KUALA LUMPUR: CPE Technology Bhd, a provider of engineering supporting services, has priced its initial public offering (IPO) at RM1.07 a share, with plans to raise RM179.58 million.
The group manufactures precision-machined parts and components and provision of computer numerical control machining services for different industries, including, semiconductor, life science and medical devices, sport equipment, sensor equipment and security industries in Malaysia and overseas.
The company plans to list on the Main Market of Bursa Malaysia Securities Bhd on Dec 7, 2023.
CPE Technology plans to issue 167,828,700 new shares under its IPO.
Application for the public issue is open today (Nov 20, 2023) until Nov 24, 2023.
"Our immediate objective for the listing is to speed up our growth. The bulk of our proceeds will go to the construction of new plants, and the purchase of new machinery and equipment which will allow us to optimise our production to cater to the increasing demand, from both local and international customers, for our products and services. As at the LPD, our unbilled order book stands at RM69.27 million," its chief executive officer, Lee Chen Yeong said in a statement.
"Meanwhile, a part of the proceeds will also be utilised for the purchase of raw materials such as stainless steel and aluminium which are mainly sourced from overseas suppliers. "Stocking these raw materials on site will help us maintain ample supply while simultaneously mitigating rising shipping costs due to fluctuation in price," he added.
About 38 per cent of the proceeds from its IPO will be for the acquisition of new industrial lands and construction of new plants, 26 per cent for part-financing ofworking capital expenditure while another 18 per cent will be for the purchase of new machinery and equipment and relocation of existing machinery and equipment. While the remainder will be forrepayment of bank borrowings, part financing other capital expenditure requirements and listing expenses.
According to the "Strategic Analysis of the Engineering Supporting Industry in Malaysia" report by Protégé Associates, the engineering supporting industry (ESI) in Malaysia is forecasted to grow from RM9.37 billion in 2022 to RM9.98 billion in 2023, further expanding by a compound annual growth rate ("CAGR") of 8.2 per cent to reach RM13.88 billion in 2027.
The growth is expected to be spurred by the advancement in technology as well as expansion in end-user markets.
As of June 30, 2023, CPE Technology holds a 1.55 per cent share, or RM145.35 million of the total ESI size in Malaysia in 2022.