Company Background

The Company was incorporated in Malaysia under the Act on 4 February 2021 as a private limited company under the name of NationGate Holdings Sdn Bhd. On 30 April 2021, the company converted into a public limited company under the present name. The company is an investment holding company. Through the subsidiaries and associated companies, the company is an EMS provider focusing on the assembly and testing of:

(a) electronic components and products to produce completed PCBs, semi-finished subassemblies and fully-assembled electronic products; and

(b) semiconductor devices.

The Group structure after the IPO is as follows:

Use of proceeds

1. Purchase of machineries and equipment - 3.6% (within 36 months)
2. Working capital requirements - 29.2% (within 24 months)
3. Repayment of bank borrowings - 63.8% (within 24 months)
4. Estimated listing expenses - 3.4% (within 1 month)

Purchase of machineries and equipment - 3.6% (within 36 months)

The company intends to utilise RM5.93 million or 3.6% of the proceeds from the Public Issue to purchase additional machineries and equipment to further expand our SMT assembly capacity by up to 38,400,000 mounting points to a maximum of 1,296,000,000 mounting points per month and enhance the production efficiency at Plant 5, in line with the increased demands from our Group’s existing and new customers. The details are as follows:

Working capital requirements - 29.2% (within 24 months)

A total of RM48.36 million or 29.2% of our Public Issue proceeds will be used to finance additional working capital requirements in tandem with the expected growth in our EMS business activities. The working capital will be used to purchase various raw materials, consumables and electronic components consumed for the EMS activities, which are the largest cost of sales item (collectively contributing between 75.2% to 83.4% in FYE 2019 to 2021 as well as FPE 2022), as follows:

Repayment of bank borrowings - 63.8% (within 24 months)

The company intends to utilise the proceeds of RM105.51 million or 63.8% of the Public Issue proceeds to pare down and reduce the utilisation of the bankers’ acceptance and term loan facilities. The interest rates and the tenure of the bankers’ acceptances and term loan facilities are set out below:

The proposed repayment will reduce the overall gearing level from 1.55 times to 0.50 times, based on the pro forma consolidated statements of financial position as at 30 June 2022 and result in an expected annual interest savings of approximately RM3.44 million per annum, assuming the average effective interest rate of 3.26% per annum, which was arrived at based on the average interest rate charged, amount of bank borrowings undertaken and the repayment period.

Business model

The following diagram illustrates the Group’s business model:

The company is involved in various segments across the E&E industry value chain from the assembly and testing of electronic components and products to producing completed PCBs, semi-finished sub-assemblies and fully assembled electronic products as well as semiconductor devices. Electronic components and semiconductor devices are widely used across many different end-user markets such as networking and telecommunications, data computing, industrial instruments, consumer electronics, automotive and semiconductor amongst others

The following diagram depicts our participation in the value chain of the E&E industry:

Other than the major approvals, licenses and permits stated in Appendix I, the company does not require other special approvals, licenses and permits to undertake the assembly and testing activities of the customer’s products.

Click here to continue the IPO - NationGate Holdings Berhad (Part 2)

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