Company Background

The company was incorporated in Malaysia under the Companies Act 1965 on 21 December 1999 as a private limited company under the name of Imptec Electronics Sdn Bhd and is deemed registered under the Act. The company changed its name to Seksun Electronics Sdn Bhd (14 July 2000), Seksun Array Sdn Bhd (3 March 2005), Toyoplas EMS Manufacturing (M) Sdn Bhd (14 March 2011) and Cape EMS Manufacturing (M) Sdn Bhd (16 July 2013). On 9 May 2022, the Company was converted into a public limited company under the name of Cape EMS Manufacturing (M) Berhad. The company assumed its present name on 27 May 2022. The company is principally an investment holding company and is involved in electronics manufacturing services.

Through the Subsidiaries, the company is also involved in aluminum die casting and electronics manufacturing services, and supply of electronic products and related activities. As at the LPD, the Group structure including the Subsidiaries is as follows:

Use of proceeds

1. Construction of New Senai 226 Warehouse and installation of automated storage facilities - 34.1% (within 48 months)
2. Setting-up of new cleanroom facility and purchase of new automated production lines for EMS operations - 40.3% (within 24 months)
3. Installation of energy-saving cooling system - 2.4% (within 24 months)
4. Purchase of new machinery and equipment for die cast manufacturing related services - 3.0% (within 12 months)
5. Working capital - 13.2% (within 12 months)
6. Estimated listing expenses - 7.0% (within 3 months)

Construction of New Senai 226 Warehouse and installation of automated storage facilities - 34.1% (within 48 months)

The Group intends to construct the New Senai 226 Warehouse and install automated storage facilities in the new warehouse. The New Senai 226 Warehouse is intended to be constructed on PLO 226B which was purchased by the Group in 2021 for a purchase consideration of approximately RM7.8 million. The purchase of PLO 226B had been funded by the proceeds from the issuance of the ICPS as well as bank borrowings. The construction of the New Senai 226 Warehouse and installation of automated storage facilities is expected to cost approximately RM53.1 million, the breakdown of which is as follows:

Upon completion of the construction of the New Senai 226 Warehouse, the Group will then purchase and install automated storage facilities in 2 phases to allow customers the usage part of the said warehouse (Phase 1) pending completion of Phase 2. The company expects to complete the installation of Phase 1 and Phase 2 of the automated storage facilities and commence operations by the third quarter of 2026 and the first quarter of 2027 respectively.

Setting-up of new cleanroom facility and purchase of new automated production lines for EMS operations - 40.3% (within 24 months)

The Group has earmarked approximately RM62.8 million or 40.3% of the proceeds raised from the Public Issue to fully fund the setting-up of a new ISO Class 8 cleanroom facility and the purchase of 4 new automated production lines for the EMS operations for the electronic cigarette for Customer A(1). The rationale of the expansion is to increase the Group’s capacity to meet the expected increasing demand from the said customer. The expected increase in demand is premised on the rolling forecast provided to the Group as well as discussions with the said customer. The setting up of a new cleanroom facility and purchase of automated production lines for EMS operations is for the Senai 227 Factory.

The total cost for setting up of new cleanroom facility and purchase of automated production lines is estimated at RM62.8 million as follows:

Installation of energy-saving cooling system - 2.4% (within 24 months)

The Group has allocated approximately RM3.7 million or 2.4% of the proceeds from the Public Issue for the installation of the energy-saving cooling system for the Senai 227 Factory in line with its cost-saving efforts and potential ‘green’ contribution towards the environment.

The estimated cost for the installation of the energy-saving cooling system will be fully funded from the proceeds raised from the Public Issue. The energy-saving cooling system is expected to be fully commissioned and be operational by the second quarter of 2023

The energy-saving cooling system is a heating, ventilation and air conditioning (“HVAC”) energy-saving system that comprises 21 sets of new air-handling units (AHU); 3 sets of new cooling towers (CT); 2 sets of new high-efficiency chillers; 3 sets of new chilled water pump; 3 sets of new condenser water pump; the installation of a new control panel with high-efficiency variable speed

drive (VSD) and the installation of an energy management system for the chiller plant room as well as wiring and programming works including wiring connection with existing air conditioning equipment.

It is anticipated that the total energy savings from the HVAC will see an improvement from the current estimated total consumption of approximately 457,000 kilowatt-hours (“kWh”) to approximately 260,000 kWh per month, representing savings of approximately 40%. The installation of the energy-saving cooling system is aimed at achieving cost-saving measures by reducing overall electricity costs, resulting in estimated energy savings of approximately RM1.0 million per annum. In addition to the cost savings, with the lower energy consumption, The company can expect lower carbon emissions which are in line with the Company’s sustainability policy.

Purchase of new machinery and equipment for die cast manufacturing related services - 3.0% (within 12 months)

The Group has allocated approximately RM4.6 million or 3.0% from proceeds raised from the Public Issue to fully fund the following machinery and equipment for its die-cast manufacturing-related services to be located at the new Tebrau 6 Factory. Cape Manufacturing acquired the Tebrau 6 Factory, which refers to the lease over 3 pieces of land held under PTD 53893, PTD 53894 and PTD 53895, together with a detached factory erected thereon, in September 2022.

The total cost for the purchase of new machinery and equipment for die-cast manufacturing-related services are as follows:

Working capital - 13.2% (within 12 months)

The Group’s working capital requirements are expected to increase in tandem with the expected growth in the business. The company anticipates a working capital requirement of approximately RM20.5 million or 13.2% of the Public Issue proceeds.

The following is the breakdown of the expected utilization of proceeds for the working capital:

Business model

The business model is as follows:

The company is an EMS provider offering a range of contract manufacturing services for end-to-end manufacturing services which entail parts and components sourcing and procurement, production, assembly, testing, packaging up to direct shipment fulfillment. The manufacturing contracts are typically turnkey contracts to provide complete box-build products. The typical lead time from receipt of the purchase order to completing the box-build assembly process is 3 to 6 months

The company carries out EMS services for box build of industrial and consumer electronic products as follows:

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