ACE Market-bound Greatech eyes over RM73m from IPO

A quarter of the proceeds will be utilised for Greatech’s sales offices in the US and China


Greatech Technology Bhd is seeking to raise RM73.05 million from its capital raising exercise on Bursa Malaysia’s ACE Market.

Its CEO Tan Eng Kee said RM18 million or 24.64% of the proceeds will be utilised for the establishment of Greatech’s engineering and manufacturing sales offices in the US and China.

“We are going to open offices in the Silicon Valley and in the East Coast for the US, and one in Shanghai, China,” he said at the company’s prospectus launch in Kuala Lumpur yesterday.

The industrial automation solution provider’s initial public offering (IPO) entails 119.75 million new shares, of which 18.78 million will be made available to the Malaysian public and 9.39 million to the eligible director, employees and business associates.

The remaining 22.72 million shares are provisioned for selected investors, while 68.86 million shares to Bumiputera investors were approved by the Ministry of International Trade and Industry.

The company is expected to be listed on the local bourse on June 13 at a price of 61 sen with a market capitalisation of RM381.86 million.

Last month, the company inked an underwriting agreement with its sole underwriter, Alliance Investment Bank Bhd, to facilitate its listing process on the local bourse.

Commenting on its move to tap into countries that are in the middle of global trade tensions, Tan said the US is controlling the bulk of the world’s research and development programmes and progressive technologies that could not be missed.

“I’m not concerned about the US-China trade war. Basically, the new technologies are coming from the US and I believe that Greatech needs to set its footprint in the US market,” he said.

For its future manufacturing expansion, Tan did not discount the possibility of establishing a regional facility in the US in the near future.

“When the time is right, having a manufacturing facility that is close to our customers is very important as we cannot ship entirely from Malaysia if we want to grow.

“However, we are focusing on our manufacturing and design operations at our new factories in Bayan Lepas and Batu Kawan, Penang, as Malaysia has a lot of advantages compared to other countries in terms of talents and costs,” he said.

With the extended regional operation and its orderbook in the pipeline, Tan said the company is targeting a revenue growth of between 10% and 15% for the 2019 financial year (FY19).

“We have secured a small project with a Swiss company, along with a couple of new projects from our existing customers. However, we cannot disclose that yet,” he said.

Last year, about 90% of Greatech’s revenue was generated from its overseas market, with Vietnam and the US taking the majority portion
of 63% and 25% of its total annual revenue respectively.

On the company’s production capacity, its RM27 million new facility in Bayan Lepas is expected to begin operations in the second half of 2019 (2H19). Its upcoming facility in Batu Kawan is also expected to commence construction in 2H19.

As at April 15, the company’s orderbook stood at RM91 million, holding 3% of the market share in Malaysia’s industrial automation industry.

For its FY18, Greatech posted a revenue of RM219.58 million and a profit after tax of RM31.72 million with an estimated 90% of the revenue derived from its international clients.