KUALA LUMPUR (April 23): Topmix Bhd, a surface decorative company listed on Tuesday, expects its expansion in the northern region of Peninsular Malaysia to boost its earnings growth.

The northern region, particularly Penang, has seen an influx of foreign investors, leading to higher income levels and rapid development of housing and commercial projects, which all “bode well for Topmix’s expansion plans", said managing director Teo Quek Siang.

“Many homeowners have changed their preferences, and now desire high-quality interior design for their house renovations and commercial projects,” Teo said at a press conference following Topmix' ACE Market debut. “We aim to expand more in the northern region to capture a larger market share.”

Topmix mainly sells so-called high-pressure laminate (HPL) products used in kitchen and office cabinets as finishing under its own brand, as well as in collaboration with third-party decor paper suppliers.

Some of Topmix commercial projects include supplying materials for furniture retailer Harvey Norman, providing cashier counters for hardware store MR DIY, as well as for fashion apparel HLA, among others.

During its debut on Tuesday, Topmix’s share price surged to an intraday high of 45.5 sen, before settling at 42 sen at the closing bell.

At the closing price, Topmix marked a premium of 11 sen or 35.48% against its initial public offering (IPO) price of 31 sen, with 124.78 million shares traded. Its market capitalisation stood at RM165.42 million.

So far in 2024, Topmix has had the fourth best-performing IPO, trailing behind Keyfield International Bhd, which recorded a 114.44% gain on its first day of trading from an IPO price of 90 sen.

This was followed by KJTS Group Bhd, which posted an 85.19% gain on its debut, closing at 50 sen compared with its IPO price of 27 sen. Zantat Holdings Bhd also performed well, recording a 50% gain on its first day of trading from an IPO price of 25 sen.

All in all, Topmix raised RM31.7 million from its listing exercise.

It has allocated over RM6 million from its IPO proceeds for business expansion, marketing, and sales initiatives. This includes the establishment of a new sales office and warehouse expansion.

The company currently operates two warehouse, with the one in Johor Bahru serving as its headquarters and warehouse, while the other is in Subang Jaya. The company has reached its maximum capacity, prompting the construction of a new warehouse in Penang, according to Teo.

While Topmix’s current focus is on expansion, the group has earmarked the largest portion of its IPO proceeds, amounting to RM11.3 million, for general working capital. Teo said the company would rather not resort to debt for market expansion.

Topmix generates nearly 100% of its revenue from the domestic market, with less than a percentage of sales coming from Indonesia, Singapore, Sri Lanka, and the Philippines. Efforts to expand further into the countries “will be conducted" soon, with the right timing and the right person, Teo said.

For the fourth quarter ended Dec 31, 2023 (4QFY2023), the group reported a net profit of RM2.84 million on revenue of RM21.64 million.

For the full FY2023, Topmix registered a net profit of RM8.39 million on revenue of RM72.68 million. This was primarily due to sales of HPL products, which represented 95.15% of total revenue.

M&A Securities is the principal adviser, sponsor, underwriter and placement agent for the IPO.