Pekat Group Berhad: Insights into Its Upcoming IPO

Introduction to Pekat Group Berhad

This week has seen numerous updates regarding IPOs, with estimated listing dates spanning June to July. Here is a list of the IPOs that have been updated recently:

• Pekat Group Berhad

• Nestcon Berhad

• Harps Holdings Berhad

• Yenher Holdings Berhad

In addition to these four IPOs, CTOS Digital Berhad submitted its initial IPO Prospectus to the Securities Commission (SC) last week (available on the official website). However, CTOS's listing is still pending, so we will focus on the two IPOs: Pekat and Nestcon.

This post provides a brief overview of the upcoming IPO of: Pekat Group Berhad, covering the company’s background and business model. For further details, you may refer to the introduction of Nestcon Berhad via this link. Nestcon Berhad

Pekat Group Berhad

Pekat (Pekat Group Berhad) operates as a holding company specializing in solar photovoltaic (PV) systems as well as Earthing and Lightning Protection (ELP) services, delivered through its wholly-owned subsidiaries and associated companies.

Pekat will mark its position as the third solar energy-themed IPO in recent years, following the listings of Solarvest Holdings Berhad and Samaiden Group Berhad.

Business Divisions of Pekat Group Berhad

Pekat Group Berhad engages in three distinct business divisions:

1. Solar Division

 Involves the design, supply, and installation of solar PV systems and power plants.

   

2. ELP Division 

Focuses on the supply and installation of ELP systems.

   

3. Trading Division 

Responsible for the distribution of electrical products and accessories.

The information provided about Pekat Group’s IPO is derived from disclosures made by the Malaysian Ministry of International Trade and Industry (MITI). 

• IPO Price per Share: RM 0.32

• IPO Application Period: Begins on June 2, 2021, and ends on June 10, 2021.

• IPO Listing Date: June 23, 2021

• Listing Market: Ace Market

Pekat's diluted earnings per share (EPS) for the last three financial years, ending from 2017 to 2019, were recorded at 1.5 sen, 1.7 sen, and 2.3 sen, respectively. Based on the IPO price, Pekat’s price-to-earnings (P/E) ratio stands at 13.89, which appears reasonable from my perspective.

Following the IPO, Pekat Group's enlarged share capital will consist of approximately 644.97 million shares. This figure includes the issuance of 138.67 million new shares (21.5% of the enlarged share capital) and an offer of 32.25 million existing shares to selected investors through private placement.

The allocation of shares is as follows:

Malaysian Public: 32.25 million shares

Eligible Directors/Employees/Contributors: 16.12 million shares

Selected Investors: (including Bumi Investors approved by MITI): 90.30 million shares

The funds raised by Pekat Group from the IPO will be allocated to the following:

Construction of a new head office and operational facility: 40.6%

Working Capital: 28.6%

Repayment of Bank Borrowings: 22.5%

Estimated Listing Expenses: 8.3%

Pekat Group does not have a formal dividend policy as stated in the initial IPO prospectus.

Shareholding Structure Post-IPO

After the public offering, the shareholding structure of Pekat Group will primarily consist of four major investors:

Chin Soo Mau 秦树茂 (Managing Director): 34.9%

Tai Yee Chee 戴于智 (Executive Director): 10.4%

Wee Chek Aik 黄则亿 (Executive Director): 8.6%

Hextar Holdings Sdn. Bhd: 19.6% (second-largest shareholder)

Collectively, these stakeholders hold a total of 73.5% of Pekat Group's enlarged share capital and are restricted from transferring or disposing of their shares for at least six months following the public offering.

It is noteworthy that Hextar Holdings is the largest shareholder of Hextar Global Berhad, a company listed on the Main Market of Bursa Securities. 

However, there is no direct shareholding relationship between this listed entity and Pekat Group.

Disclaimer:I am not responsible for any gain or loss in your investment.