Leon Fuat likely to raise RM25m from its listing

STEEL maker Leon Fuat Bhd's initial public offering (IPO) is expected to raise over RM25 million.

The company, which is en route to a listing on Bursa Malaysia's Main Market, plans to utilise the proceeds for capital expenditure and to reduce its debt.

Leon Fuat executive director Calvin Ooi, while declining to reveal the estimated proceed from the IPO, said the company will utilise RM13 million of the listing gain to par down its debts.

Some RM6 million will be used to build a new plant and another RM6 million to buy two new slitting machines.

The slitting machines are estimated to cost RM3 million per unit, Ooi told a media briefing after a site visit to Leon Fuat's factories.

The company, which is involved in the trading and processing of steel products, aims to strengthen its presence in Malaysia as well as gain a foothold in several countries.

"We are focusing on small and medium enterprises that are expanding their businesses," he said, adding that 99 per cent of its revenue comes from the local market.

The company has penetrated the Asean market with clients in Thailand, Singapore and Indonesia.

Ooi said he is confident that the company will do better this year, based on strong previous performance and stable growth signs.

Between 2009 and 2011, the group's revenue increased from RM355.42 million to RM542.94 million, with a corresponding increase in net profit of RM25.16 million from RM17.04 million previously.

"The increase in revenue and profit was attributed to our two major business segments, namely the trading and processing of steel products," Ooi said.

Leon Fuat, which specialises in rolled long and flat products, focuses on carbon steel, of which the majority is mild steel, complemented by stainless steel and alloy steel.