(From left) Well Chip Group Bhd non-independent non-executive directors Yeah Chia Kai and Yeah Hiang Nam, independent non-executive chairman Mak Lye Mun, Kenanga Investment Bank Bhd executive director and head of group investment banking and Islamic banking Datuk Roslan Hj Tik, Well Chip executive director and chief executive officer Ng Hooi Lang, independent non-executive director Dr Yap Lang Ling, independent non-executive director Wong Chin Chin and executive director Tang Soo Yen. (Photo by Sam Fong)

KUALA LUMPUR (June 26): Well Chip Group Bhd — principally involved in the provision of pawnbroking services and the trading of jewellery and gold — aims to raise RM172.5 million from its initial public offering (IPO) exercise, ahead of its listing on the Main Market of Bursa Malaysia.

According to its prospectus, with its IPO price at RM1.15 per share, the counter has a price-earnings (P/E) multiple of 19.54 times, based on earnings per share (EPS) of 5.89 sen or net profit of RM35.32 million for the financial year ended on Dec 31, 2023 (FY2023).

For comparison, industry peer Pappajack Bhd (KL:PPJACK) is trading at a P/E multiple of 35.4 times, based on EPS of 2.80 sen for FY2023. Meanwhile, Evergreen Max Cash Capital Bhd (KL:EMCC) is trading at a P/E multiple of 25.2 times, based on EPS of 1.71 sen for FY2023.

Well Chip intends to recommend and distribute dividends of at least 35% of its consolidated profit after tax attributed to its shareholders for the first three financial years after its listing.

The IPO comprises the issuance of 150 million new ordinary shares, representing 25% of the enlarged share capital.

Thirty million new shares will be made available to the Malaysian public, while 75 million new shares will be made available to Bumiputera investors approved by the Ministry of Investment, Trade, and Industry.

The remaining 45 million shares will be made available to institutional and selected investors by way of private placement.

Well Chip plans to utilise 72% of the proceeds, or RM124.3 million, as cash capital for its existing 23 pawnshops. It will also utilise 23.2% of the proceeds, or RM40 million, for the expansion of pawnshops. The remainder will be used to defray listing expenses.

The application will close on July 10. Well Chip is slated for listing on July 23.

Upon completion of the IPO, Well Chip’s enlarged share capital will increase to RM344.15 million comprising a total of 600 million shares.

Upon listing, Singapore-based ValueMax Group Ltd — controlled by Yeah Holdings Pte Ltd — would be the largest shareholder of Well Chip with a 65.5% indirect stake, of which 50.7% will be held through VYN Holdings and 14.8% through VMM Holdings.

Kenanga Investment Bank Bhd is the principal adviser, managing underwriter, as well as a joint underwriter and joint placement agent for the IPO. CGS International Securities Malaysia Sdn Bhd also acts as a joint underwriter and joint placement agent.