KUALA LUMPUR (Jan 30): After making an impressive debut on the ACE Market opening at 43 sen, up 15 sen or 53.6% from its initial public offering (IPO) price of 28 sen, electrical engineering services provider HE Group Bhd saw less ebullient trading as the day progressed and ended at 32.5 sen at market close on Tuesday.

Even so, it yielded IPO subscribers a 4.5 sen or 16.1% premium. At its current price, its market capitalization is RM143 million.

HE Group also topped the most active stock with 209.4 million shares changing hands. Its IPO was oversubscribed by 63.35 times.

At a press conference at Bursa, HE Group managing director Amos Haw Chee Seng highlighted the company’s expansion plan to set up offices in Johor to tap into the data centre market, which aims to benefit from the establishment of the Johor-Singapore Special Economic Zone.

“Firstly, we will open new offices in Kedah and Johor. There are a lot of investments in Kedah, especially in Kulim, and all the semiconductor giants are there. We are also going to Johor because we target data centres. [The government] has just announced a new Special Economic Zone between Malaysia and Singapore. So, we plan to set up [offices] there, hoping to get a piece of the cake from that market [of data centre clientele],” he said.

Furthermore, Haw remained upbeat about the outlook for the semiconductor industry in 2024.

“Most of the electric vehicles have high-end chips, so the semiconductor industry will be booming for the next two to three years. Now, the wave is coming for artificial intelligence also. You can see a lot of data centres and chipmakers expanding their businesses and operations in Malaysia.”

He added that Malaysia will likely continue benefiting from the trade war between the US and China, because of its political stability and a well-established ecosystem for the industry.

In a statement on Monday, HE Group said proceeds raised from the IPO, amounting to RM24.33 million, will be used mainly for its working capital requirements (RM15.13 million). It will also allocate RM3.65 million for business expansion, RM3.8 million for listing expenses and RM1.75 million for capital expenditure.

The company recorded a profit after tax (PAT) of RM7.26 million on RM138.58 million in revenue for the financial period ended Aug 31, 2023.

The semiconductor sector accounted for 77.2% of the company's revenue for the financial period, followed by medical devices (16.1%), and other end-user industries, including electrodeposited copper oil, battery cell manufacturing and telecommunications (6.7%).

From the financial year ended Dec 31, 2020 (FY2020) to FY2022, the group saw its revenue grow to RM107.57 million from RM31.39 million, translating into a compound annual growth rate (CAGR) of 85.1%. Meanwhile, PAT jumped to RM6.17 million from RM1.7 million over the same period, representing a CAGR of 90.61%.

As of Dec 15, 2023, the group’s order book stood at RM211.9 million, of which 90% is expected to be delivered by end-2024.