This article first appeared in Capital, The Edge Malaysia Weekly on April 20, 2026 - April 26, 2026

PENANG-BASED AMS Advanced Material Bhd, which is slated for listing on April 23 with an initial public offering (IPO) of 29 sen per share, is looking at the semiconductor and construction industries for its next phase of growth.

The group is involved in the trading of semi-finished aluminium and copper products, as well as the processing of semi-finished aluminium products. It sells these to manufacturers, contractors and fabricators in the aerospace, automotive and semiconductor industries.

AMS Advanced Material counts among its top five customers a long-standing aerospace component manufacturer, which contributes more than 20% to its revenue, and three semiconductor contract manufacturers that provide services to chipmakers with ultra-precision machining modules.

The group is looking to raise RM32.77 million from its IPO, the bulk of which will be used to set up a manufacturing facility in Penang that will double as a warehouse and to fund its expansion into the manufacturing of aluminium architectural products.

AMS Advanced Material, which has a 20-year track record in the aluminium industry, says the manufacturing facility will be a licensed manufacturing warehouse (LMW) focusing on the semiconductor and engineering support industries. An LMW allows manufacturers to import raw materials, components or machinery and equipment without incurring customs duty or sales tax, provided that the items are used directly in the manufacturing of finished products primarily for export.

“This new facility will enable our group to import, process and distribute semi-finished aluminium products sourced globally, including from Europe, the US and other regions. The LMW framework allows us to better serve export-oriented industries, especially semiconductor and engineering support,” the group says in its prospectus.

On its expansion into the manufacturing of aluminium architectural products, The group says it plans to rent a manufacturing facility in the Klang Valley for warehousing and production activities.

“As part of our growth strategy, we plan to expand our product offerings to include aluminium architectural products, catering to both interior and exterior applications in the construction and architectural sectors, to meet our customers’ needs,” it adds.

Of the remaining proceeds of RM17.77 million, RM8.17 million will be used to reduce its borrowings, RM2.5 million to set up a new distribution point in Kuantan, Pahang, RM2.67 million to fund its working capital and RM4.43 million to cover its listing expenses.

The public portion of AMS Advanced Material’s IPO was oversubscribed by 9.03 times. The company received 8,110 applications for 307.03 million shares worth RM89.04 million under the public balloting portion. The bumiputera portion recorded an oversubscription rate of 2.98 times, while the non-bumiputera portion was oversubscribed by 15.08 times.

The IPO includes an offer for sale of 47 million existing shares, representing 7.68% of its enlarged share capital, to raise RM13.6 million. The sum will go to AMS Metal Group, which is controlled by managing director Keh Teng Yang (56%), Tan Chee Yuen (20.5%), Lee Boon Kean (13.5%) and See Cherng Jye (10%).

Post-IPO, AMS Metal will remain the group’s single largest shareholder with a 73.86% stake, of which 22.59% is indirectly held — down from a full 100% control previously.

At the IPO price of 29 sen per share, the company is valued at a price-earnings ratio (PER) of 20.71 times, based on its FY2025 profit after tax. Four research houses have ascribed a higher fair value for the stock as they expect the group to see a net profit compound annual growth rate (CAGR) of more than 20% over the next three years.

RHB Research and Malacca Securities assigned the counter a fair value of 34 sen and 38 sen per share respectively, implying an upside potential of 17% and 31%.

RHB says AMS Advanced Material is well positioned to benefit from the recovery of the semiconductor industry, underpinned by stronger chip sales, renewed wafer fabrication equipment spending and higher demand for precision aluminium materials. “With the semiconductor industry set to contribute a larger and higher-margin share of earnings, its IPO valuation of 12 times FY27 forecast PER is undemanding,” it said in an April 10 note to clients.

Malacca Securities is expecting AMS Advanced Material to post a three-year earnings CAGR of 20.8%, backed by its Penang manufacturing expansion, venture into higher-margin products and diversification into scrap recycling for export to China. “AMS’ expansion of its LMW plant in Penang is expected to drive stronger revenue growth in the processing segment by tapping into Malaysia’s semiconductor supercycle,” it says in a report.

Nevertheless, both research houses flagged key risks such as dependence on one major customer, absence of long-term contracts, dependence on major suppliers, fluctuation of foreign exchange rates and global market prices of aluminium and copper.

AMS Advanced Material’s top line grew at a CAGR of 28.4% to RM129.70 million in the financial year ended Sept 30, 2025 (FY2025) from RM61.26 million in FY2022. It was driven by the expansion of its network and its venture into the processing of semi-finished aluminium products.

The group has a network of 32 local and 28 foreign suppliers in Singapore, China, Taiwan, South Korea, the US and the UK.

AMS Advanced Material’s net profit grew to RM8.57 million, or 1.40 sen per share, in FY2025 from RM4.15 million, or 0.68 sen per share, in FY2022.

In FY2022, the group derived its revenue from the trading of semi-finished aluminium and copper products. That changed in FY2024 and FY2025, when the trading segment contributed about 50% to its revenue. The remainder came from the processing of semi-finished aluminium products.

Improving margins at both its trading and processing businesses then boosted the group’s gross margin to 15.61% in FY2025 from 14.17% in FY2022.

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

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