5E Resources, Malaysia’s fifth-largest scheduled waste management services provider has launched its IPO on the SGX Catalist on Apr 29.
The IPO will consist of 38.5 million new shares at 26 cents per share, comprising two million shares in the public offer and 36.5 million placement shares. This will raise gross proceeds of approximately $10 million for 5E.
The new shares represent about 26.1% of the enlarged share capital of approximately 147.5 million shares of 5E Resources, and based on the IPO price of 26 cents, the market capitalisation for the company after listing will be approximately $38.3 million.
The IPO will close at 12pm on 10 May, and the listing and trading of 5E’s shares are expected to commence at 9am on 12 May.
In a press release, 5E says it plans to use the net proceeds of approximately $8 million raised in the IPO to further strengthen its market position and expand its business operations.
5E revealed it will expand its geographical coverage beyond its established base in Johor, Malaysia to the Central Peninsular Malaysia (CPM) region by potentially acquiring a parcel of land on which an off-site storage plant is situated.
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At the same time, it intends to relocate sales and marketing personnel to the CPM region, so as to have a closer liaison with customers there.
This is also to improve response time, cost efficiency and capture more market opportunities.
In addition, the move is expected to broaden 5E’s customer base to include the under-served market of small quantity waste generators in the CPM region.
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Financial position
For its FY2020 ended 31 December 2020, 5E recorded total revenue of RM44 million ($13.95 million) and net profit after tax (NPAT) of RM8 million, compared to total revenue of RM53.8 million and NPAT of RM12.1 million in FY2019.
5E explained the decline was mainly due to the overall disruption in business activities caused by the outbreak of the Covid-19 pandemic, as well as the lower revenue from ad-hoc projects which had contributed approximately RM12 million in revenue for FY2019.
This was partially offset by a decrease in direct labour cost, repair and maintenance cost, sludge disposal cost, fuel oil and petrol consumed for the provision of scheduled waste management services in FY2020.
For the nine-month period ending 30 September 2021, its total revenue increased across all three business segments by 25.5% year-on-year to RM37.4 million, as demand for regular scheduled waste management services increased and COVID-19 restrictions continued to ease in Malaysia.
5E says it currently does not have a fixed dividend policy, but it intends to recommend and distribute dividends of not less than 25% of its NPAT for the financial years ending 31 December 2022, 2023 and 2024.
