Mst Golf: MST Golf eyes RM129.6m from IPO for expansion

KUALA LUMPUR: MST Golf Group Bhd, Malaysia's largest chain of golf specialty retailers of golf equipment, is expected to raise RM129.6 million from its initial public offering (IPO) - with 90% of the proceeds earmarked for expansion in its domestic and new geographical markets.MST Golf executive director and group CEO Ng Yap (pix) said the group plans to further expand its retail coverage in Indonesia, Thailand and Vietnam."We believe that the golf consumers in Southeast Asia are generally under-served, and we are very excited about the strong growth potential for the region especially Indonesia, Thailand, and Vietnam where we have no retail presence and basically will grow from ground up."For each country we are venturing into, we intend to enter into joint ventures with a strong local retail player where we bring our business model, retail concept, brands, marketing and operation knowhow while we leverage on our local partners' infrastructure and knowledge in the retail industry including importation and logistic, human resources management, local regulations and compliance," he said during the prospectus launch recently.The IPO exercise involves a public issue of 160 million new shares as well as an offer for sale of up to 68 million existing shares, based on the IPO price of 81 sen per share. RM129.6 million in IPO proceeds will be raised by the company via the public issue.While 90% will be used for expansion, another 2.3% will be for the upgrading of digital technology facilities along with 2.5% being channelled towards working capital. The remaining proceeds will be used to defray listing expenses.It will have a market capitalisation of RM664.9 million upon listing, with an enlarged share capital of 820.87 million shares. This values the company at a price-to-earnings ratio of 27 times its profit after tax of RM29.1 million for FY22.Post-listing, MST Golf has adopted a dividend policy that targets to return 30% of its earnings to shareholders.MST Golf is set to be listed on the Main Market of Bursa Malaysia Securities Bhd on July 20, 2023.Established in 1989, MST Golf has grown its golf retail footprint and product offerings within its home market, Malaysia, as well as Singapore.It operates 44 retail outlets, comprising 36 outlets in Malaysia and eight outlets in Singapore. Between 2019 and 2022, MST Golf recorded a compounded annual growth rate of 19.6% and 41.8% in revenue and profit after tax (PAT), respectively. This was on the back of the group's revenue and PAT of RM176 million and RM10.2 million, respectively, for the financial year ended Dec 31, 2019, as compared with RM300.9 million and RM29.1 million in revenue and PAT, respectively, for FY22.According to an independent market report by Vital Factor Consulting Sdn Bhd, MST Golf commands a market share of 51% of golf equipment imported into Malaysia and is the largest chain of golf specialty retailers in Malaysia, based on data obtained in 2022.Ng stated that it has grown operations and continued to enhance its business model to become an entrenched brand name for golf retail and golf related services in Malaysia and Singapore."Our network of retail outlets showcases a range of products, while also serving as a hub for the golf community. We set ourselves apart by providing a multi-brand retail experience with an offering of 97 brands, and serving as a comprehensive golf specialty retailer, catering to customers with varying preferences, skill levels, and price points. Our retail concept consists of MST Golf specialty store, the Golf Lab academy and Golf Arena indoor golf, equipped with the latest golf technology, aims to deliver a total golf retail experience where consumers can enjoy shopping, club fitting, golf learning, practicing, playing and dining all under one roof."That, coupled with a management system and our brand partners' support, shall continue to anchor our group's steady expansion as we increase our retail footprint within Malaysia, Singapore and into new geographical markets in Indonesia, Thailand and Vietnam. By constantly evolving and elevating our retail concept, combined with our understanding of consumer trends and needs, we aim to create long-term value for our stakeholders," he said.RHB Investment Bank is the principal adviser, sole underwriter, and sole placement agent for this IPO exercise.