CPE Technology Bhd’s (CPETECH, 5317) debut at the Main Market of Bursa Malaysia was listed this morning amid poor sentiment opening at 90 sen, compared with the initial public offering (IPO) price of RM1.07. It fell 17 sen or 15.89%.
At 9.35am, the price rose slightly to 0.955 which was still a -0.115 (-10.8%) shortfall of the initial IPO price with an opening volume of 6.31 million shares.
In addition, the company’s IPO was oversubscribed 17.69 times.
The company also reported to Bursa Malaysia last week that its net profit in the first quarter of fiscal year 2024 was RM2.57 million; its revenue was recorded at RM22.7 million.
Earlier, the engineering precision parts manufacturer has announced the pricing of its initial public offering (IPO) at RM1.07 per share, aiming to raise RM179.58 million ($40.2 million) in an IPO scheduled for December 7th. The company seeks a market valuation of RM718.31 million ($160.9 million) as it prepares to list on the Main Market of Bursa Malaysia.
During a prospectus briefing, CPE Technology unveiled its strategic plans to use the proceeds from the IPO to enhance its global market reach and optimise production efficiency. The company intends to invest substantially in new infrastructure and advanced machinery, as well as in pre-purchasing key raw materials from overseas suppliers to mitigate fluctuating shipping costs.
CEO Lee Chen Yeong outlined the allocation of the IPO proceeds, with RM69.6 million targeted for acquiring industrial land and constructing a new facility in Johor. This move is part of CPE’s strategy to meet increasing product demand, particularly from the semiconductor sector, where the company currently boasts an unbilled order book worth RM69.27 million ($15.5 million).
The public offering will include 167.83 million new ordinary shares along with a private placement offer of 67.13 million shares. The company has also detailed how the remaining funds will be distributed:
RM32.9 million ($7.4 million) for new machinery and equipment
RM17.5 million ($3.9 million) for loan repayments
RM46.9 million ($10.5 million) for working capital
RM1.4 million ($313,000) for other capital expenditures
RM11.3 million ($2.5 million) for estimated listing expenses
With this IPO, Lee Chen Yeong will hold a post-IPO stake of 32.5%, while Foo Ming will retain 19.5%, and Mu Woon Chai will maintain a 13% stake in the company.
CPE Technology’s decision to go public comes at a time when the company is looking to capitalise on its current market position and solidify its footprint in the global supply chain by expanding its production capabilities and securing resources against a backdrop of volatile shipping costs that impact many industries worldwide.
