MeGroup lands first Hyundai dealership, to use S$329,000 of IPO proceeds

CATALIST-LISTED MeGroup has snagged its first Hyundai dealership, with the rights to operate a Hyundai 3S (sales, service and spare parts) centre in Bandar Bukit Raja in Klang, Selangor, awarded by the make's official Malaysian distributor Hyundai-Sime Darby Motors.

For the purpose of the award, MeGroup will incorporate a new wholly owned subsidiary called MN Automart, under its existing unit Menang Nusantara Holdings, it said in a regulatory filing on Tuesday.

MeGroup intends to raise the issued and paid-up capital of MN Automart to RM1 million (around S$300,000), to be funded by S$329,000 from its initial public offering proceeds of S$1.8 million.

The group said the deal is not expected to have any material impact on its net tangible assets per share and earnings per share for the financial year ending March 31, 2020.

The dealership is expected to be fully operational in the second half of 2019, and will offer new Hyundai models such as Elantra, IONIQ, Tucson, SantaFe and Starex.

Prior to the commencement of operations, MeGroup will be required to seek Sime Darby's approval for the design, structure and layout plan of the new dealership. At the same time, it also needs to secure a banker's guarantee of RM100,000 in favour of Sime Darby as a performance security deposit.

The award brings MeGroup's number of automobile dealerships to seven, including a recently acquired third Peugeot dealership.

Wong Cheong Chee, executive chairman and CEO of MeGroup said the new dealership will cover areas surrounding Klang, Kapar, Setia Alam and Shah Alam, which have "a very high potential for growth".

"Hyundai, the number one carmaker in South Korea, is slowly gaining popularity here in Malaysia. They have also been carrying out a number of facelifts to their popular models and had unveiled them in the last couple of months," he added.

MeGroup shares closed flat at S$0.20 on Tuesday as at 12.52pm.