KUALA LUMPUR (Dec 12) — Electronics Manufacturing Services (EMS) provider NationGate Holdings Bhd is seeking to raise RM165.5 million in its initial public offering (IPO), with most of the proceeds going to pay down bank debt.
With an issue price of 38 sen per share and an expanded total share capital of 2.1 billion shares, the company is expected to have a market capitalization of RM788.1 million when it debuts on January 12, 2023 – making it the largest listing on the ACE Bursa Securities Market.
NationGate allocated RM105.5 million, or 63.8% of total gross proceeds, to repay the company’s bank debt, while an additional RM48.4 million (29.2%) was allocated for working capital needs to purchase various raw materials, consumables and used electronic components are intended for its EMS activities.
An additional RM5.9 million will be used to purchase additional machinery and equipment to expand surface mount technology (SMT) assembly capacity and improve production efficiency at Plant 5 to meet the increased demands of its existing and new customers.
The remaining RM5.7 million is intended to cover the estimated listing costs.
NationGate is an established EMS provider focused on the assembly and testing of electronic components and products to produce finished Printed Circuit Boards (PCBs), semi-finished sub-assemblies and fully assembled electronic products and semiconductor devices.
NationGate Managing Director Ooi Eng Leong said the company will add four SMT assembly lines for its PCB assembly services.
“These new machines and plants should also improve our EMS efficiency. As of November 14, 2022, we have a monthly production capacity for SMT services of up to 1.26 billion assembly points per month,” Ooi said in his speech at the company prospectus launch on Monday (December 12).
After completing the expansion of SMT production lines within 36 months, NationGate’s monthly production capacity is expected to increase by up to 38.4 million assembly points to a maximum of 1.3 billion assembly points per month, he noted.
“Currently, we operate our EMS business from our EMS manufacturing facilities in Seberang Perai, Penang and Taiping, Perak, with the group having the flexibility to have a high-mix, low-volume and low-mix, high-volume -Perform production based on our customers’ requirements,” he added.
Looking ahead to the next three years, Ooi said the company intends to grow its EMS business by expanding EMS offerings to existing customers, which include multinationals or international groups with a diversified product range, as well as pledged its track record in the EMS space use industry to win new customers.
“Our business collaboration with GoldTek Technology Co Ltd allows us to secure new business growth and further expand our product category such as low power portable IoT electronic devices, which is an ideal channel to tap into their global customer base,” he said.
NationGate reported after-tax profit (PAT) for fiscal year 2020 (FY2020) of RM30.7 million on sales of RM566.2 million versus a PAT of RM5.3 million for fiscal year 2019 when sales were RM326 million RM fraud.
His FY2021 PAT increased to RM59.5 million as revenue increased to RM760.9 million.
For the fiscal year ended June 30, 2022 (FPE2022), the Company recorded a PAT of RM33.4 million on sales of RM426 million. Malaysia accounted for 74.4% of its FPE2022 revenue, while 25.6% came from abroad.
“We are targeting a 30% dividend policy after we go public, and we will seek approval from the entire board,” Ooi added.
M&A Securities Sdn Bhd is the advisor, sponsor, underwriter and placement agent for the IPO exercise.
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