It’s official—Malaysia’s first main IPO goes public on May 19. Construction services giant Tuju Setia will issue 80 million new shares, priced 70 sen apiece, along with an offer for sale of 27 million existing shares.

Khoo Hsu Chuang spoke with Tuju Setia’s Managing Director Wee Eng Kong on The Breakfast Grille, and asked him why the company is confident about its IPO, despite posting a 39.34% year-on-year revenue drop in 2020.

Here are 4 reasons why, according to Eng Kong:

1. Reputation boosts confidence

The construction firm aims to fetch RM56 million from its IPO on Bursa Malaysia, which has been in the works for the past 2 years. When asked why they didn’t wait for the economic climate to improve, Eng Kong believes that Tuju Setia has built a strong fifteen-year reputation with clients like Glomac, IJM, and Guocoland, that will see them through.

2. Clients seeing a steady stream of sales

Amid concerns that the property market is currently a buyer’s market due to the COVID-19 pandemic (i.e. supply exceeds demand), Eng Kong argues that demand for property is still high. He cited the continuous rollout of projects by the company’s clients, and strong sales among developments like Guocoland’s in Desa Parkcity, and Glomac’s in Cheras.

3. Busy—and profitable—years ahead

The next two to three years look to be exciting ones for Tuju Setia. Over the past year, they secured four new high-rise projects worth around RM953 million despite the pandemic. They’ve also expanded to the hospital sector with deals to design and build the new Kajang Women and Children Hospital. Last year, the hospital sector contributed to 20% of Tuju Setia’s revenue, an industry Eng Kong expects to grow.

4. Safety standards are of paramount importance

There’s no doubt that safety’s a top concern with all the construction projects going on across the country, and the many incidents they’re associated with. According to Eng Kong, the company registers all of its new projects to be assessed by the Construction Industry Development board (CIDB) to ensure that the projects adhere to safety standards. Eng Kong stresses that the firm has high standards when it comes to the safety of their workers, and that their safety supervisors are licensed by the Department of Occupational Safety and Health. However, he didn’t specify the number of accidents and casualties recorded on Tuju Setia’s development sites.

Are these reasons good enough to instill confidence in a company's IPO? Tweet us @BFMRadio and check out the full Breakfast Grille below.

Written by Hezril Asyraaf and edited by Lee Chwi Lynn.

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