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Pan Merchant eyes global growth beyond edible oil
calendar23-06-2025 | linkThe Star | Share This Post:

23/06/2025 (The Star), Petaling Jaya - Having made inroads into high-growth sectors such as sustainable fuel, water treatment, and mining, ACE Market-bound Pan Merchant Bhd is now gearing up to scale its operations in its efforts to capture a larger share of global market share.

Pan Merchant Bhd executive director Wong Voon Yoong said while the edible oil industry has long been the company’s “bread and butter”, the solid liquid filtration specialist is looking to expand its presence in sectors like water treatment and mining.

“Water is the immediate sector that we are already putting a lot of focus into. Many projects are coming up, both locally and overseas, and the contract values are quite high,” he told StarBiz.

Almost 90% of Pan Merchant’s total revenue last year was derived from the edible oil segment.

For the water division, the company’s filter presses are used to remove impurities from potable water before further treatment into drinkable water, as well as to filter sludge from wastewater before it is reused or safely discharged.

Voon Yoong also highlighted mining as a promising growth area, given the sector’s substantial market size.

“If you look at edible oil, it accounts for only about 5.8% of the global filtration market. However, the mining sector makes up roughly about 22%, which is about three and a half times larger than the edible oil industry.

“Together, the water and mining sectors make up about 50% of the global filtration market,” he said.

Voon Yoong said that over the past few years, Pan Merchant has supplied filters for smaller mining applications, such as clay processing.

“Mining is a very big industry which can involve small, medium or even very large filters due to the sheer volume of water that needs to be filtered.

“In some parts of the industry where the filters needed are not too big, we are already able to cater to those needs – for example, clay, which we have been involved in about 10 to 20 years ago,” he said.

Meanwhile, executive director Wong Nyeon Thiat said the group currently holds a global market share of just 0.5% and is aiming to increase this to between 2% and 3% over the next two to three years.

“Getting to 2% to 3% is very substantial and a lot of work needs to be put in,” she said.

Pan Merchant aims to raise RM67.6 mil from its public issuance via an initial public offering (IPO) on the ACE Market of Bursa Malaysia on June 26.

The group will issue 232.19 million new ordinary shares at 27 sen apiece.

The IPO pricing is based on a 32.14 times price-earnings ratio, benchmarked against Pan Merchant’s financial year ended Dec 31, 2024 (FY24), and values the company at an estimated market capitalisation of RM247.32mil upon listing.

For the offer-for-sale portion, only substantial shareholder Budhi Sentoso Rachmat will be disposing of his shares via private placement to selected investors.

According to the prospectus, Budhi is offering 18 million existing Pan Merchant shares for sale. No other members of management or shareholders are participating in the share sale during the IPO.

Of the targeted RM67.6mil in IPO proceeds, RM62.7mil will be go to Pan Merchant, while the balance RM4.9mil will go to Budhi.

The group aims to maintain a dividend payout ratio of no less than 30% of its profit after taxation attributable to owners of the company for each financial year.

About RM7mil of the IPO proceeds is earmarked for product development, including the creation of a prototype filter customised for the mining industry by the end of next year.

Other key initiatives include developing complementary equipment like slurry thickeners, cake discharge mechanisms, and conveyor systems, as well as modular filters for easier international shipment.

Pan Merchant also plans to produce replacement parts in-house to gain greater design control, establish a mobile filtration test centre, and hire two engineers specialising in the mining sector.

The bulk of the proceeds, or RM28mil, will fund the company’s capital expenditure, including enhancing its manufacturing capabilities by acquiring new machinery, equipment and tools, along with renovating its manufacturing plants.

Pan Merchant operates three facilities in Ipoh, Perak: Jelapang Plant 1, Jelapang Plant 2, and Lahat Plant, with the majority of its products exported to Asia, Europe, the Americas and Africa.

Pan Merchant also plans to intensify its sales and marketing activities in the region by participating in international exhibitions across Europe and America, and updating its website and marketing materials.

Managing director Wong Voon Ten noted that the group intends to set up an additional filter leaf production line at Jelapang Plant 1, along with new automated machineries, equipment and tools.

These upgrades aims to improve consistency in producing quality filters, reduce manpower requirement, and cut down on outsourcing.

Additionally, the group is adding a second filter leaf production line at its Netherlands office as part of a broader RM6mil expansion plan, which also includes renovating and expanding its office and workshop space there.

“The filter leaves are spare parts that our customers need to change periodically due to wear and tear.”

“This generates a recurring source of income for the group,” Voon Ten added.

Over the years, the number of filters sold has increased, leading to a larger installed base. “With our current production capacity, it is not that we are unable to cope with demand – but delivery times can become too long at times,” he noted.

He said with the new production lines, the group will be better able to handle rising demand and shorten delivery times, especially for urgent replacement orders.

Pan Merchant also aims to increase automation of key processes at its facilities by acquiring and installing new machinery.

At present, about 80% of its production processes still rely on manual labour.

While Nyeon Thiat noted that certain assembly processes are irreplaceable and some manual labour will still be needed, she said the company targets to reduce manual labour from 80% to around 30% to 40%.

The remaining IPO proceeds will be allocated to working capital (RM14.69mil) and estimated listing expenses (RM7mil).

Affin Hwang Investment Bank Bhd is the principal adviser, sponsor, sole underwriter and sole placement agent for the IPO.

https://www.thestar.com.my/business/business-news/2025/06/23/pan-merchant-eyes-global-growth-beyond-edible-oil