KUALA LUMPUR (Dec 12): Electronics manufacturing services (EMS) provider NationGate Holdings Bhd is seeking to raise RM165.5 million in its initial public offering (IPO), where the bulk of the proceeds will be used to repay bank borrowings.

With an issue price of 38 sen per share and an enlarged share capital totalling 2.1 billion shares, the company is expected to have a market capitalisation of RM788.1 million on its debut on Jan 12, 2023 — making it the largest listing on the ACE Market of Bursa Securities.

NationGate allocated RM105.5 million, representing 63.8% of total gross proceeds, for repayment of the company’s bank borrowings while a further RM48.4 million (29.2%) will be for working capital requirements to purchase various raw materials, consumables and electronic components consumed for its EMS activities.

Another RM5.9 million will be used to purchase additional machinery and equipment to expand its surface mount technology (SMT) assembly capacity and enhance its production efficiency at Plant 5, in line with the increased demands from its existing and new customers.

The remaining RM5.7 million is to defray the estimated listing expenses.

NationGate is an established EMS provider focusing on the assembly and testing of electronic components and products to produce completed printed circuit boards (PCBs), semi-finished sub-assemblies and fully assembled electronic products as well as semiconductor devices.

NationGate managing director Ooi Eng Leong said the company will add four SMT assembly lines for its PCB assembly services.

“These new machinery and equipment are also expected to enhance our EMS efficiencies. As at Nov 14, 2022, we have a monthly production capacity for SMT services of up to 1.26 billion mounting points per month,” said Ooi in his speech at the launch of the company’s prospectus on Monday (Dec 12).

Upon completion of the expansion of the SMT assembly lines within 36 months, NationGate’s monthly production capacity is expected to increase by up to 38.4 million mounting points to a maximum of 1.3 billion mounting points per month, he noted.

“Currently, we operate our EMS business from our EMS manufacturing facilities located in Seberang Perai, Penang, and Taiping, Perak, with the group possessing the flexibility to undertake high-mix, low-volume and low-mix, high-volume production based on our customers’ requirements,” he added.

Looking ahead over the next three years, Ooi said the company intends to expand its EMS business by expanding EMS offerings to existing customers, which comprise multinational corporations or international corporations, with a diversified range of products as well as leverage its track record in the EMS industry to secure new customers.

“Our business collaboration with GoldTek Technology Co Ltd allows us to secure new business growth and further expand our product category such as portable and low power consumption IoT electronic devices which is an ideal channel to tap into their global customer base,” he said.

NationGate posted a profit after tax (PAT) of RM30.7 million for the financial year 2020 (FY2020) on a revenue of RM566.2 million as opposed to a PAT of RM5.3 million for FY2019, when revenue was RM326 million.

Its PAT for FY2021 jumped to RM59.5 million as revenue expanded to RM760.9 million.

For the financial period ended June 30, 2022 (FPE2022), the company registered a PAT of RM33.4 million on a revenue of RM426 million. Malaysia accounted for 74.4% of its FPE2022 revenue, while 25.6% came from overseas.

"We are aiming for a 30% dividend policy after we go public, and we will seek approval from the entire board," Ooi added.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.