PETALING JAYA: Techbond Group Bhd, a developer and manufacturer of industrial adhesives and sealants, ended its debut on the Main Market of Bursa Malaysia Securities today 30% or 20 sen higher at 86 sen, giving it a market capitalisation of RM197.8 million.
“Today’s listing signals the beginning of a new phase in our corporate journey. As demonstrated from the public portion of our shares which was oversubscribed by 24.20 times, this strong interest from the members of the public will give us motivation to strive for better achievements and higher shareholders’ value in the coming years. We have developed a clear roadmap and set realistic targets which we are hopeful of achieving,” Techbond managing director Lee Seng Thye said at its listing ceremony.
The company’s initial public offering (IPO) entailed a public issue of 60.11 million new ordinary shares at an issue price of 66 sen per share.
Techbond is working to strengthen its reach in its existing markets, such as Vietnam, Malaysia, Indonesia and other countries, and to continuously develop and expand its product range of industrial adhesives and sealants. This is expected to provide sustainability and growth opportunities to the company in the years to come.
The IPO proceeds of about RM39.67 million will be used for, among others, the construction of a factory complex at the Vietnam-Singapore Industrial Park 2 in Binh Duong Province, Vietnam (VSIP2). They will also go to the purchase of machinery and equipment for VSIP2 and its existing factory complexes in Shah Alam.
Techbond began operations in 1996 in Malaysia and expanded to Vietnam in 2005. Over the years, Techbond expanded its presence to countries such as Indonesia, China, Thailand, Cambodia, Brunei, Liberia, Singapore, Sri Lanka, the Maldives, China (Hong Kong) and Uganda.
In conjunction with the listing, Rakuten Trade initiated coverage on Techbond with a “buy” call and a target price of 95 sen. Its target price is based on 15x price-to-earnings ratio of the Bursa Malaysia Industrial Production Index.
The valuation is premised on Techbond’s 22-year track record as a manufacturer of industrial adhesives and sealants with a strong presence in Asean; the fact that about 73% of the IPO proceeds will go to the second factory complex in Vietnam, to be completed by March 2020; that 14.9% of the proceeds for its Malaysian operations to add four production lines as well as the development of new adhesives types; and its commendable net margin of around 15%, with net profit growing steadily at a 12.3% compound annual growth rate for the past four years.
Rakuten Trade said it expects Techbond’s earnings per share to grow by 8% and 26% respectively in FY19 and FY20.
