KUALA LUMPUR: Main Market-bound MST Golf Group Bhd
will be utilising the bulk of its listing proceeds to fund its expansion in both the domestic and regional markets.
The golf specialty retailer, formerly known as M S T Golf (Asia) Sdn Bhd, plans to raise RM129.6mil from its initial public offering (IPO) of 160 million new shares at an issue price of 81 sen a share.
MST Golf executive director and group chief executive officer Ng Yap said the golf consumers in South-East Asia are generally underserved and there is still room for further expansion locally.
“For example, we do not have a store in Seremban yet. There are a few golf courses there and we have over 1,000 members in Seremban but they need to travel to Kuala Lumpur to buy golf products.
“If we have a store there, chances are, these individuals will visit the store more often and buy more,” he said at its prospectus launch in Kuala Lumpur yesterday.
MST Golf’s principal markets as well as operational bases are in Malaysia and Singapore.
As at May 31, 2023, it had a total of 44 retail outlets comprising 36 outlets in the country and eight outlets in Singapore. The group is eyeing to establish its presence in Indonesia, Thailand and Vietnam.
MST Golf plans to allocate RM62.8mil for its expansion in Malaysia and Singapore while some RM53.6mil will go towards the group’s expansion into other new geographical markets.
Another RM3mil is to be allocated for the upgrading of its digital technology facilities while RM3.3mil has been set aside for working capital requirements.
The remainder RM7.04mil will be used to defray listing expenses.
“For each country we are venturing into, we intend to enter into joint ventures with strong local retail players there.
“We aim to bring our business model, retail concept, brands, marketing and operation knowhow while leveraging on our local partners’ infrastructure and knowledge in the retail industry including importation and logistics, human resources management, local regulations and compliance.
“We will start with Indonesia first and then move onto Thailand in 2024 before expanding into Vietnam in 2025.
“We have been actively engaged with various key retail players in Thailand and Vietnam, however as of now we are not committing to anything yet,” Ng said.
MST Golf entered into a memorandum of understanding on April 18, 2023 with PT Sinar Eka Selaras, a subsidiary of PT Erajaya Swasembada Tbk, for a proposed joint venture to establish golf retail outlets and indoor golf centres in Indonesia.
A public company listed on the Indonesia Stock Exchange, PT Erajaya Swasembada Tbk is involved in the distribution and trading of telecommunications equipment, computer and other electronic devices. It is also involved in the distribution and retailing of fashion products for brands such as ASICS, Garmin and JD Sports.
MST Golf’s Ng added that technology-driven, entertainment-based driving ranges and indoor golf centres have been mushrooming in the last couple of years, including in South-East Asia.
This has effectively lowered the entry barrier for the new generation of golfers coming into the game.
“As we continue to cement our market positions in Malaysia and Singapore, as well as establish and grow our retail presence within South-East Asia, we recognise the rising interest in golf among the younger generation which presents a relatively untapped market segment.
“By strategically positioning ourselves to cater to this trend, we can captivate new golfers and provide them with an engaging and inclusive golfing experience,” he said.
With retail as its backbone, MST Golf’s businesses also cover wholesale business and other golf-related services, including golf coaching, golf academies, event/tournament management, corporate merchandising, club fitting and operating driving ranges. The group is the distributor and retail partner of many global golf brands.
“The retail business contributes over 80% of our group’s revenue.
“We started our loyalty programme called ilovegolf in 2005 which has allowed a thriving golf community of about 90,000 active members to flourish.
“Our loyalty membership community, which has grown over the years, plays a key role as one of our direct and targeted marketing channels, which effectively resulted in over 75% of our retail sales coming from our members,” Ng said.
He said MST Golf has adopted a dividend policy with a payout rate of 30% of earnings.
MST Golf’s IPO entails a public issue of 160 million new shares and an offer for sale of 68 million existing shares at an offer price of 81 sen per share.
Some 41.5 million shares will be made available to the Malaysian public while 7.9 million shares will be offered to its eligible directors, employees and individuals who have made contributions to its success.
A total of 76 million shares will be sold to selected investors through a private placement, while 34.6 million shares will be set aside for bumiputra investors who have received approval from the Investment, Trade and Industry Ministry through private placements.
With an enlarged share capital of 820.9 million shares, MST Golf will have a market capitalisation of RM664.9mil upon listing on the Main Market of Bursa Malaysia on July 20.
RHB Investment Bank is the principal adviser, sole underwriter, and sole placement agent for this IPO exercise.
