Under the IPO, a total of 932.7 million ordinary shares in DXN will be offered for sale. These comprise 772.7 million existing shares and a public issue of 160 million new shares.
The group’s maximum IPO price – which will be determined via a book-building exercise – is 76 sen, which represents a price-to-earnings ratio (PER) of 15.6x.
Of the 772.7 million existing shares, which account for 15.5% of DXN’s enlarged share capital, 623.13 million shares will be offered to Bumiputera investors and the remaining 149.5 million shares to Malaysians as well as foreign institutional and selected investors.
The company said 65.8% of the proceeds from the IPO, which is expected to amount to RM80 million, will be used to repay bank borrowings. Another RM17.5 million, or 14.4% of the proceeds will be used for working capital while the remaining sum will be used to defray the cost of the IPO.
Based on the enlarged issued shares of 4.99 billion post-IPO and the retail price of RM0.76 per share, DXN’s expected market capitalisation will be RM3.8 billion.
Not its first listing
DXN is an investment holding company engaged in the provision of management services. Through its subsidiaries, DXN is involved in the sales of health and wellness consumer products through a direct selling model.
Previously listed in 2003, it was subsequently delisted in December 2011 following a takeover and privatisation by its founder.
Its direct selling network consists of members (including stockists) and external distribution agencies who exclusively carry its products to on-sell and distribute to other members and end-consumers, according to its prospectus exposure.
DXN’s products are based on active natural ingredients such as Ganoderma, Spirulina and Cordyceps. The company covers food and beverages, cosmetics, health supplements and other market segments.
Why IPO again?
While almost two thirds (65.8%) of the group’s funds is being used to repay debts, group CEO Teoh Hang Ching said the company is cash-rich, standing at a cash position of RM498 million.
He said “It (the IPO) is not really to raise funds, but to profile our company and build public relations in the market, this will allow us to compete with other key market players”.
On that note, DXN, which is operating in 48 countries, has expansion plans in North America and Africa, where they plan to open another five facilities in the next two years.
22.8% of DXN’s revenue comes from Peru, followed by Bolivia (14.2%), Mexico (13.7%) and India (10.9%).
DXN intends to declare a yearly dividend with a payout ratio of between 30% and 50% of its net profits. The company said it feels confident to do that due to its strong net profit margin, which stands at 17.2%.
For the financial period ended Oct 31, 2022, the company’s profit after tax amortisation and minority interests rose by 13.1% from RM159 million to RM179.9 million. Revenue also grew by 31.5% from RM793.2 million to RM1.04 billion in the same period.
DXN’s founder and non-independent executive chairman Lim Siow Jin said: “Over the years we have invested in two research facilities, six cultivation facilities, and 10 manufacturing facilities which have allowed us to control the supply chain and be innovative”.
The retail offering will commence today and will close at 5pm on May 9.
Maybank Investment Bank Bhd is the principal adviser, managing underwriter and placement agent for the IPO.