Pantech Global Bhd group MD Adrian Tan (second left) with board members at the IPO prospectus launch on Monday. (Photo by Zahid Izzani/The Edge)

KUALA LUMPUR (Feb 10): Main market bound-Pantech Global Bhd, a manufacturer of pipe fittings and welded pipes, remains unfazed by proposed US tariffs of 25% on steel and aluminum imports, citing the blanket nature of the tariff as a levelling factor.

Pantech Global’s group managing director Adrian Tan explained that if the tariff is imposed uniformly across all countries, the net impact on the company will be negligible. However, he noted that further details remain unclear.

“The details of the implementation are still uncertain — whether it applies to steel and aluminum in general, or specific categories. From what I see is that usually when they go for steel or aluminum, they will go to the upstream. So usually, we are not there,” Tan told reporters at the company’s initial public offering (IPO) prospectus launch on Monday.

Trump has indicated that the US will impose reciprocal tariffs on imports, aligning its rates with those levied by other nations. Further details are expected to be announced on Tuesday or Wednesday, with implementation to follow shortly after.

“When we sell to America — we do sell through OEM (original equipment manufacturers). That means [they] sell [under] their brand and [they] mark up more than double the prices,” Tan added.

Pantech Global operates in 27 foreign markets and held a 66% share of Malaysia’s export market for butt-weld pipe fittings in 2023. It also supplies 16% of the country’s stainless-steel welded pipes, according to its prospectus.

Revenue from foreign markets collectively accounted for 72.56% of the group’s total revenue for the financial year ended Feb 29, 2024 (FY2024), with key contributions from the United States (47.44%, including revenue from its authorised distributors in Taiwan), Netherlands (6.53%), Canada (2.87%), Indonesia (2.47%), and other foreign markets (13.25%).

Targeting expansion in North Africa

Upon listing, Pantech Global aims to expand further into North Africa, particularly Egypt and Türkiye, while also strengthening its presence in South America.

“We are definitely looking for more. In fact, we get a lot of contact from our new markets when we ship to a customer. People from other countries who saw our certificates ... they will contact us,” Tan said. Further, the company will do a lot of exhibitions over the next years to boost visibility.

“The first exhibition that we are going to have will be in Egypt, which is in North Africa. And another one we are going to do this year will be in South America — we will be having it in Brazil. We [already] have customers in Ecuador and Chile, but we wanted to have more from those South American countries,” Tan explained.

Pantech Global aims to raise over RM178 million from its IPO to support its expansion plans. The funds will be allocated for acquiring existing operational facilities, purchasing new machinery and equipment, and expanding its operations in Malaysia.

At an IPO price of 68 sen per share, the company will have a market capitalisation of RM578 million and a price-to-earnings (P/E) ratio of 12 times its FY2024 earnings. The listing will see up to 30.85% of the company’s shares offered to investors, with Pantech Group Holdings Bhd (KL:PANTECH) remaining the controlling shareholder.

The company has set a target dividend payout ratio of 40% to 50% of profit after tax (PAT) attributable to owners on a consolidated basis, after factoring in working capital requirements.

For FY2024, Pantech Global posted a PAT of RM49.71 million, a 38% drop from RM81.41 million in FY2023, as revenue dropped 20% to RM440.94 million, from RM551.44 million.

This was attributed to lower contribution from its manufacturing of butt weld pipe fittings and stainless-steel welded pipe segment, due to the drop in the average selling price of steel.

Pantech Global’s IPO is open for subscription starting Monday, with applications closing on Feb 19 this year. The company is scheduled to be listed on Bursa Malaysia’s Main Market on March 3, 2025.

Alliance Islamic Bank Bhd serves as the principal adviser, underwriter, and placement agent for the IPO.