KUALA LUMPUR (March 5): Surface finishing treatment services provider Chemlite Innovation Bhd, which is en route to be listed on the ACE Market of Bursa Malaysia on March 26, aims to significantly increase the revenue contribution from its non-metal plating business to 50% by 2026 — up from the current 14.25% — through strategic expansion.

"We are prioritising growth in the non-metal plating segment," said Chemlite chief executive officer and executive director Chong Yuen Fong, adding that this target will be achieved by adopting advanced technology and securing new customers.

"We hope to increase the revenue for the non-metal plating process to 50%," chief operating officer and executive director Heng Chee Khiang told a virtual press conference following the launch of the company's initial public offering (IPO) prospectus on Wednesday.

This is to prevent over-reliance on its metal-plating business, which is a major revenue contributor, contributing 85.75% of the company's total revenue of RM34.19 million for the financial year ended Dec 31, 2024, as opposed to the non-metal plating's 14.25%.

The Penang-based company is now onboarding two new customers for its non-metal plating processes, with one expected to come on board by April, according to financial controller Lance Ng Swee Ping. "After the onboarding process, purchase orders for non-metal plating will increase gradually," Ng added.

Chemlite specialises in metal plating services involving intermediate metal products, with expertise in multi-layer metal coatings. It also provides non-metal plating services, including anodising and other non-metal treatments. It primarily serves the semiconductor, electrical and electronics (E&E), and machinery and equipment (M&E) sectors.

According to Ng, the new production facility in Penang will house at least four fully automated non-metal plating lines and four semi-automated metal plating lines. The new facility will have a built-up area of at least 100,000 square feet, built on three acres of industrial land.

"It [the new facility] will increase the non-metal plating lines by 200% and metal plating lines by 75%. It is clear that the non-metal plating business is the one we wish to expand," Ng said.

Malaysia is Chemlite’s largest market, contributing 75.03% to its total revenue in FY2024, followed by the Philippines at 24.91%, with Japan and Singapore taking up the remaining 0.06%. When asked about expanding beyond Malaysia, Ng said: "For the next three years, we will keep expanding our base in Penang but not beyond Penang," indicating a continued focus on the Malaysian market.

The company aims to raise RM45 million from its IPO, which offers investors a 30% stake in the company, to fund its expansion — including acquiring new facilities, establishing clean rooms and expanding its Malaysian operations.

At an IPO price of 25 sen, Chemlite will have a market capitalisation of RM150 million post-listing, valuing it at 16.23 times its earnings per share of 1.54 sen for FY2024.

Chemlite does not have a formal dividend payout policy at present and distributions will depend on factors such as the company’s cash level, gearing and operational results.

Chemlite's profit after tax (PAT) has been on an upward trend over the last few years, jumping from RM1.65 million in FY2021 to RM3.18 million in FY2022, then nearly tripling to RM9 million in FY2023, before climbing further to RM9.26 million in FY2024, which it attributed to an overall increase in purchase orders with higher values from two major customers.

Revenue rose from RM18.40 million in FY2021 to RM22.15 million in FY2022, then to RM28.05 million in FY2023 and further to RM34.19 million in FY2024.

Chemlite’s IPO is open for subscription starting Wednesday, with applications closing on March 12. UOB Kay Hian is the principal adviser, sponsor, underwriter and placement agent.

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