KUALA LUMPUR (Sept 26): Precision component manufacturer Northeast Group Bhd (KL:NE) unveiled its prospectus on Thursday for its initial public offering (IPO) on the ACE Market to raise up to RM110.4 million.
The IPO, priced at 50 sen per share, consists of a public issue of 168.99 million new shares that would raise up to RM84.5 million and an offer for sale of 51.8 million existing shares that would gross as much as RM25.9 million, according to the prospectus released on the stock exchange.
Applications for the IPO will close on Oct 3, with the listing scheduled for Oct 15.
The listing offers investors a 29.84% stake in Northeast Group that made a profit after tax of RM18.36 million for the financial year ended Sept 30, 2023 (FY2023). Upon listing, the company is expected to have a market capitalisation of RM370 million.
At the IPO price, Northeast Group would be valued at about 20 times the earnings per share of 2.48 sen in FY2023.
Founded in 2004, the Penang-based company specialises in the manufacturing of precision engineering components used in the photonics, electrical and electronics, semiconductor, telecommunication, and optoelectronics industries. Further, the company also provides surface finishing, sheet metal fabrication and mechanical sub-assembly.
Most of the group’s revenue is derived from overseas customers — including the US, UK, Russia, and Germany — which contributed around 73.9% of FY2023’s total revenue, while the local market accounted for 26.1%.
The public issue comprises 37 million shares for the public, 29.6 million shares for eligible persons, 61.69 million shares through private placement to selected investors, and 40.7 million shares through private placement to identified Bumiputera investors.
About 47.34% of the gross proceeds from the public issue will be allocated for the construction of a new factory, expected to provide a total production floor space of approximately 79,020 sq ft and accommodate about 200 units of computer numerical control (CNC) machines to support production activities.
Currently, the company operates at three factories located in Juru and Bukit Minyak, with all the production floor space fully utilised.
Northeast Group has also earmarked 23.67% of the proceeds to repay bank borrowings, 14.65% for the purchase of 36 new CNC machines to increase its estimated annual operating capacity while 7.81% will be allocated for listing expenses and the remaining 6.53% for working capital.
Proceeds from the sale of existing shares, meanwhile, will go entirely to the selling shareholders including managing director Ng Chay Chin and his brother Ng Chai Hee, who is also the senior operations director.
Executive director Chong Ewe Hean, senior business and sales director Yin Thien Hee, along with two other shareholders Ng Meng Hang and Tang Ah Lek will also put up their existing shares for sale.
Affin Hwang Investment Bank is the principal adviser, sponsor, sole placement agent and sole underwriter for the IPO.