Elridge Energy Launches IPO, Subscription Opens on August 6th
August 6th – $ELRIDGE (0318.BMS)$ is set to launch an initial public offering (IPO), with the subscription period running from August 6th to August 12th. The company plans to issue a total of 350 million new ordinary shares. Out of these shares, 80 million shares are allocated for application by the Malaysian public; 20 million shares are set aside for application by the company's eligible directors, employees, and contributors to its success; and 250 million shares are offered through private placement to Bumiputera investors identified or approved by the Ministry of Investment, Trade, and Industry of Malaysia. Concurrently, the company is also offering for sale 350 million existing ordinary shares in EEHB to a select group of investors through private placement. The shares are priced at RM 0.29 each.
Elridge Energy Holdings Berhad was incorporated in Malaysia under the Act on 10 January 2024 as a public limited company. It primarily operates as an investment holding company. As of the Last Practicable Date (LPD), the company has a direct 100% ownership stake in a subsidiary named BESB. Through its subsidiary, the company is principally involved in the manufacturing and trading of biomass fuel products, particularly PKS and wood pellets.
Their Port Klang Factory features six PKS production lines with a combined annual capacity of 720,000 MT and one wood pellet line capable of producing 36,000 MT per year, as of the end of FYE 2023.
The company sources its raw materials from a network of local and foreign suppliers, which includes traders, oil palm plantation and milling companies, palm fruits transporters, and logging transporters. Given that Malaysia is one of the world's largest oil palm producers and is abundant in forest resources, the majority of the company's raw materials are locally sourced within Malaysia. Additionally, the company procures raw materials, especially unprocessed PKS, from traders in Singapore and Indonesia, contingent upon the availability and pricing of these materials.
The company primarily serves a customer base of biomass fuel product trading firms and end-users, including manufacturers and biomass power plant operators in need of industrial boilers for energy production. While the majority of sales are channeled through trading companies, the firm also engages in direct sales to end-users. With a strong presence in the Asia Pacific region, the company's clientele is predominantly international, accounting for about 95.0% of its revenue as of FYE 2023. Key markets include Indonesia, Singapore, and Japan.
The company's financial performance has exhibited a marked increase, with revenues escalating from RM115.11 million in FYE 2021 to RM335.25 million in FYE 2023. Gross Profit (GP) has also significantly increased, jumping from RM9.30 million to RM45.97 million over the same period.
Profit Before Tax (PBT) has risen from RM1.78 million to RM27.98 million, while Profit After Tax (PAT) has grown from RM1.74 million to RM23.57 million. The GP margin has improved from 8.07% to 13.71%, and both PBT and PAT margins have seen a considerable rise, reflecting enhanced profitability.Earnings Per Share (EPS) has significantly increased, moving from 0.09 sen to 1.18 sen, which is more than a twelvefold increase, indicating the company's strong financial progress and growth.
For the period from January 1, 2024, to April 30, 2024, the data shows a continuation of the company's positive financial trend. Revenue for this period is RM117.66 million, with Gross Profit (GP) at RM25.83 million. Profit Before Tax (PBT) stands at RM19.76 million, and Profit After Tax (PAT) is RM14.97 million. The GP margin for this period has impressively reached 21.95%, while the PBT margin has increased to 16.79% and the PAT margin to 12.72%. The Basic/Diluted Earnings Per Share (EPS) for this period is 0.75 sen.
Biomass fuel refers to solid, liquid or gaseous energy sources derived from organic materials, that are burned or combusted to generate heat or electricity. These fuels are typically eco-friendly, being sourced from by-products, waste, or renewable resources, which are sustainable and less likely to deplete. Common examples include Palm Kernel Shells, Wood Pellets, Agricultural Residue, Energy Crops, and Municipal Waste.
Palm kernel shells, a traditional biomass fuel in Southeast Asia's palm oil industry, are gaining popularity in power generation and manufacturing due to their sustainability and lower carbon footprint. On the other hand, wood pellets, a prevalent biomass fuel in the Asia Pacific, are facing sustainability concerns that may lead to deforestation. As a result, there is a growing preference for wood pellets sourced from sustainably managed forests, with certifications like PEFC and Green Label ensuring environmental responsibility.
The industry size for palm kernel shells in Asia Pacific, in terms of sales of palm kernel shells in the region, grew from USD218.6 million (RM905.6 million) in 2019 to USD283.3 million (RM1.3 billion) in 2023 at a compound annual growth rate (“CAGR”) of 6.7%. Meanwhile, the wood pellet industry size in Asia Pacific, in terms of sales of wood pellets, grew from USD7.5 billion (RM31.1 billion) in 2019 to USD9.8 billion (RM44.7 billion) in 2023 at a CAGR of 6.9%.
Moving forward, the palm kernel shells industry size in Asia Pacific is forecast to grow at a CAGR of 8.9% from an estimated USD308.6 million (RM1.4 billion) in 2024 to USD366.1 million (RM1.7 billion) in 2026, while the industry size for wood pellets in Asia Pacific is forecast to grow by a further CAGR of 8.6%, from USD10.6 billion (RM48.4 billion) in 2024 to USD12.5 billion (RM57.1 billion) in 2026.
1. Construction of new factory and warehouse in Kuantan: Responding to the heightened demand for PKS, the company has chosen Kuantan, Pahang, for its new factory. The region's abundant oil palm plantations provide a strategic advantage for sourcing raw materials, minimizing transportation costs. The company intends to allocate RM47 million, roughly 46.31% of the gross proceeds from the Public Issue to acquire a 435,000 sq ft plot for the New Kuantan Facility, with a 105,000 sq ft built-up area. This facility, featuring two PKS production lines, is expected to produce 240,000 MT annually, efficiently addressing the market's needs.
2. Purchase of new machineries and equipment: The company intends to allocate RM21.14 million, roughly 20.82% of the gross proceeds from the Public Issue to purchase new machinery and equipment for the production of PKS in their upcoming factories and warehouses in Johor, Kuantan, and Sabah. This acquisition will bolster the Group's annual PKS production capacity by an additional 720,000 metric tons.
3. Working capital: The company plans to allocate RM27.06 million, roughly 26.66% of the gross proceeds from the Public Issue, to bolster its working capital. This strategic allocation is anticipated to strengthen the Group's liquidity and cash flow, supporting the projected growth in daily operations. In alignment with the Group's business plan, the working capital will be instrumental in scaling up production capacity to meet the escalating sales demands from international markets, necessitating an increase in raw material procurement for production.
4. Estimated listing expenses: A sum of RM6.3 million, constituting approximately 6.21% of the gross proceeds from the Public Issue, has been designated to cover the estimated expenses associated with the company's Listing.
Source: Prospectus Announcement
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103916021 : ok
104643635 : Interesting
105167842 : Mmmm..biomass still not very convincing
105399617paul : curious
105034193 : Until now I don't know what it does
SevenSeaS 105034193 : Waste wood and palm kernel shells are collected to make fuel rods instead of coal to be burned to generate electricity.
103475335 105034193 : Not doing it is the best thing to do