Winstar Capital Berhad, a Malaysian aluminium products manufacturer, is set to list on Bursa Malaysia’s ACE Market on December 19, 2024.
IPO Details
Purpose of IPO: The company aims to raise approximately RM19.79 million through the IPO. The proceeds are allocated as follows:
RM10.5 million for the acquisition of new production equipment to enhance manufacturing capacity.
RM4.29 million for working capital, including the purchase of aluminium billets, the main raw material.
RM2.5 million for repayment of bank borrowings.
RM2.5 million to cover listing expenses.
Oversubscription Rate: The public portion of the IPO, comprising 14.5 million shares, was oversubscribed by 80.17 times, attracting RM413 million in interest from retail investors.
IPO Placement Amount and Outstanding Shares
Total Shares Offered: 73.95 million shares, representing 25.5% of the enlarged issued share capital of 290 million shares.
Offer Price: RM0.35 per share.
Allocation Breakdown:
14.5 million shares for the Malaysian public.
15.95 million shares for eligible directors, employees, and contributors to the group’s success.
43.5 million shares via private placement to selected investors.
Given the substantial oversubscription rate and strategic use of proceeds for capacity expansion, the IPO is anticipated to perform well on its first day of listing.
Principal Adviser, Sponsor, Sole Placement Agent, and Sole Underwriter: TA Securities Holdings Berhad.
Financial Adviser: Eco Asia Capital Advisory Sdn Bhd.
The involvement of reputable financial institutions suggests a positive outlook for the IPO’s performance on the first day of listing.
Business Model and Industry: Winstar Capital Berhad and its subsidiaries are primarily involved in aluminium extrusion and fabrication, as well as the trading and distribution of building materials. The company operates in the midstream and downstream segments of the aluminium industry, converting aluminium billets into extruded aluminium profiles.
The company plans to increase its total annual capacity to 15,285 tonnes from the current 6,705 tonnes, indicating a significant expansion in production capabilities.
The aluminium industry is experiencing growth due to increasing demand in construction and manufacturing sectors.
Growth Strategy: The company aims to enhance its manufacturing capacity by acquiring new production equipment, increasing annual capacity to 15,285 tonnes.
Ownership Structure: Post-IPO, the public will hold 25.5% of the company’s enlarged issued share capital.
The public portion of the IPO was oversubscribed by 80.17 times, indicating strong investor interest and suggesting a positive performance on the first day of listing.
Company Overview
Business Model and Industry: Winstar Capital Berhad and its subsidiaries are primarily involved in aluminium extrusion and fabrication, as well as the trading and distribution of building materials. Operating in the midstream and downstream segments of the aluminium industry, the company’s activities include converting aluminium billets into extruded aluminium profiles. The aluminium industry in Malaysia is experiencing growth, driven by increasing demand in construction and renewable energy sectors, providing potential for expansion.
Winstar has established a significant presence in Malaysia’s aluminium industry, with plans to increase its annual production capacity from 6,705 tonnes to 15,285 tonnes through the acquisition of new machinery. This expansion is expected to enhance the company’s market share and competitiveness.
The company’s leadership includes Executive Vice Chairman Chua Nyok Chong and CEO Chua Boon Hong, who bring substantial experience in the aluminium manufacturing industry. Further details about the management team can be found in the company’s prospectus.
The global aluminium market is projected to grow, driven by increasing demand in construction, automotive, and renewable energy sectors. Regionally, Malaysia’s aluminium industry is benefiting from government initiatives promoting infrastructure development and renewable energy adoption, indicating a favorable environment for companies like Winstar.
Malaysia’s economy has been showing signs of recovery, with improving industrial output and investment in infrastructure projects, which are positive indicators for the aluminium sector.
Winstar’s expansion into the solar photovoltaic (PV) sector aligns with global trends towards renewable energy, potentially opening new revenue streams and enhancing growth prospects.
Risk Factors: Potential risks include reliance on the cyclical nature of the construction and manufacturing industries, competition within the aluminium market, and economic fluctuations affecting demand. The company also faces operational risks related to supply chain disruptions and fluctuations in raw material prices. Detailed risk factors are outlined in the company’s prospectus.
Growth Strategy: The company plans to utilize IPO proceeds to acquire new aluminium extrusion press machines and equipment, increasing total annual capacity to 15,285 tonnes from 6,705 tonnes. This expansion aims to meet growing demand in the construction and solar PV sectors.
Analysis:
Winstar’s P/E ratio of 12.0 is above the industry average of 7.9, reflecting market confidence in its growth prospects. The company plans to adopt a dividend policy with a payout ratio of at least 30% of profit after tax.
TA Securities Holdings Berhad serves as the principal adviser, sponsor, sole underwriter, and placement agent for Winstar’s IPO. The involvement of a reputable institution like TA Securities is expected to enhance investor confidence and contribute positively to the IPO’s performance on the first day of listing.
Mercury Securities assigns a fair value of RM0.52 per share, based on a P/E ratio of 10x FY25 EPS, indicating a 47% upside from the IPO price.
M+ Online values the company at RM0.56 per share, using a P/E ratio of 15x FY25f EPS, suggesting a 60% upside from the IPO price.
These valuations reflect strong earnings growth potential, driven by strategic ventures into the solar panel market.
IPO Prospectus Download: https://www.bursamalaysia.com/
#Winstar Capital Berhad IPO
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