KUALA LUMPUR: En route to being listed on the ACE Market of Bursa Malaysia, SBS Nexus Bhd will allocate larger shares of the initial public offering (IPO) proceeds towards the establishment of the company’s new headquarters and business expansion plans.
Managing director and CEO Wong Chun Mun said the group plans to relocate to a significantly larger office of about 20,000 square feet, compared to the current 10,000 square foot premises, to support the growing workforce of 44 employees and the anticipated expansion to several hundred staff.
“The new headquarters will feature enhanced facilities, including a dedicated training room and an improved studio, to better support our operational and growth requirements.
“We currently produce a substantial volume of broadcast content for Shanghai Magazine and Shanghai Talk of Fame, operating from a single, relatively small studio of approximately 400 square feet. As part of our expansion strategy, we intend to develop two larger studios to support our growth and meet increasing demand in a rapidly expanding market.
“In addition, we plan to establish an in-house mini event hall to accommodate our frequent event activities. Given the cost and external venue rentals, having our own facilities will allow us to manage productions and events more effectively and in a more integrated manner,” he told reporters after the company’s IPO prospectus launch today.
SBS Nexus is a branding and marketing solutions specialist, principally involved in the provision of offline branding solutions and digital branding solutions.
SBS Nexus’ IPO comprises the public offering of 171.5 million shares, consisting of a public issue of 122.50 million new shares and an offer for sale of 49 million shares, representing 35% of the group’s enlarged issued share capital of 490 million shares.
Of the issue shares, 24.5 million are allocated to the Malaysian public, 17.15 million to eligible directors, employees and contributors, 61.25 million via private placement to approved Bumiputera investors, and 19.6 million to selected investors.
The offer shares are fully allocated to selected investors through private placement.
At an IPO price of 25 sen per share, the exercise is expected to raise RM30.63 million for SBS Nexus. Applications for the public tranche are open and will close on Jan 7.
Of the total proceeds of RM30.63 million, RM7.1 million (23.2%) is earmarked for the establishment of the group’s new headquarters, while RM7.25 million (23.7%) will be allocated for business expansion.
A further RM740,000 (2.4%) will be used for branding, marketing, and promotional activities to enhance the market’s presence.
In addition, RM6 million (19.6%) will be applied to the repayment of borrowings to strengthen the group’s balance sheet, RM5.04 million (16.4%) will be set aside for working capital requirements, and RM4.5 million (14.7%) will be used to cover estimated listing expenses.
Based on the enlarged share capital of 490 million ordinary shares and the IPO price of 25 sen per share, SBS Nexus is expected to have a market capitalisation of RM122.5 million.
Wong said the Malaysian advertising market is estimated to be sizeable, with total annual spending of RM5 billion.
Based on independent market research, SBS Nexus currently accounts for less than 1% of the market, representing an estimated market share of around 0.3%, which highlights the significant growth potential available to the group.
“As an asset-light and cash-generative business, the group is well positioned to generate sustainable cash flows,“ Wong said.
When asked, Wong said that, at present, the majority of the group’s profits are reinvested back into the business to strengthen our capital base.
“While we do not have a formal dividend policy at this time, our track record reflects a largely consistent history of dividend payments. Subject to future business conditions and financial performance, dividends can be paid, although we do not wish to make any commitments at this stage.
“While specific dividend policies will be determined by the board in due course, the business model supports the potential for future dividend distributions, subject to financial performance, cash requirements, and prevailing market conditions,“ he added.
