CEKD Bhd aims to raise $5.85 million from IPO

The market capitalisation upon the successful listing of CEKD will be $22.52 million

Die-cutting solutions provider CEKD Bhd aims to raise RM24.28 million ($5.85 million) from its upcoming initial public offering (IPO) on Bursa Malaysia's ACE market.

From this, a total of $2.12 million (36.2%) has been allocated for the acquisition of a factory for Hotstar (M) Sdn Bhd — one of CEKD's three wholly-owned subsidiaries at Kepong, Kuala Lumpur.

A further $0.72 million (12.4%) of the proceeds will be allocated for the purchase of new machinery and $0.31 million (5.4%) for the upgrade and development of computer software and server.

The remainder will be used for the repayment of bank borrowings amounting to $0.96 million (16.5%), $0.36 million (6.2%) for marketing activities, $0.65 million (11%) for general working capital and $0.72 million (12.3%) for estimated listing expenses.

The IPO involves the public issue of 50.59 million new shares at the issue price of 48 sen per share.

Of this, 9.73 million new shares will be available for application to the Malaysian public, 9.73 million new shares will be allocated for application by eligible directors, employees and persons who have contributed to the success of the group, 6.81 million new shares by way of private placement to selected investors, and 24.32 million shares by way of private placement to Bumiputera investors approved by the Ministry of International Trade and Industry (MITI).

The market capitalisation upon the successful listing of CEKD, scheduled on Sept 29, 2021, will be $22.52 million.

Following a virtual prospectus launch today, CEKD managing director Yap Kai Ning said the forthcoming IPO listing of CEKD will not only strengthen the group's presence in the industry as a leading die-cutting solutions provider and manufacturer but also raise its profile to help in its expansion plans.

The proceeds from the IPO will go towards acquiring laser-cutting machines and automatic steel rule processors to support business expansion and increase our production efficiency. Our production capability will be enhanced with the upgrading of our computer software and servers and this will support business growth, she said.

This IPO will help us leverage on our integrated business model alongside our three wholly-owned subsidiaries, Sharp Die Cutting Mould Sdn Bhd at Jalan Kelang Lama, Kuala Lumpur; Hotstar; and Focuswin Diecutting Mould Sdn Bhd at Prai, Penang, while allowing us to fortify our presence in the industry as a leading provider and manufacturer of custom die-cutting solutions as well as a trader of related consumables, tools, and accessories, she said.

Meanwhile, M&A Securities managing director of corporate finance Datuk Bill Tan sees a lot more growth opportunities given the number of industries that CEKD can cater to while not relying on any particular industry, mitigating the risk of over-reliance on a particular sector.

CEKD has leveraged off the industrial growth in Malaysia to expand its business, these industries include paper printing and packaging, the E&E, automotive and textile, just to name a few. These industries will continue to grow and thus so does CEKD’s outlook and sustainability, he said.

Further, the Covid-19 pandemic has led to a substantial increase in demand for packaging material which CEKD supply to. We see a lot more growth opportunities given the number of industries that CEKD can cater to while not relying on any particular industry, mitigating the risk of over-reliance on a particular sector, he said.