ACO DEBUTS ON THE ACE MARKET OF BURSA MALAYSIA
Kuala Lumpur, 18 March 2020 – ACO Group Berhad (“ACO Group” or “the Group”), a distributor of electrical products and accessories, has successfully debuted on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) today. The stock is categorized under the Industrial Products & Services sector and carries the stock name of ACO and stock code of 0218.
ACO Group distributes a total of 88 brands of electrical products and accessories, comprising 85 third party brands and 3 own brands. The Group also has a lighting concept store, namely “UR Home Light”, in Johor Bahru. Out of all the third party brands, ACO Group is an authorised distributor for 10 brands of electrical products and accessories that include Schneider Electric, KDK, Hager, Omron, ABB, Panasonic, Ledvance, Maxguard, Siemens and Yaskawa.
Speaking at the listing ceremony, ACO Group’s Group Managing Director, Ir. Tang Pee Tee @ Tan Chang Kim (陈章锦) said, “Since our inception in 1991, we have weathered through numerous headwinds and several business cycles along the way to get to where we are today. As markets all over the world are currently faced with uncertainties arising from the Covid-19 pandemic and global economic slowdown, we remain cognisant on the near-term challenges that lie ahead.”
“We are here for the long haul and as a Group with strong fundamentals and long-term future plans, we are focused on growing our market share and financial performance. The immediate focus is on executing our expansion plans to capitalize and tap into the growth opportunities that lie ahead in the power and construction industries.”
“Propelled by the listing status and proceeds raised from our initial public offering (“IPO”) exercise, we are not resting on our laurels and are thrilled to embark on our next phase of growth.”
“To strengthen our market presence as a distributor of electrical products and accessories, we will be expanding our product range of third party and own brands, as well as adding more retail touch points and distribution channels throughout Peninsular Malaysia,” he concluded.
Furthermore, the Group will invest in improving customer convenience by upgrading our online ordering and enterprise resource planning (“ERP”) systems, in addition to purchasing new trucks to ensure timely delivery of products to its customers.
ACO Group raised RM16.2 million from its IPO exercise, of which RM4.2 million or 25.9% of total proceeds would be used to set up new sales outlets and lighting concept store, RM2.5 million (15.4%) for the set up of new head office and distribution centre in Johor and RM2.0 million (12.3%) to purchase new trucks and upgrade Information Technology (“IT”) system.
Other utilizations of the IPO proceeds include RM4.2 million (26.1%) for working capital and RM3.3 million (20.3%) to defray listing expenses.
The Group will be setting up a new head office with distribution centre, 7 new sales outlets, 2 new distribution centres, 2 new lighting concept stores and acquiring 3 new trucks. Inclusive of the new additions, the Group will have a total of 15 sales outlets, 4 distribution centres, 3 lighting concept stores, and a fleet of 20 trucks by FY2022.
Geographically, ACO Group will expand its foothold in other towns within Johor and in new markets such as Kuala Lumpur, Negeri Sembilan, Kelantan, Terengganu, Pulau Pinang and Pahang.
In terms of financial performance, the Group’s revenue grew from RM114.5 million in the financial year ended 28 February 2017 (“FY2017”) to RM134.4 million in the financial year ended 28 February 2019 (“FY2019”), representing a two-year compound annual growth rate (“2-year CAGR”) of 8.3%. Profit after tax (“PAT”) rose from RM4.5 million in FY2017 to RM 7.4 million in FY2019, at a 2-year CAGR of 29.0%.
Majority of its revenue, approximately 71% of total revenue in FY2019, was contributed by its direct distribution channel which includes industrial users such as electrical contractors, electrical product manufacturers, factory and business owners, architects and interior designers, equipment and machinery repair and maintenance service providers, as well as walk-in customers. The remaining 29% of its FY2019 revenue was derived from its indirect distribution channel, which are made up of distributors and retailers.
For the financial period ended 30 November 2019 (“FPE 30 Nov 2019”), ACO Group reported a revenue of RM104.1 million and PAT of RM6.0 million. This represents a year-on-year (“y-o-y”) increase in revenue and net profit of 8.8% and 39.4% respectively. The improvement in financial performance was mainly attributable to an increase in sales contribution from direct distribution channel along with higher sales of higher margin products.
Alliance Investment Bank Berhad is the principal adviser, sponsor, sole underwriter and placement agent for the IPO exercise.
Photo caption (from left to right):
• Mr. Mahesh P Rupawalla, Chief Executive Officer of Alliance Investment Bank Berhad
• Ir. Dr. Ng Kok Chiang (黄国将), Independent Non-Executive Director of ACO Group
• Madam. Jin Siew Yen (袁秀英), Promoter and substantial shareholder of ACO Group
• Mr. Sean Tan Yushan (陈煜山), Non-Independent Executive Director of ACO Group
• Ir. Tang Pee Tee @ Tan Chang Kim (陈章锦), Group Managing Director of ACO Group
• Mr. Yap Koon Roy (叶坤来), Independent Non-Executive Chairman of ACO Group
• Dr. Teh Chee Ghee (郑志毅), Independent Non-Executive Director of ACO Group
• Madam. Chai Poh Choo (蔡宝珠), Non-Independent Executive Director of ACO Group
• Mr. Tee Kok Wah (郑国华), Head/Senior Vice President of Corporate Finance of Alliance Investment Bank Berhad