Smart Asia Chemical Bhd (SAC) specialises in the development, manufacturing, distribution, and sale of decorative paints and protective coatings for both household and industrial applications. Additionally, SAC expands its product line to include various paint-related items such as colourants, binding and coating chemicals, painting tools and accessories, and aerosol spray paints. Leveraging its in-house manufacturing capabilities, SAC also provides Original Design Manufacturing (ODM) services for third-party brand owners.

Background

Smart Asia Chemical Bhd (SAC) specialises in the development, manufacturing, distribution, and sale of decorative paints and protective coatings for both household and industrial applications. Additionally, SAC expands its product line to include various paint-related items such as colourants, binding and coating chemicals, painting tools and accessories, and aerosol spray paints. Leveraging its in-house manufacturing capabilities, SAC also provides Original Design Manufacturing (ODM) services for third-party brand owners.

IPO Statistic

The IPO entails a public issue of 91.0mn new ordinary shares at an IPO price of RM0.40/share, which account for 25.3% of the group’s enlarged issued share capital.

Public Issue:

• 18.5mn new shares for application by the Malaysian public,

• 12.1mn new shares for application by eligible parties,

• 46.2mn new shares for MITI, and

• 16.7mn new shares for private placement to selected investors.

Main Competitive Advantages

1. Diverse product portfolio under its own branded lines. 2. Well-established sales channel and distribution network; and 3. Strong technical expertise and market sense to adapt to new market trends and demand.

Valuation

At an IPO price of RM0.40/share, SAC is priced at a trailing PER of 17x FY23 core EPS. We value the company at 12x CY25 EPS, arriving at a fair value of RM0.54/share. Not Rated.

Source: TA Research - 10 May 2024