Upcoming IPO Series - Nestcon Berhad

May 14, 2021

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Introduction of Nestcon

Nestcon Berhad is a construction and infrastructure construction service company that will be listed on Ace Market of Bursa Malaysia at the end of June 2021. Through its wholly-owned subsidiaries Nestcon Builder and Nestcon Infra, it is engaged in construction services, civil engineering and infrastructure projects.

Malaysia 2021 IPO Series - Nestcon Berhad IPO Prospectus Analysis | Construction stocks in Bursa Malaysia | Malaysia Construction Sector Stocks | Malaysia Government Project in Construction | Government CIDB Grade 7 contractor | Introduction of Construction sector stocks in Malaysia | What is Nestcon Berhad? | What is the business model of Nestcon?

Currently Nestcon has 10 years of operating history in the construction industry in Malaysia. Nestcon Infra and Nestcon Builders have since 2011 and 2014 respectively, been registered as Grade 7 (or commonly known as G7) contractors with CIDB for the categories of:

B04 (Building General Works)
CE21 (General Civil Engineering Works)
MiS (MechanicalWorks)

As G7 contractors under CIDB, the highest grade issued by CIDB, we can undertake projects of any size and of unlimited amounts within Malaysia. In addition, bot our subsidiaries are also registered as G7 contractors under Sijil Perolehan Kontrak Kerajaan, which meets the requirements and guidelines of Ministry of Finance, Malaysia allowing us to participate in government awarded contracts.

Nestcon are capble of constructing：

Various types of buildings such as reSidential, commercial, industrial and leisure properties; and

Various types of civil engineering and infrastructure works such as earthworks, roadworks and drainage works.

The following content about Nestcon Group IPO is based on the information disclosed by the Malaysian Ministry of International Trade and Industry (MITI). My previous article has a detailed record of how to view this information through MITI. For those who are interested, you can refer this post for more information (in mandarin).

IPO Price Per Share ：RM 0.28
IPO Application (Begin) ：8th June 2021
IPO Application (End) ：15th June 2021
IPO Listing Date ：30th June 2021
IPO Listing Market ：Ace Market

Nestcon’s Diluted Earnings Per Share (EPS) recorded in the past three financial year ended from 2017 to 2019 were 0.85 sen, 1.16 sen and 2.27 sen, respectively. So based on the IPO price, Pekat’s P/E Ratio is 12.33 times which is still reasonable from my perspective.

Enlarged share capital of Pekat Group after listing in Ace Market is about 643.82 million shares. It includes the issuance of 160.96 million new shares (25% of enlarged share capital) and also an offer for sale of current 32.19 million shares to selected investors through private placement.

Malaysian Public , Pekat's Eligible Director/Employee/Contributor and the selected investors(including Bumi Investors approved by MITI) will be allocated with 32.19 mil, 32.19 mil and 96.57 mil new shares respectively.

The funds raised by Nestcon Group in the IPO will be used for the following purposes (% is not mentioned here):

Establish of own IBS Facility
Acquire machineries and equipment
Upgrade software and systems
Repayment of bank borrowings
Working Capital
Estimated Listing Expenses

Nestcon Group doesn't have any formal dividend policy as disclosed in the initial version of IPO prospectus.

Lastly, the shareholdings structure of Nestcon Group after the public issue is largely contributed by 4 major investors and they are:

Datuk Ir Dr. Lim Jee Gin【Managing Director】
Ong Yong Chuan【Executive Director】

They have 60% and 10% of the Nestcon Group's enlarged share capital respectively, which made up total of 70%. They are unable to dispose or transfer their stake at least 6 months after the public issue.

Endings

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