Company Background

The Company was incorporated on 14 May 2019 under the Act as a private limited company under the name Cosmos Technology International Sdn Bhd. On 30 September 2019, the Company was converted to a public limited company and assumed its present name, Cosmos Technology International Berhad.

The Company is an investment holding company and through the Subsidiaries, they are an integrated water technology solutions provider principally involved in the distribution and instrumentation services of fluid control products and manufacturing of fabricated metal products for industrial applications used in the water, wastewater, and oil and/or gas industries.

The Company was listed on the LEAP Market on 9 March 2020. Pursuant to the listing on LEAP Market, the company issued 19,240,000 Shares representing approximately 10.00% of the enlarged issued share capital at RM0.28 per Share to sophisticated investors as specified in Part I of Schedule 7 of the CMSA pursuant to Section 230 of the CMSA. Subsequently, the Company was delisted from the LEAP Market on 10 November 2021 pursuant to the withdrawal of the listing from the LEAP Market to facilitate the listing on the ACE Market.

A summary of the business model is illustrated as follows:

Use of proceeds

1. Acquisition of New Building - 44.56% (within 24 months)
2. Purchase of new machineries - 15.59% (within 24 months)
3. Repayment of bank borrowing - 6.68% (within 6 months)
4. Working capital - 19.80% (Within 12 months)
5. Estimated listing expenses - 13.37% (within 1 month)

Acquisition of New Building - 44.56% (within 24 months)

The company has earmarked RM10.00 million or 44.56% of the total proceeds from the Public Issue to acquire the New Building which is a piece of industrial land with an existing and ready-built factory as well as an office in the Balakong industrial area.

The Group does not expect the lower built-up area of the New Building as compared to the existing manufacturing in Balakong to constrain the Group’s plan to expand its manufacturing capability and capacity after taking into consideration the following:

1. The purchase and installation of new and improved machineries, such as high-power laser cutting machines, press brake machines, and robotic welding machines, as detailed in Note (ii) below, has higher efficiency through improved specifications which include higher output and increased automation. Increased automation through the use of new machineries is also expected to have higher precision and enable the Group to reduce its reliance on trained workers; and
2. The relocation of the Group’s operations provides an opportunity for the Group to re-design the manufacturing processes and systems at the New Building.

           This is to improve its efficiency in the use of the production space by identifying and reducing inefficiencies such as, among others,                reducing storage space and maintaining the optimum level of inventory with improved supply chain management by leveraging its             established business relationships with their suppliers through shorter delivery time

The New Building will also be used by Cosmos Instruments to set up a product showroom and service and maintenance centre and store its inventories. Cosmos Instruments intends to showcase its range of fluid control products, flowmeters, RTUs, and other products distributed by Cosmos Instruments and to demonstrate their functions and potential benefits and advantages to its future or potential customers. Cosmos intends to carry out renovations on the interior of the New Building without affecting its external structure.

Purchase of new machineries - 15.59% (within 24 months)

The company intends to allocate RM3.50 million or 15.59% of the total proceeds from the Public Issue to MCI for the purchase of new machineries to be located in the New Building to expand the manufacturing operations.

Details of the new machineries proposed to be acquired are as follows:

The estimated cost for the purchase of machineries is inclusive of the installation cost and was derived based on quotations. All the machineries will be purchased locally.

Repayment of bank borrowing - 6.68% (within 6 months)

The company has earmarked RM1.50 million or 6.68% of the total proceeds from the Public Issue to repay part of the Group’s bank borrowings. MCI has an overdraft facility of RM1.50 million with United Overseas Bank (Malaysia) Bhd. As at the LPD, the amount outstanding under the overdraft facility is RM1.49 million. The company intends to repay the entire amount outstanding under the abovementioned overdraft facility to reduce the financing cost. The repayment is expected to result in interest savings of approximately RM0.06 million per year based on the weighted average interest rate of 5.76% per annum. However, the actual interest savings may vary depending on the then applicable interest rate.

Working capital - 19.80% (Within 12 months)

The company intends to allocate RM4.44 million or 19.80% of the total proceeds from the Public Issue to supplement the general working capital requirements. The following is a breakdown of the expected utilisation of the working capital:

Business model

The Group’s business model is illustrated below:

The Group’s principal activities are segmented into the following:

1. Distribution and instrumentation services of fluid control and telemetry products such as Siemens’ electronic flowmeters and related products, Sofrel’s data loggers and centralised monitoring systems used in the water and wastewater applications; and
2. Manufacturing of fabricated metal products used in main water, wastewater, and oil and gas applications.

1. Distribution and instrumentation services of fluid control and telemetry products

The company instrumentation services include, but are not limited to, consultation and advice, design and integration of telemetry systems, installation and commissioning of instruments, calibration and testing of instruments, maintenance, training, and after-sales services for the fluid control and telemetry systems and equipment as detailed below:

• Consultation and advice
• Design and integrate of telemetry solutions
• Installation and commissioning of instruments
• Calibration and testing of instruments
• Maintenance of the instruments
• Training

2. Manufacturing of fabricated metal products

MCI possesses the technical knowledge, experience, and capabilities in metal fabrication to produce quality fabricated metal products. The manufacturing facility is equipped with high-precision manufacturing technologies, including robotic welding machines to carry out the manufacturing and fabrication processes. The company is capable of customising fabricated metal products according to the customers’ application needs.

Apart from the metal frame for shaker filters and metal body frame for shale shakers, MCI also produces other metal products such as wall mounts, pedestal panels, metal enclosures, stainless steel earthing rings, mild steel, and stainless-steel brackets, and lamella plate used in water and wastewater applications. MCI commenced the manufacturing of metal products used in water and wastewater applications in August 2019. These products have extended its market presence, and also as part of its strategy to reduce the dependency on the oil and gas industry.

Click here to continue the IPO -Cosmos Technology International Berhad (Part 2)

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