KUALA LUMPUR (May 9): ACE Market-bound Edelteq Holdings Bhd has set its initial public offering (IPO) price at 24 sen per share, and will have a market capitalisation of RM127.81 million upon listing, with an enlarged share capital of 532.5 million.

The IPO price translates into a price-earnings multiple of 23.53 times based on the group’s audited profit after tax (PAT) of RM5.44 million or 1.02 sen per share for the financial year ended Dec 31, 2022 (FY2022).

Edelteq, which provides engineering support for integrated circuit (IC) assembly and test processes within the semiconductor industry, has also set a target to distribute up to 20% of its annual PAT attributable to shareholders of the group.

At its prospectus launch on Tuesday (May 9), the group shared that it will raise a total of RM24 million from the IPO, of which RM3.7 million has been earmarked for the construction of a new factory in Batu Kawan, Penang, while RM3.1 million will be used for research and development activities, RM10.3 million to repay the group’s bank borrowings, and the balance of RM3.6 million to defray listing expenses.

Edelteq executive director and group chief executive officer Chin Yong Keong said the group’s long-term prospects remain bright, driven by rapid technological advancements in electronic products, growing worldwide demand for electronics, increased adoption of Internet of Things, and technological advancement in automotive electronics.

Further, he said geopolitical issues between the US and China led to multinational companies (MNCs) relocating their semiconductor industries from China to countries like Malaysia and Singapore, creating new prospects for growth and expansion for the group.

“At the same time, China is investing heavily in building its own fab capabilities to achieve greater self-sufficiency in semiconductors. Moreover, the Chips Act in the US is paving the way for more semiconductor fabs to be built in the country.

“We already have an existing market presence in these countries, and leveraging our strong customer relationships with US-based semiconductor companies, we are in an excellent position to cross-sell our products and services to their facilities in other locations as they expand,” he elaborated.

In addition, Chin also shared that the group is targeting double-digit profit growth in FY2023.

The group's PAT increased steadily in the past financial years, from RM600,000 in FY2019 to RM4 million in FY2020, and RM9 million in FY2021 — before falling to RM5.4 million in FY2022, due to lower revenue from the supply and refurbishment segment of IC assembly and test consumables.

Revenue increased from RM12.4 million in FY2019 to RM16.7 million in FY2020, followed by RM24 million in FY2021, and RM24.4 million in FY2022.

The local market contributed RM18.91 million or 77.6% of the group's total revenue in FY2022, while overseas markets such as Singapore, China, Thailand and the US accounted for the remaining 22.4%.

The group, which is slated to be listed on the ACE Market of Bursa Malaysia on May 30, supplies to MNCs such as Infineon Technologies (Malaysia) Sdn Bhd.

UOB Kay Hian Securities (M) Sdn Bhd is the principal adviser, sponsor, underwriter and placement agent for the IPO exercise.