KUALA LUMPUR: ACE-market-bound surface decorative products company Topmix Bhd does not anticipate any hike in raw material prices this year as the company has strategic plans to mitigate any fluctuations.
Managing director Teo Quek Siang said the company handles the raw materials for its products through its original equipment manufacturer (OEM), and it will only take finished products for customisation to cater to customers from diverse industries.
“We do not anticipate any hike on our raw material prices in the medium term as we take all our products from our OEMs.
“We expect prices to sustain for the term as we continue to cater our products to diverse industries in Malaysia,” he told reporters at the company’s prospectus launch.
According to the prospectus, Topmix OEM suppliers are Zhejiang Rexin Decorative Material Co Ltd and Melatone Group through their Malaysian subsidiaries.
Topmix purchases from Zhejiang Rexin and Melatone Group accounted for 75.52 per cent to 81.81 per cent of its total purchases for the financial years 2020, 2021, 2022 and the financial year ended 2023.
Topmix markets a wide range of own-brand surface decorative products, including high-pressure laminate (HPL), compact panels, wall panels, PVC edging, decorative boards and PVC plywood used in various commercial and residential interior surface applications.
Its customer base spans local hardware product dealers, stockists, interior designers, contractors of residential and commercial properties, and carpenters.
“Demand for surface decorative products is growing in popularity as they are durable, cost-effective, have a long shelf life, and enhance the aesthetic appeal of interior spaces.
“Our upcoming initial public offering (IPO) will enable us to accelerate our expansion plans and further strengthen our market presence in the industry,” Teo said.
Topmix is raising RM25.6 million under its IPO, with RM11.3 million (44.2 per cent) earmarked for general working capital while RM6.0 million (23.3 per cent) is allocated towards business expansion, marketing and sales, including establishing a new sales office and expanding warehouse capacity.
The company also plans to allocate RM5.3 million (20.8 per cent) to expand into melamine-faced chipboard (MFC) product assembly.
The remaining RM3.0 million (11.7 per cent) will be allocated to defray listing expenses.
According to the prospectus, Topmix plans to expand in Malaysia to capture business opportunities in Penang and tap and market its surface decorative solutions by establishing a sales office, including a showroom and warehouse.
Topmix intends to utilise RM3.08 million from the IPO proceeds to fund to setup the sales office in Penang, which will include the cost of setting up the sales office
including showroom and warehouse (RM1.90 million), purchase of motor vehicles (RM0.34 million) and office equipment (RM0.07 million) and manpower requirement for 12 months (RM0.77 million).
“This allows us to maintain a larger inventory, ensuring timely and cost-efficient order fulfilment for our customers,” Teo said.
Topmix expects the demand for surface decorative products will grow due to recovery in the property markets, increased foreign and domestic investments, population growth and urbanisation, higher income levels and supportive government initiatives to encourage home ownership.
“To capitalise on this trend, we will intensify our marketing and sales activities and strengthen our Topmix HPL mobile application with features such as augmented reality technology and a 360-degree virtual tour of our showroom to increase brand and product awareness,” Teo said.
Topmix’s IPO exercise encompasses a public issuance of 82.7 million new ordinary shares, representing 21.0 per cent of its enlarged share capital, an offer for sale of 19.7 million existing shares, or 5.0 per cent of its enlarged share capital by way of private placement to selected investors.
Out of the 82.7 million new shares, 19.7 million shares will be made available to the Malaysian public via balloting, 7.9 million shares to its eligible directors, employees and persons who have contributed to the success of Topmix, while the remaining 55.1 million shares are reserved to selected Bumiputera investors approved by the Ministry of Investment, Trade and Industry (MITI) and selected investors via private placement.
Based on the IPO price of RM0.31 per share and its enlarged issued shares of 393.9 million, Topmix’s market capitalisation upon listing is approximately RM122.1 million.
On earnings, Topmix’s revenue rose from RM27.5 million in FY20 to RM65.8 million in FY22 ended December 31, 2022, representing a two-year compound annual growth rate (CAGR) of 54.7 per cent.
Concurrently, net profit surged from RM2.4 million in FY20 to RM8.5 million in FY22, signifying a two-year CAGR of 88.2 per cent.
For FY23, Topmix reported a revenue and net profit of RM51.0 million and RM5.6 million, respectively.
HPL products segment accounted for 94.1 per cent of the company’s revenue in FY23, while the remaining 5.9 per cent is attributed to the other surface decorative products segment and kitchen and wardrobe accessories segment.
The company will be listed on the ACE Market of Bursa Malaysia on April 23, 2024.
M&A Securities is the IPO exercise’s principal adviser, sponsor, underwriter, and placement agent.
