DBD Engineering Plc became the first small and medium-size enterprise (SME) to be listed on the Growth Board of the Cambodia Securities Exchange (CSX) following its listing in September this year.

The CSX’s Growth Board was set up in 2015 to assist SMEs in raising capital to expand their business.

Founded in 1995 and one of the oldest engineering and construction companies in Cambodia, DBD provides design, construction, installation and maintenance services to national and international companies.

Backed by around 700 employees and its track record, the company is also involved in building reputable shopping malls in the Kingdom.

DBD was one of the companies that benefited from the first Securities and Exchange Regulator of Cambodia’s “Excellence Programme”, which was organised in 2017, followed by the second in 2020.

The programme is geared towards providing professional consultations to budding business entities to help them achieve sustainable business growth.

The listing exercise has brought benefits to DBD – from the injection of additional capital, to an increased ability to attract talent and contribute to the national economy.

Seven main advantages of an IPO

Long-term and large-scale capital financing

Local companies can raise capital from investors through an initial public offering (IPO), which is a better and safer source of financing compared to bank loans.

Bank borrowing requires collateral, while in an IPO exercise, a company’s assets, reputation and revenue-generating capacity are essential.

Moreover, the company must pay interest even if it does not make any profits.

While in the issuance of securities, the company is obliged to pay dividends only when it makes a profit.

This does not mean that companies should not rely on bank loans, both options are good if they are used effectively.

Tax incentives

The government offers tax incentives to a listed company, including the exemption of tax liability and the reduction of tax on profits.

Good governance with better management

Going public ensures companies – even family-run concerns – have a standardised governance framework, with clear committee structures one of the most necessary elements for the issuance of equity.

Transparency

Public listing allows for financial integrity, with the reporting of figures and financial statements made transparent to protect investors.

Even business owners who are reluctant to open up their books or disclose financial statements to the public and tax authorities are required under the laws to do so once they are listed on the bourse.

Companies can face penalties or may even have to cease operations if they flout the laws.

Trust and reputation

A listed company can leverage its public listing status to bid for major projects as it will have established a stronger reputation and built greater trust among investors, giving it an edge over its competitors.

Tapping potential investors

Compared to a non-listed company of a similar size, a listed company can find it easier to source investment partners or strategic investors.

They are more transparent, have a clear management structure, practise good governance, make financial information available and ensure the proper payment of tax.

These factors make it easier for investors to make an investment decision.

The issuer’s shares have more liquidity than those of the non-issuer because investors can buy shares in a company that is already listed on the CSX – such DBD Engineering’s shares – or the shares the company will additionally issue.

Promoting the national economy

Raising capital through the issuance of equity securities can also fuel a country’s economic growth due to revolving capital flows through the optimal utilisation of idle capital.

In this regard, those who have less capital can also invest in the stock market rather than keeping their money unused, thus creating more job opportunities for locals.

These are the main benefits that have taken DBD Engineering to the next level after the IPO.

Prepared by: DBD Engineering Email:[email protected] Tel: +855 78 700 598