IPO - Bunseng Holdings Bhd

Bunseng Holdings Bhd, a general hardware distributor and marketer, plans to use the proceeds raised from its upcoming IPO to construct a new facility comprising an integrated warehouse and retail centre on a 12.43-acre (4.97ha) piece of land in Jalan Ipoh.

The new integrated warehouse, which is expected to commence construction in the second half 2011, will enable Bunseng to rationalise its existing logistics operations in the Klang Valley as well as expand its capacity.

Bunseng bought the land for RM34 million in 2010.

It would issue 33.3 million new shares and make an offer for sale of 45 million existing shares for the IPO. Bunseng is expected to be listed by the third quarter 2011.

Bunseng mainly markets and distributes its general hardware, such as nails, bolts, nuts and locks to hardware wholesalers, retailers, tradespeople, building contractors, manufacturers and agriculturists.

The company is also the brand owner of several hardware products such as Ace, aman, Colex, ViP, Hitz and Hans.

Bunseng also planned to use part of the proceeds to establish a representative office in Indonesia by the second half 2011 to enhance its marketing and distribution capability in the country.

It will use its subsidiary (Sing Brothers Harwarde Pte Ltd) in Singapore to penetrate the Indonesian market. Exports currently make up 12% of the company’s revenue.

Bunseng made a total profit of RM16 million for the 10-month period ended April 31 on top of RM160 million in revenue, giving the company a net profit margin of 10%. Bunseng posted a net profit of RM20.7 million for its FY10 ended June 30 on the back of RM193.4 million in revenue.

Its closest listed peer is Engtex Group Bhd, currently trading at a price to earnings ratio (PER) of 4.8 times. Bunseng could have a market capitalisation of RM100 million if it is pegged at a similar PER as Engtex upon listing.