DPI Holdings Berhad (“DPI Holdings”) (KLSE: DPIH) is a Malaysian aerosol paints producer. 

Since its listing on the ACE Market of Bursa Malaysia on 7 January 2019, DPI’s share price has appreciated over 240%. 

If you are looking at DPI with interest, here are 8 things to know before you invest.

  1. Group structure and business model

DPI Holdings was incorporated in Malaysia on 5 October 2017.

Its principal activity is investment holding whereas its subsidiaries are principally involved in the development, manufacturing and distribution of aerosol products for the automotive, industrial and household markets. The group is also involved in trading of solvents and thinners. 

The structure of the group is illustrated below.

(Source: IPO prospectus)

The group’s business model is illustrated below:

(Source: IPO prospectus)

  1. Business units

DPIH has structured its business units based on their products as follows:

  1. Aerosol products – Development, manufacturing and distribution of aerosol products.
  1. Solvents and thinners – Trading of solvents and thinners, and thinner blending activities. 

The group’s key revenue contributors are:

  1. Own Brands Manufacturing (“OBM”) – developing, manufacturing, filling and packaging of aerosol product under its own brand name, “DPI”, “Anchor” and “Kromoto”. The group currently sell to customers in Malaysia, which comprise a majority of its OBM customers, and Indonesia.
  1. Private label manufacturing services (“OEM”) – providing solutions for paint and lubricant formulation, raw and packaging materials sourcing, aerosol paint and industrial aerosol manufacturing as well as aerosol filing and packaging. Finished aerosol products are sold under its customers’ brand names in accordance with their specifications. The group currently serve customers operating in Malaysia, Indonesia, Japan, Australia, Singapore and New Zealand.  
  1. Principal markets   

DPIH’s OBM continues to be its largest revenue contributor. Separately, the majority of OEM product are for overseas clients. 

Revenue from aerosol products contributed approximately 85.3% of revenue for the financial year ended (FYE) 31 May 2021. Meanwhile, revenue from solvents and thinners products contributed 14.7% of revenue for the same FYE. 

(Source: Corporate presentation slides)

84.1% of revenue for the FYE 2021 is derived from Malaysia, while the remaining 15.9% of revenue for the same FYE is derived outside Malaysia.  

  1. Utilisation of IPO proceeds

DPIH has raised gross proceeds of RM31.64 from its IPO. The table below shows how the group has utilized the proceeds as of 31 May 2021. 

(Source: Corporate presentation slides)

  1. Business strategies 

A summary of the group’s business strategies is set out below:

  1. To maintain its market position in the domestic market and increase exports for its aerosol product through expansion of production capacity with construction of a new factory and upgrade of existing aerosol filling lines;
  1. To penetrate into new markets by establishing new geographical footprints and pursuing opportunities to develop a wider range of aerosol products to cater for new niche market segments through increase in sales, marketing and advertising initiatives; and
  1. To consistently improve the quality standard of its products and manufacturing practices through continual investment in product development.  
  1. Acquisition of new 90% owned subsidiary in Japan

On 30 July 2021, the group had subscribed for 450 new ordinary shares in DPI Japan Co., Ltd (“DPIJ”), which represents 90.0% of the enlarged equity interest therein, for a cash consideration of JPY 4.50 million (which is equivalent to RM173,830.50). The DPIJ acquisition is in line with the group’s long term plans to increase its global footprint and industry presence, by penetrating the well-developed aerosol market in Japan. 

In conjunction with DPIJ acquisition, DPIJ had entered into a director’s service agreement with Masaki Matsueda, the existing shareholder and director of DPIJ on 17 August 2021. Matsueda is to continue as DPIJ’s chief executive officer and will be responsible for all business development activities across Japan as well as managing the day-to-day operation of DPIJ.

  1. Substantial shareholders 

Post IPO, the Chai family collectively own 74.0% of DPIH as at 26 August 2020. 

(Source: Corporate presentation slides)

The profiles of its substantial shareholders are as follows:

  1. Choy Mui Seng @ Chai Mui Seng (Peter Chai) – Peter Chai is DPIH’s executive chairman and managing director. He continues to spearhead and oversee the overall operations of DPIH and its subsidiaries from quality control to product development, as well as to formulate the implement new business strategies.
  1. Chai Chun Vui (Adam Chai) – As marketing and business development director, Adam Chai is in charge of creating new products, developing new sales pipelines through branding, managing the marketing campaigns and participating in trade shows, formulating strategic business development plans as well as identifying and building strategic alliances and partnerships overseas. Further as group deputy managing director, he assists the managing director in overseeing the group’s overall operations including production, product development and finance. 
  1. Financial Highlights  
FYE 2019FYE 2020FYE 2021
RM millionRM millionRM million
Revenue 49.12941.73862.417
Gross profit 15.58514.40323.095
Profit after tax 6.3956.04111.859
Gross profit margin (%)31.734.537.0
Profit after tax margin (%)13.014.519.0
Basic earnings per share (EPS) (sen)1.561.242.44
Dividend payout 1.9461.9465.231
As at 31 May 2019As at 31 May 2020As at 31 May 2021
Current ratio (times)12.7413.258.49
Gearing ratio (times) 

(Source: Company presentation slides)

DPIH is a profitable company. The group has seen an increase in sales orders from existing and new customers following the reopening of the local economy. 

Due to the cash-generative nature of the group’s business model and prudent approach in financial management, DPIH is always in a net cash position with minimal borrowings and the group has net cash of RM56.24 million as at 31 May 2021. The current ratio is 8.49 times as of 31 May 2021 showing the group’s financial capabilities to weather any financial downturn or recession. 

Although DPIH does not have any formal dividend policy, the group has commendable dividend pay-out since its listing. Its historical dividend payout ratio is in the range of 30.4% to 44.1% since IPO.


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