Tentative Date(s):

• Opening of application - 15 January 2025
• Closing of application - 23 January 2025
• Balloting of applications - 27 January 2025
• Allotment of IPO shares to successful applicants - 06 February 2025
• Tentative listing date - 10 February 2025

Company Background

The company was incorporated in Malaysia on 4 December 2023 under the Act as a private limited company under the name of Colform Group Sdn Bhd. Subsequently, the company was converted to a public limited company on 28 May 2024 and assumed its present name as Colform Group Berhad. The company is an investment holding company. Through its subsidiaries, they are principally involved in the manufacturing, processing, and trading of steel products, as well as trading of building materials.

The company Group structure after the IPO is as follows:

Use of proceeds

1. Setting up colour coil coating production line - 21.84% (within 18 months)
2. Construction of a storage facility - 10.93% (within 18 months)
3. Business expansion to Peninsular Malaysia - 12.38% (within 30 months)
4. Working capital - 43.92% (within 24 months)
5. Estimated listing expenses - 10.93% (within 1 month)

Setting up colour coil coating production line - 21.84% (within 18 months)

The company intends to allocate RM9.00 million of the gross proceeds from its Public Issue for purchasing new machineries to set up a new colour coil coating production line at the Kota Kinabalu Factory.

The new colour coil production line will complement and expand the company Group’s existing range of steel products to include colour-coated coils as they currently do not manufacture colour-coated coils and only purchase colour-coated coils from suppliers. The estimated costs for the setting up of the colour coil coating production line are set out below:

The Foundation Works mainly involve construction works for piling, flooring, and upgrading or installing utilities to support the new production line at the Kota Kinabalu Factory. Thereafter, upon completion of the Foundation Works, the company will purchase machineries to set up the colour coil coating production line. The colour coil coating production line has a prime oven which requires gas to generate heat for the colour coating process. Therefore, the company intends to install a gas storage tank at Kota Kinabalu Land and gas pipelines that connect the gas storage tank to the colour coil coating production line to transport the natural gas from the gas storage tank to the colour coil coating production line. The setting up of the colour coil coating production line and the gas storage tank and gas pipeline is estimated to take 15 to 18 months from the completion of the Foundation Works (the estimated time includes the preparation of the production line for commissioning and production).

The company intends to utilize RM9.00 million for the setting up of the new production line and the remaining balance will be funded via bank borrowings and/ or internally generated funds. In the event the Foundation Works commence prior to the Listing, it will be funded via bank borrowings and/ or internally generated funds. The company will utilize the RM9.00 million for the purchase of machineries and the installation of the gas storage tanks and gas pipelines.

In the event the actual cost is lower than the allocated amount, the excess will be reallocated to the working capital.

Construction of a storage facility - 10.93% (within 18 months)

The company intends to allocate RM4.50 million of the gross proceeds from its Public Issue for the construction of a New Storage Facility to be located on the Kota Kinabalu Land. The New Storage Facility will be constructed right beside the Kota Kinabalu Factory. The company intends to begin the construction of the New Storage Facility upon obtaining building plan approval from the relevant authority which is expected to be obtained by the second quarter of 2025. The construction of the New Storage Facility is estimated to take between 15 to 18 months. As at the LPD, the company has finalized the design and layout plan of the New Storage Facility and submitted the design and layout to the relevant authority.

The New Storage Facility is estimated to have a total built-up area of approximately 40,000 sq. ft and is to be used as additional storage space for the company Group. With the establishment of the colour coating production line, the company anticipates the need for a bigger storage area to store raw materials for both the existing and new production lines and the finished goods. The cost for the construction of the New Storage Facility is approximately RM5.04 million.

The company Group intends to utilize RM4.50 million to fund the construction of the New Storage Facility. The remaining balance will be funded via bank borrowings and/ or internally generated funds. In the event the actual cost is lower than the allocated amount, the excess will be reallocated to the working capital.

Business expansion to Peninsular Malaysia - 12.38% (within 30 months)

The company intends to allocate RM5.10 million of the gross proceeds from its Public Issue to support the business expansion to Peninsular Malaysia. The company intends to set up a branch office and lease a factory in the Klang area. This will allow the company to expand its footprint to Peninsular Malaysia where they currently do not have any presence in.

The breakdown of the estimated cost for the expansion is as follows:

In the event the actual cost of the company’s business expansion is higher than the earmarked amount, the shortfall will be funded out of the portion allocated for the working capital requirements. Conversely, if the actual cost of such expansion is lower than the amount earmarked, the excess will be utilized for working capital requirements for the company Group.

Working capital - 43.92% (within 24 months)

As demand for steel products is expected to grow in line with the business expansion, the company Group intends to allocate RM18.09 million of the proceeds from its Public Issue for the working capital.

The proceeds shall be allocated in the following manner:

The company Group intends to utilize RM1.00 million for the implementation of the ERP system to further improve the manufacturing process and operation management by having a fully integrated solution with central management and control from the headquarters. The company has engaged a system provider to build the ERP system tailored to the company’s specifications and requirements. The cost for the implementation of the ERP system is approximately RM0.79 million and the subsequent maintenance fees of the ERP system is approximately RM0.21 million. As at the LPD, the company has paid RM0.45 million to the ERP system provider via the company’s internally generated funds which consist of RM0.37 million for the partial payment for implementation of the ERP system and RM0.08 million for the partial payment for the maintenance fees. Upon the receipt of the IPO proceeds, the company Group plans to use the proceeds to replenish the internally generated funds that were used to pay for the ERP system.

Raw materials are the main component of the purchases, which amount to RM56.02 million, RM44.34 million, RM43.27 million, and RM30.25 million for the Financial Years Under Review and FPE 2024 respectively. The company Group intends to utilize RM17.09 million for the purchase of raw materials to be used in the steel manufacturing activities and the colour coil coating production in line with the company’s expansion.

Business Model

The company’s business model is set out as follows:

Click here to continue the IPO - Colform Group Berhad (Part 2)

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