Friday 02 Jun 2023
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KUALA LUMPUR (Jan 12): NationGate Holdings Bhd made a firm debut on the ACE Market of Bursa Malaysia on Thursday (Jan 12), with an opening price of 81 sen — a premium of 113.2% against its initial public offering (IPO) price of 38 sen. 

At market close, its share price settled even higher at RM1, with a premium of 163.16%. 

With a trading volume of 654.92 million and a market capitalisation at RM2.07 billion, it is the largest IPO on the ACE Market to date. 

The company announced no dividend policy. 

"The listing will facilitate NationGate with greater financial flexibility to pursue future growth opportunities, and enhance our group's reputation in the marketing of our services to expand our customer base, and to retain and attract new, experienced professionals in the EMS (electronics manufacturing services) industry," said Ooi Eng Leong, the managing director of NationGate. 

"Over the last three years, the group has seen increasing orders from customers from the networking and telecommunications, data computing, automotive and semiconductor segments. 

"The widespread deployment of 5G networks and high demand for electric vehicles should continue to benefit the networking, telecommunications and automotive sectors in terms of order visibility, and lengthen the sectors' upcycle." 

At a press conference, the group remained optimistic about 5G growth, but was cautious in its region outlook. 

"In terms of 5G infrastructure, many nations still need to upgrade. We believe there are still hundreds of billions that will be spent in 10 to 15 years," said corporate services director Tay Seng Chew.

"Our orders will continue to remain strong, and we foresee that it will give us the platform to continue to grow within this segment. 

"I believe [that despite] the global downturn, as talked by many in the financial arena, we are able to go through it, and come out even stronger and healthier." 

On the global outlook, Tay further added that it was tense with the Ukraine-Russia conflict, and China's zero-Covid policy.

"As China is opening up, we believe in this particular Asia-Pacific region, economies would be more buoyant, and we would benefit from the open economy of China." 

"With the Chips Act now being in place by the US, I believe many of the Chinese manufacturer products have to move out, and in that regard, it will flow into Asean countries.  

"As far as Asean countries are concerned, this region would benefit from China moving out of their own base into this region." 

When asked about the possibility of moving to the Main Market, Ooi is confident that it will happen eventually. 

"We are new to the public market," he responded, "let us have the experience. 

"We believe by the next one to two years, we will be moving to the Main Market, to get into the international pool and the bigger market." 

On Wednesday, UOB Kay Hian Securities initiated coverage of NationGate, with a "buy" rating and a target price of 98 sen, and said the stock is listing at an undemanding 13.8 times 2021 price-earnings. 

“While NationGate can offer high-mix low-volume and low-mix high-volume production set-ups, its strategic diversification towards recession-proof segments has borne fruition, especially amid the current economic downturn." 

Upon its listing, the group raised RM165.5 million from its IPO, via the issuance of 435.5 million new shares. 

NationGate has allocated RM105.5 million or 63.8% of total gross proceeds for the repayment of the company’s bank borrowings.  

A further RM48.4 million (29.2%) will be used as working capital to purchase raw materials, consumables and electronic components for its EMS activities. 

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

The remaining RM5.7 million will be used for the estimated listing expenses. 

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

Edited BySurin Murugiah & Isabelle Francis
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