Govt’s broadband convergence push bodes well for Mestron’s specialty poles business

18 Jun 2019 / 20:24 H.

KUALA LUMPUR: Steel-pole maker Mestron Holding Bhd, which saw a 3.1% premium against 16 sen offer price on its debut on the ACE Market of Bursa Malaysia today, will leverage on the government’s push for broadband network convergence to boost its revenue stream from specialty poles business.

Mestron shares surged as much as 5 sen or 31.3% to 21 sen before closing 0.5 sen or 3.1% higher at 16.5 sen on 367.7 million shares changing hands.

Its managing director Por Teong Eng said broadband network convergence (including the 5G technology) will be a key catalyst for the company’s manufacturing segment as it will create demand for specialty poles such as high mast and telecommunication monopole.

“The inevitable growth in broadband infrastructure is in line with Mestron’s future plan to expand its revenue stream from the sale of specialty poles due to higher gross profit margin as well as to expand its clientele in the telecommunication industry,” he said in a statement.

Maxis, Celcom and Digi have already begun their 5G technology trial in Cyberjaya in April.

Por said Mestron will also benefit from the growing demand for LED outdoor lighting products as LED lighting products have higher specifications and quality as compared with the traditional light bulbs and thus fetching higher sales value.

The government wants all streetlights to be LED lamps starting September 2019, in a move to save energy by as much as 50%. He said the announcement will create demand for LED outdoor lighting products.

Mestron expects to raise RM25.28 million through its initial public offering (IPO). Of the total IPO proceeds, RM13 million (51.4%) will be used to expand its main manufacturing facility and acquire more manufacturing machineries and equipment for future business growth.

It will further utilise RM5.18 million (20.5%) for working capital to purchase raw materials such as steel plates and steel pipes to support its expansion in capacity; RM4 million (15.8%) to repay bank borrowings while the remaining RM3.1 million (12.3%) to be used to defray listing expenses for the IPO.

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