KUALA LUMPUR (March 10): Electronics manufacturing services provider Cape EMS Bhd made an impressive debut on Bursa Malaysia's Main Market on Friday (March 10), opening at a premium of 52 sen or 57.8% over the initial public offering (IPO) price of 90 sen.
The counter went on to close at the day's high of RM1.50 for a gain of 60 sen or 66.67% over the IPO price. Its lowest price during the day was RM1.32.
Cape EMS was the day’s most active stock with 253.58 million shares traded.
Formerly known as Cape EMS Manufacturing (M) Bhd, the group had come out with a public issue of 173 million new shares.
The retail portion of 46.2 million shares recorded an oversubscription rate of 17.8 times.
Cape EMS’s non-independent managing director and chief executive officer Tee Kim Chin said the group intends to capitalise on its listing status to further fuel its growth trajectory.
“With the additional production capacity that we intend to purchase using our IPO proceeds, we believe that we are on track to expedite our growth in the EMS industry to cater to the expected increase in demand for EMS services, driven by the projected global growth of the semiconductor and electronics market,” she said.
The listing exercise successfully raised RM155.7 million, with 40.3% of the proceeds to be used for the setting-up of a new cleanroom facility and the purchase of new automated production lines for EMS operations.
Another 34.1% will be utilised for the construction of the group's New Senai 226 warehouse and installation of automated storage facilities, and a further 13.2% will be allocated for working capital.
The group also said 3% will be utilised for the purchase of new machinery and equipment for die cast manufacturing related services, 2.4% will go towards the installation of an energy saving cooling system, and 7% to defray listing-related expenses.
Hong Leong Investment Bank Bhd is the principal adviser, joint underwriter and joint bookrunner of Cape EMS' IPO and listing exercise, while AmInvestment Bank Bhd is the joint underwriter and joint bookrunner.
In a note on Friday, Rakuten Trade recommended “buy” with a target price of RM1.40 after it ascribed 18 times price-earnings ratio on FY2023 earnings per share as per average price earnings of its peers on Bursa Malaysia.
Other EMS counters included VS Industry Bhd, SKP Resources Bhd, Aurelius Technologies Bhd, EG Industries Bhd and Scope Industries Bhd.
Rakuten Trade said Cape EMS is anticipated to chart revenue and net profit three-year compound annual growth rate (FY2021 to FY2024) of 33% and 42% respectively, bringing its revenue to above the RM500 million mark and net profit to RM59.2 million by FY2023 and RM75.3 million by FY2024.
For FY2022, the Johor-based group posted a net profit of RM33.54 million, 27.7% higher than the RM26.26 million reported for FY2021, as cumulative revenue rose 27.19% to RM437.95 million from RM344.33 million.