Baba Eco rises 23% on LEAP debut

TheEdge Tue, Jul 23, 2019 08:48am - 4 years View Original


KUALA LUMPUR: The share price of gardening solutions provider Baba Eco Group Bhd closed three sen or 23% higher at 16 sen on its maiden trading day on Bursa Malaysia’s LEAP Market yesterday. A total of 130,500 shares changed hands.

The company, with has a market capitalisation of RM35.96 million, is the 10th counter to be listed on the LEAP Market, a complementary marketplace for small and medium enterprises, this year.

Speaking to reporters at Baba Eco’s listing ceremony, executive director Leong Jyahao said the company intends to further expand its overseas sales and marketing efforts by establishing a physical presence in neighbouring countries such as Thailand, Myanmar, Cambodia and Vietnam.

The company plans to start with Thailand, given its large network of home improvement centres and hypermarkets, by collaborating with a local partner to set up a joint-venture company.

Jyahao said Baba Eco’s existing overseas markets include Australia, Japan, New Zealand and Saudi Arabia.

“We also intend to develop and introduce a new series of organic fertilisers and natural pesticides under the name ‘Eco-Merchandise’,” said Jyahao .

He said the company plans to collaborate with local universities or agro-microbial companies for research and development (R&D) on competitive microbe strains.

For the first six months ended April 30, 2019, Baba Eco’s profit after tax fell 8.47% to RM1.26 million, from RM1.38 million in the same period previously, while revenue was up 9.84% to RM14.55 million from RM13.24 million.

For the six months ended April 30, 2019, 79.41% of Baba Eco’s revenue contribution came from the local market, while 12.63% was from Southeast Asia, and the remaining 7.96% from other countries including New Zealand, Saudi Arabia, Australia and Japan.

Under the listing exercise, Baba Eco raised RM3.58 million via the placement of 27.5 million new shares, representing 12.24% of its enlarged issued share capital, at an issue price of 13 sen per share to sophisticated investors.

From the RM3.58 million, 41.96% or RM1.5 million will be used for capital expenditure, which involves expanding its production facilities. Another RM800,000 (22.37%) will be used to purchase production equipment, RM500,000 (13.99%) for overseas expansion, and another RM500,000 for R&D, and the remaining RM280,000 for working capital.

Baba Eco provides gardening supplies under the Baba brand name, manufactures and trades in biodegradable flower pots, planting media and other plastic-injection-moulding products. It also processes organic fertilisers and natural pesticides.

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