According to the disclosure of the Hong Kong Stock Exchange on April 29, EC Excel Holdings Limited (hereinafter referred to as "EX Excel") submitted a prospectus to the Hong Kong Stock Exchange for the second time to be listed on the GEM Growth Enterprise Market in Hong Kong, with Qiyao Capital as its exclusive sponsor. It is reported that the company submitted a listing application to the Hong Kong Stock Exchange on 30 September 2021.
Company Profile
The company is mainly engaged in the processing and sales of hot-rolled steel bars, manufacturing and sales of cold-rolled steel bars and wire products in the Malay Peninsula. The company can respond to the different needs of customers, providing standard products and customized products with different specifications in terms of length, diameter and surface treatment.
The Group's history dates back to 2007 when Mr. Ng, Executive Director, Chief Executive Officer and Chairman of the Board, established EC Excel Wire, one of the operating subsidiaries of the Company in the Malay Peninsula. Since then, the company has accumulated more than 15 years of experience in the manufacturing of steel and wire products in the Malay Peninsula and has established a sales network covering most of the Malay Peninsula. According to the Ipsos report, the Group ranks second among Malaysian manufacturers of steel and wire products, with revenues of approximately RM302 million in FY2020, representing a share of approximately 2.7% of the industry's total revenue.
Business model
The company's steel and wire products are commonly used in construction and infrastructure projects. The relevant products can be divided into: standard steel bar and steel wire products, customized steel bar and steel wire products with different specifications, and custom size mesh with different physical characteristics.
With regard to the Company's standard steel and wire products, the Company maintains optimal inventory levels according to its weekly production schedule. On the other hand, the Company does not keep customized steel and wire products in stock because the product specifications and requirements vary from order to order. As for the company's size-cut mesh, the company's in-house technical team proposed cost-saving wire mesh combinations to enable clients' architectural designs such as property developers and building contractors. The company's in-house technical team can make appropriate adjustments to the wire mesh to suit the customer's construction needs. The trade products purchased by the company from third parties mainly include unprocessed hot-rolled steel bars and other building materials, which can be sold to customers individually or together with the company's steel and wire products, so that customers can complete the purchase at one time.
Financial overview
The Company's total revenue increased by approximately 31.5% from approximately RM494 million in FY2020 to approximately RM649 million in FY2021. Earnings in all of the Company's product categories increased in FY2020 compared to FY2021.
During the same period, the Company's gross profit was approximately RM46.7 million and RM62.5 million respectively, and gross profit margin was approximately 9.5% and 9.6% respectively.
Despite an increase in the Company's earnings from the sale of hot-rolled steel bars in the same year, its gross profit declined slightly from approximately RM10.7 million in FY2020 to approximately RM10.6 million in FY2021. This was mainly due to the decline in gross profit due to the increase in all raw material costs, manufacturing expenses, direct labor costs and depreciation expenses involved in the manufacture of hot-rolled rebar, which was higher than sales between fiscal 2020 and fiscal 2021. On the other hand, the gross profit from the sale of cold-rolled rebar increased from approximately RM5.1 million in FY2020 to approximately RM6.4 million in FY2021. Although the increase in manufacturing expenses, direct labor costs and depreciation costs for the manufacture of cold-rolled rebar was also higher than the increase in sales of cold-rolled rebar between FY2020 and FY2021, the increase in raw material costs for manufacturing cold-rolled rebar did not exceed the increase in sales revenue in the same year.