KUALA LUMPUR: ACE Market-bound Saliran Group Bhd will set up a regional sales office in Indonesia as part of the company’s broader strategy to strengthen its presence in the country.
Managing director Liaw Choon Wei said with Indonesia’s oil and gas sector experiencing significant growth, establishing a dedicated sales office will give Saliran Group greater market exposure and increased business opportunities.
“This expansion will enhance our reach and position us for sustained growth in Indonesia,” he told reporters after the company’s prospectus launch today.
Saliran Group plans to set up an office of 1,000 sq ft in south Jakarta, Indonesia. The new office will support the company’s business expansion in the country and enable it to capture opportunities arising from market demand.
The company noted that having a physical presence locally will provide greater confidence to local customers to source products from it.
Saliran Group believes that these measures will enable it to secure customers and grow sales in Indonesia, and subsequently drive its business growth.
The company estimates that the total cost of the expansion plan, comprising rental of office and staff costs over a 36-month period and one-off purchase of office equipment, at RM1.2 million, which will be fully funded with proceeds from its initial public offering (IPO).
Saliran Group manufactures pipes, fittings, flanges and steel products in diverse specifications, including products under the jointly owned “THF” brand. The company’s products are primarily used in the oil and gas industry to support industrial processing, refining and manufacturing activities.
They are mainly used by engineering, procurement, construction and commissioning companies for fabrication works within the oil and gas industry. These include the construction of new facilities and infrastructure, processing and refining plants, refurbishing, retrofitting, and maintaining existing facilities and infrastructure.
Saliran Group markets its products to customers in Malaysia, Indonesia, Singapore and other countries such as China, South Korea and Vietnam.
According to the company’s prospectus, the supply and distribution segment contributed the most revenue, accounting for 96.9%, 97.3%, and 98.5% of total revenue from financial years 2021 to 2023 and 99.2% for the financial period ended 2024. The oil and gas industry contributed 80%, 72.9%, 86.2%, and 89.1% of total revenue during the same period.
Malaysia remains Saliran Group’s principal market, generating 98%, 99.3%, 83.5%, and 70.8% of the revenue for the past three financial years and the financial period ended 2024.
Saliran Group aims to raise RM21.71 million from the IPO by issuing 80.4 million shares at 27 sen per share.
From the proceeds, RM1.2 million will be spent on establishing a sales office in Indonesia, and RM1.44 million will be spent on purchasing machinery and delivery trucks.
Further, RM7 million will be used to repay bank borrowings, RM8.37 million will be used for general working capital, and RM3.70 million will be allocated for estimated listing expenses.
Malacca Securities Sdn Bhd is the principal adviser, sponsor, underwriter, and placement agent for Saliran Group’s IPO.
The company has demonstrated strong financial performance over the past three years, reflecting its strong operational capabilities and market presence. It achieved consistent revenue growth of RM70.6 million, RM138.6 million, and RM243.2 million in FY21, FY22 and FY23, respectively.
Touching on steel price fluctuations, Liaw said any spike in prices would not be fully passed on to the customers.
“We will not pass the full price increase to our customers and will only adjust it partially. However, due to our fast stock turnover, fluctuations in steel prices have minimal impact on our business. Pricing also depends on the type of customers we serve, as there is no one-size-fits-all approach,“ he said.
Saliran Group’s main products, fittings and flanges, are less price-sensitive than structural steel products, Liaw said. “Additionally, with our jointly established brand, THF, we can maintain profitability despite market fluctuations.”
