This article first appeared in The Edge Financial Daily, on April 28, 2016.

IPOH: Bluetooth electronic components maker Salutica Bhd sees its planned listing on the ACE Market of Bursa Malaysia on May 18 as “a natural progresson” to further grow the company.

“We have large multinational companies as customers who have been with us for sometime, and if they see that we are just staying in this position, they may leave us for other manufacturers that are more forward-looking in terms of growth.

“If you cannot keep your current customers, you are not good. We want to make sure that all our customers will stay with us,” said Salutica managing director James Lim when met at the company’s factory here recently.

“It is a natural progression for us,” Lim told The Edge Financial Daily on the company’s decision to list on the local bourse.

Salutica’s initial public offering (IPO) involves the issuance of 101 million shares at an issue price of 80 sen per share, comprising a public issue of 78 million new shares and an offer for sale of 23 million existing shares.

The company expects to raise RM62.4 million from the exercise, of which RM25 million will be utilised for the purchase of new machineries and equipment, and RM16.7 million for working capital.

A further RM8.2 million will be allocated for the expansion of the company’s research and development department, which includes the expansion of facilities, equipment, as well as workforce. Another RM8.5 million will be used to repay bank borrowings and the remaining RM4 million to defray listing expenses.

The company’s 30,000 sq m factory in Ipoh has a utilisation rate of 70% and with the upgrades from the IPO, it will see an additional capacity of 30%.

Lim said the company will be in a better position to clinch more customers pursuant to the listing, and that it is already in talks with a potential new German client.

Over 90% of the company’s revenue comes from the exports of bluetooth devices for external brands. The sale of Fobo products only constituted 1.8% of Salutica’s revenue in its financial year ended June 30, 2015 (FY15). In FY15, the group posted a net profit of RM27.41 million and a revenue of RM192.52 million.

Lim said proceeds from the IPO will also help the company further develop its Fobo brand of products, which has experienced a compound annual growth rate in revenue of 226.1% over the past three years.

The company will have a net earnings per share of 5.2 sen per share for FY15, based on its enlarged paid-up share capital of 388 million shares post-IPO, which translates to a price-earnings ratio of about 15.4 times.