April 23, 2024 -$TOPMIX (0302.MY)$ shares surged 40.32% in its trading debut above the IPO price of RM 31 sen per share, opening at RM 41 sen per share before climbing to as high as RM 43.5 sen per share.
Topmix Bhd, a surface decorative products company, has made a debut on the ACE Market of Bursa Malaysia. The company's IPO raised RM31.7 million, with the public tranche oversubscribed by 58.61 times, and shares set aside for eligible persons, Bumiputera investors, and select investors offered through private placement fully taken up. The company's successful IPO and strong position in the industry bode well for its future growth opportunities, particularly in the northern region of Peninsular Malaysia.
The region has seen an influx of foreign investors, leading to higher income levels and rapid development of housing and commercial projects, which all "bode well for Topmix's expansion plans", according to managing director Teo Quek Siang. Topmix has allocated over RM6 million from its IPO proceeds for business expansion, marketing, and sales initiatives, including the establishment of a new sales office and warehouse expansion. The company has reached maximum capacity in its two current warehouses, prompting the construction of a new warehouse in Penang.
According to a note from Rakuten Trade, the research house has issued a "buy" rating on Topmix Bhd, a surface decorative products company on the ACE Market, at an IPO price of RM 31 sen per share. The fair value of the company is estimated to be 40 sen per share based on the forecast price-earnings (PE) of 15 times for the financial year 2024 (FY2024), which is consistent with industry peers.
In addition, Rakuten Trade expects Topmix's earnings to experience strong compound annual growth at a rate of 25% from FY2023-FY2026, supported by cross-selling opportunities from product expansion, geographic expansion across Peninsular Malaysia, and the anticipated recovery in commercial and residential property markets. Additionally, Topmix has maintained a healthy balance sheet, with a gearing ratio of 0.67 times as of December FY2023, which is expected to continue post-IPO.
About the company
Topmix primarily focuses on selling high-pressure laminate (HPL) products that are used as finishing in kitchen and office cabinets under its brand, as well as in partnership with third-party decor paper suppliers. The company's commercial projects include the supply of materials for furniture retailer Harvey Norman, the provision of cashier counters for hardware store MR DIY, and the supply of products to fashion apparel brand HLA, among others.
Announcement: Initial Public Offering