Company Background

The Company was incorporated in Malaysia on 13 May 2019 under the Act as a private limited company under the name of Smart Asia Chemical Sdn Bhd. Subsequently, the Company was converted to a public limited company on 30 May 2023 and assumed its present name as Smart Asia Chemical Bhd. The Company is an investment holding company. The Group structure after the IPO is as follows:

Through its subsidiaries, the company is principally involved in the development, manufacturing, distribution and sale of decorative paints and protective coatings for household and industrial applications. In addition, the company is also involved in the development, manufacturing, distribution and sale of related products, namely colourants, and binding and coating chemicals; sale and trading of painting tools and accessories, aerosol spray paints and other related products to complement the decorative paints and protective coatings offerings. The company also provide ODM services of decorative paints, protective coatings as well as binding and coating chemicals for third party brand owners.

Use of proceeds

1. Establishment of Perak Plant - 72.19% (within 12 months):
2. Construction of Perak Plant - 42.78% (within 12 months)
3. Purchase and commissioning of automated paint production system - 29.41% (within 12 months)
4. Purchase of 250 sets of Smart Colour POS Tinting Machine - 13.37% (within 36 months)
5. Working capital - 3.48% (within 12 months)
6. Estimated listing expenses - 10.96% (within 1 month)

Establishment of Perak Plant - 72.19% (within 12 months)

a. Construction of Perak Plant - 42.78% (within 12 months)

The Group intends to allocate RM 16.00 million, representing 42.78% of the proceeds from the IPO to partly finance the construction of the Perak Plant.

The purpose of the establishment of the Perak Plant is to streamline manufacturing operations as well as to increase the existing manufacturing capacity. This is achieved through the installation of an industrial tinting system and automated paint production system in the Perak Plant which are expected to reduce the dependency on human operators for its manufacturing activities, as well as the closer proximity of the Perak Plant to calcium carbonate sources which is expected to reduce the production lead time. The Perak Plant will be focusing on the manufacturing of water-based decorative paints and protective coatings. It will also allow them to expand and support its customer base within the Central and Northern regions of Malaysia based on the location of Perak Plant.

The total estimated construction cost of the Perak Plant is approximately RM28.20 million. On 19 September 2022, the Group was offered a banking facility of up to approximately RM22.56 million, being 80.00% of the total estimated construction cost, to part finance the construction of the Perak Plant. The remaining RM5.64 million or 20.00% will be funded via the Group’s internally generated funds. The details of the banking facility as at the LPD are as set out below:

The progress billing for the construction work of the Perak Plant is approximately RM27.80 million and the Group has paid a total of approximately RM26.13 million via internally generated funds and bank borrowing as follows:

b. Purchase and commissioning of automated paint production system - 29.41% (within 12 months)

The Group intends to allocate up to RM11.00 million, representing 29.41% of the proceeds from the IPO for the purchase and commissioning of an automated paint production system in the Perak Plant. The breakdown of the estimated costs is set out in the table below:

The automated paint production system comprises the set up and integration of multiple systems to form an automated production line and reduce the dependence on human labour.

On 19 September 2022, the Group was offered a banking facility of up to RM11.00 million, being approximately 69.97% of the total estimated cost, to part finance the purchase of new equipment for its Perak Plant. The remaining RM4.72 million or 30.03% will be funded via the Group’s internally generated funds. The details of the banking facility as at the LPD are as set out below:

The outstanding balance of the banking facility is approximately RM7.21 million. After the receipt of our IPO proceeds, the Group plans to utilise the sum of up to RM11.00 million allocated for the purchase and commissioning of the automated paint production system to fully repay the said banking facility mentioned above. In the event that the actual outstanding balance of the banking facility is lower than RM11.00 million, the excess will be reallocated to working capital.

Purchase of 250 sets of Smart Colour POS Tinting Machine - 13.37% (within 36 months)

The Group intends to allocate RM5.00 million, representing 13.37% of the proceeds raised from the IPO to purchase 250 sets of Smart Colour POS Tinting Machine within these 3 years (i.e. 2024 (after the Listing) to 2026). The average estimated cost for the purchase of Smart Colour POS Tinting Machines is RM0.02 million per set.

The company has set up its Smart Colour POS Tinting Machines in 381 retail hardware stores or retail paint shops throughout Malaysia. As the Smart Colour POS Tinting Machines are used to facilitate the sales of its decorative paints, the company plans to purchase an additional 250 sets of Smart Colour POS Tinting Machine to be distributed locally to its new and existing wholesalers and dealers who set up new retail hardware stores or retail paint shops, across Malaysia. This is expected to encourage more wholesalers and dealers to market the decorative paints, which they anticipate will continue to drive the sales of the products.

The purchase of the additional 250 sets of Smart Colour POS Tinting Machine is expected to be phased out according to the following timeline:

Working capital - 3.48% (within 12 months)

The Group intends to allocate RM1.30 million, representing 3.48% of the proceeds raised from the IPO to supplement the working capital requirements of its Group. The proceeds shall be allocated in the following manner:

Business model

A summary of the Group’s business model is illustrated as follow:

The Group is principally involved in the development, manufacturing, distribution and sale of decorative paints and protective coatings for household and industrial applications. In addition, the company is also involved in the development, manufacturing, distribution and sale of related products, namely colourants, and binding and coating chemicals; sale and trading of painting tools and accessories, aerosol spray paints and other related products to complement the decorative paints and protective coatings offerings. The company also provides ODM services of decorative paints, protective coatings as well as binding and coating chemicals for third party brand owners.

Click here to continue the IPO - Smart Asia Chemical Bhd (Part 2)​​

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