KUALA LUMPUR (Dec 23): Coraza Integrated Technology Bhd expects to raise RM33 million from its initial public offering (IPO) on the ACE Market of Bursa Malaysia Securities Bhd for business expansion, according to the integrated engineering support services provider in a statement on Wednesday (Dec 22).
Coraza provides a comprehensive range of services, which include fabrication of sheet metal, precision engineering components as well as provision of related services, such as design and development and value-added sub-module assembly to customers across a diverse range of industries, including semiconductor, instrumentation, life science and medical devices, as well as aerospace.
The company said that it will deploy RM15.5 million or 47% of its expected RM33 million IPO proceeds to purchase new machinery and equipment over the next three years for its existing and new factories in Nibong Tebal, Penang.
Coraza added that it had earmarked RM6.4 million or 19.5% of the IPO proceeds to part-finance the construction of the new factory, which is adjacent to its current factory and expected to have a total built-up area of approximately 91,110.1 sq ft. It said construction will be carried out in three phases and is targeted for completion by December 2023.
The construction of the new factory is aimed at expanding Coraza’s production capacity and service offerings amid increasing demand from the semiconductor industry.
Meanwhile, the remainder of the proceeds will be utilised to repay bank borrowings of RM4.6 million (13.9%), extend its existing factory to add an additional area for capacity expansion costing RM1.5 million (4.6%), as well as procure and integrate a new enterprise resource planning system to streamline and automate its processes for more efficient operations while spending RM3.8 million (11.4%) for estimated listing expenses.
In the statement, Coraza managing director Lim Teik Hoe said the company "received substantial continuous incremental orders for metal fabricated parts from its major customers, in particular precision-machined components used in the semiconductor industry” over the past two years.
“Despite the movement control order restrictions in 2020, our revenue for the financial year ended Dec 31, 2020 grew 42.8% to RM83.7 million from RM58.6 million a year ago.
“The new machinery will further increase our capacity by approximately 25% and improve our service offerings to meet increasing demand from customers operating in the booming semiconductor industry.
“Coraza strives to continuously expand the range of services we provide to our customers that operate in various industries. In order to do so, we continuously invest in machinery, in line with improving technology and the requirements of our customers.
“As such, we are able to meet our customers’ more advanced requirements as well as keep up with demands of the market and capture new customers in new markets.
“These additional machinery will enable us to expand our fabrication as well as machining services to produce more complex parts and improve our production capacity, efficiency and quality,” Lim highlighted.
The IPO, which is open for subscription from Wednesday until Jan 6, 2022, will see Coraza issue 117.8 million new shares, representing 27.5% of its enlarged share capital, at an issue price of 28 sen apiece, according to the statement.
Based on the enlarged share capital of 428.3 million shares, Coraza said it is expected to have a market capitalisation of RM119.9 million.
Coraza is expected to be listed on the ACE Market of Bursa by Jan 20, 2022.
The public will be able to subscribe to 21.4 million new shares via balloting, followed by 21.4 million new shares for eligible directors, employees and persons who have contributed to the success of the Coraza group under pink form allocations, while the remaining 74.9 million new shares are earmarked for selected investors by way of private placement.
The company said its existing shareholders also plan to make an offer for sale of 21.4 million existing shares to selected investors via a private placement on top of the new offerings.
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for Coraza’s IPO.