Borneo Aqua expanding
The Edge
5 September 2005

Mesdaq Market-bound Borneo Aqua Harvest Bhd, the first Sabah-based company to seek a listing on the board, is looking to raise RM24.8 million from the exercise. Essentially an integrated marine aquaculture set-up, the company is involved in marine fish breeding, hatchery and rearing.

Borneo Aqua carries out its principal activities via its subsidiaries Plentiful Harvest Sdn Bhd and Marine Terrace Sdn Bhd. Plentiful Harvest concentrates on marine fish breeding, rearing and fish hatchery while Marine Terrace focuses on fish rearing.

Borneo Aqua is also one of the few Mesdaq companies to have a dividend policy, which entails the company declaring and paying out some 30% of its annual profit-after-tax. This may have been contributory factor to the positive response to its initial public offering, which was oversubscribed by over 29 times.

As at its financial year ended March 31, 2005, its exports contributed about 45% of its revenue, while the domestic market accounted for about 55%. At the launch of its prospectus, managing director Datuk Lo Fui Ming said Borneo Aqua aims to increase the contribution from exports to some 75% of revenue for FY2006.

Lo is better known in the corporate circles for his role in the boardroom battle for control of Cepatwawasan Group Bhd a year ago. He was the founder of Cepatwawasan.

Lo had resigned as managing director of the company a year ago, but returned to it following the entry of new shareholders.

Recently, he resigned again from Cepatwawasan and ceased to be a substantial shareholder in order to concentrate on Borneo Aqua.

Meanwhile, Borneo Aqua's expansion plans include its penetrating the South Korean and Japanese markets by next year. It currently exports to Hong Kong and China.

Borneo Aqua also plans to increase its capacity to handle the mass production of fish fry and adult fish of high commercial value through the construction of an additional 400 sea cages for fish-rearing activities, and the construction of a new indoor hatchery on Pulau Palak, which is off Sandakan, Sabah.

Analysts estimate the expansion to boost the company's net profits by 178% to RM9.3 million in FY2006, and by 47% to RM13.6 million in RY2007.

The company's bottom line is also to set to gain from the 10-year tax exemption on statutory income (effective April 1, 2004), which is to be partially returned to its shareholders via an annual tax-exempt dividend of no less than 30%.

Borneo Aqua plans to use RM2.7 million of the listing proceeds to purchase broodstock and equipment for research purposes, and has budgeted an annual research and development (R&D) expenditure of 1% of the group's consolidated revenue each year.

For the financial year ended March 31, 2005, the group's revenue totalled RM6 million, representing an increase of 266% from the RM1.6 million revenue posted in the same period last year.

Most of this growth was attributed to an increase in the sales volume of fish fry and adult fish in the local and Hong Kong markets respectively.

Borneo Aqua Harvest
IPO details
Mesdaq Market
Issue price: 99 sen (pre-bonus issue)
Par value: 10 sen
Paid-up capital: RM7.5 million
Estimated free float: 47.7%
Controlling shareholder(s):
Datuk Lo Fui Ming (53.34%), Ho Kin Fong (8.50%), Lo Ken Hin (7.69%)
Bumiputera allocation: NA
Oversubscribed by: 29.65 times
Fair value: NA
Listing date: Sept 5, 2005
 
EARNING PROJECTIONS
YEAR-END
FY06/
MARCH 31 RM MIL
2002
2003
2004
2005
Pre-tax profit (Loss)
(0.1)
(0.8)
0.4
3.3
Net profit (Loss)
(0.1)
(0.5)
0.3
3.3
EPS (sen) based on enlarged share capital
(0.08)
(0.83)
0.37
4.45
Dividend per share (sen)
-
-
-
-
Dividend yield (%)
-
-
-
-

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