From left to right: Lim Chue Wan, Cape EMS non-independent executive director, Cape EMS independent non-executive chairman, Datuk Mohd Rabin Bin Basir, Hong Leong Investment Bank Bhd group managing director/chief executive officer, Lee Jim Leng, Cape EMS non-independent managing director/group chief executive officer, Tee Kim Chin, AmInvestment Bank Bhd chief executive officer Tracy Chen Wee Keng, Cape EMS non-independent executive director Tee Kim Yok, and Hong Leong Investment Bank Bhd head of equity markets Phang Siew Loong at the Cape EMS Bhd launching its prospectus in conjunction with its listing on the Main Market of Bursa Malaysia Securities Berhad on Thursday.
PETALING JAYA: Main Market-bound Cape EMS Bhd
will be utilising the bulk of its listing proceeds to fund the expansion of its manufacturing operations.
The electronic manufacturing services (EMS) provider plans to raise RM155.7mil from its initial public offering (IPO) from the public issue of 173 million new shares at an issue price of 90 sen a share.
Cape EMS managing director and chief executive officer Christina Tee Kim Chin said the group’s strong financial performance has provided it with the resources to invest in its manufacturing facilities and gain more market share.
“The IPO exercise comes at an opportune time where we will be able to expedite growth with the proceeds raised. In 2021, the local market size for the manufacturing of electronic equipment stood at RM123.4bil, with Cape EMS’ current market share at less than 1%. This means there is still a lot of room for us to grow.
“The projected growth of the global semiconductor and electronics markets will drive the demand for EMS. We have set sights on the huge growth potential for both the local and global EMS industries,” she said.
Cape EMS plans to allocate RM62.8mil to set up a new cleanroom facility and automated production lines for EMS operations.
Some RM53.1mil will go towards the construction of its new Senai 226 warehouse and the installation of automated storage facilities.
Another RM4.6mil will be allocated for the purchase of new machinery and equipment for diecast manufacturing services.
Additionally, RM3.7mil has been set aside for the installation of an energy-saving cooling system.
The remaining RM31.5mil will be used for working capital and to defray listing expenses.
Tee said that the added production capacity and automated facilities is expected to boost operational efficiency and reduce reliance on manual labour.
“Current automated and semi-automated factory lines meet 60% of the group’s manufacturing needs. We still need to have some measure of labour in our manufacturing activities.
“However, the labour that I am referring to is more towards skilled operators, technicians and engineers,” she said.
Cape EMS is also looking to expand into other markets like Mongolia and Central Asia, other than its existing markets in the United States, Asia-Pacific and Europe.
“There are no issues of over reliance on one customer in terms of revenue contribution. The maximum that one customer can contribute to our revenue is 25%.
“Now that we have crossed the learning curve for all our product segments, we are looking for new customers to give us higher stabilisation on each segment,” said Tee.
As at Jan 4, 2023, Cape EMS has an order book of RM358.7mil, to be fulfilled by the fourth quarter of 2023.
Tee remains optimistic on the group’s growth prospects going forward, given its diversified customer portfolio and operations.
“We are not really affected by the downturn of the consumer electronics sector as we are more focused on industrial electronics.
“While there is no way to avoid a recession in the United States, I think the company is in a very good position with most of our customers having a US-orientated market and are new to the Asian market,” she said.
Cape EMS’ IPO entails a public issue of 173 million new shares and an offer for sale of 86.7 million existing shares at an offer price of 90 sen per share.
Some 46.2 million shares will be made available to the Malaysian public, while eight million shares will be offered to its eligible directors, employees and individuals who have made contributions to its success.
Another 90 million shares will be allocated to selected investors via a private placement, while 115.5 million shares will be set aside for bumiputra investors that have received the approval of the International Trade and Industry Ministry.
With an enlarged share capital of 923 million shares, Cape EMS will have a market capitalisation of RM830.7mil upon listing on the Main Market on March 10.
Hong Leong Investment Bank Bhd is the principal adviser, joint book runner and joint underwriter for the IPO exercise, while AmInvestment Bank Bhd is the joint book runner and joint underwriter.
