion, down from RM1.48 billion in 2022.
Net Profit: The net profit stood at RM91.6 million in 2023, a decrease from RM150.34 million in the previous year.
Profit Margins: The profit margin for 2023 was approximately 7%.
Debt Levels: Specific debt figures are not provided in the available data.
TMK Chemical is a significant player in Malaysia’s inorganic chemicals market, aiming to expand its product range and penetrate new markets.
Management Team:
Managing Director: Wong Kin Wah leads the company.
Ownership: TMK Chemical is controlled by the youngest Lee brother of Kuala Lumpur Kepong Bhd (KLK).
The chemical industry is expected to benefit from Malaysia’s economic recovery, with increased demand across various sectors.
The IPO is scheduled for December 12, 2024, aligning with positive economic forecasts.
Analysts anticipate improvements in Malaysia’s economy, which could enhance investor sentiment towards the IPO.
TMK Chemical plans to utilize IPO proceeds for business expansion, including the construction of a new plant in Singapore.
IPO Details
Shares Offered: 220 million new shares.
Offer Price: RM1.75 per share.
Market Capitalization: Approximately RM1.75 billion post-IPO.
Purpose: Funds will be allocated for plant expansion, construction of a new facility in Singapore, and working capital.
Oversubscription: The public portion was oversubscribed by 14.28 times, indicating strong demand.
Dividend Policy: The company plans to distribute 30% to 50% of its profit after tax as annual dividends.
Controlled by the Lee family, founders of KLK, indicating strong promoter commitment.
Investment Banker, Underwriter, and Sponsor
Principal Adviser: Maybank Investment Bank Bhd.
Underwriter: Maybank Investment Bank Bhd.
The involvement of a reputable investment bank suggests potential positive performance on the first trading day.
Latest IPO Allotment Result
The public portion of the TMK Chemical Bhd IPO was oversubscribed by 14.28 times, indicating strong demand from investors.
Institutional allotment was also fully subscribed, reflecting confidence in the company’s future growth.
Performance Likelihood: The strong oversubscription levels suggest robust first-day trading. Investors’ sentiment aligns with the broader growth potential of the chemical sector, which should support upward price momentum on listing day.
During the same period, IPOs such as Hydropipes Berhad and Topvision Eye Specialist Berhad were also active. These IPOs target different sectors (construction and healthcare) but indicate overall positive investor appetite in the Malaysian IPO market.
Performance Likelihood: A strong IPO market across sectors often reflects favorable sentiment, which could further boost TMK Chemical’s performance on its listing day.
Placement Amount: RM385 million (estimated from IPO pricing and shares offered).
Number of Outstanding Shares: Approximately 220 million shares, post-IPO.
The prospectus for TMK Chemical Bhd can be downloaded from the Securities Commission Malaysia website: https://www.sc.com.my/
Industry Growth: The chemical sector’s strong CAGR of 4-6% globally and regionally aligns with TMK’s focus on expanding industrial applications and water treatment solutions.
Strong Financials: TMK has steady profitability with a gross margin of 7% and revenue of over RM1.3 billion.
Price Range: Likely to trade between RM1.80 and RM2.00, mildly to strongly above the IPO price of RM1.75.
Performance Assessment: The IPO is poised to perform strongly on listing day, supported by oversubscription, market sentiment, and favorable sector growth.
M+ Online has assigned a fair value of RM2.47 per share, indicating a 41.1% upside from the IPO price of RM1.75. This valuation is based on a P/E ratio of 17x, pegged to the forecasted FY2025 EPS of 14.51 sen.
Recommendation: Worth Subscribing for both short-term trading and long-term value.
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