Coraza seeks ACE Market listing on bullish semiconductor prospects

 There has been an increase in usage of semiconductor in both traditional and non-traditional industries 

By S BIRRUNTHA / TMR Graphic

INTEGRATED engineering supporting services provider Coraza Integrated Technology Bhd is optimistic about the semiconductor industry’s prospects next year, following the rapid investment growth in the industry. 

The group, which is set to be listed on Bursa Malaysia’s ACE Market, noted that there has been an increase in demand for semiconductor, supported by an increased usage of semiconductor in both traditional and non-traditional industries. 

It said the global sales of semiconductors were valued at US$412.31 billion in 2019 and increased to US$440.39 billion (RM1.85 trillion) in 2020, representing an increase of 6.8%. 

“The global semiconductor industry is projected to expand as an ever-increasing number of electrical and electronic devices are being produced with embedded semiconductor technology. 

“The continued evolution in technologies is expected to lead to introduction of new electronic devices and contribute to a higher demand for semiconductors,” the group said in its virtual prospectus launching ceremony yesterday. 

Coraza added that the world is currently facing a shortage in semiconductors, in which the shortage of integrated circuits has led to production disruptions in the global automotive, as well consumer electronics industries. 

It said the shortage has also led to increased bookings for semiconductors by consumers to secure parts for production of end-products. 

Going into 2021, the group highlighted that the global semiconductor industry is forecast to reach US$550.88 billion. 

Apart from the semiconductor industry, the group is also looking forward to the demand coming from telecommunications industry, as well as automotive and aerospace industry. 

Coraza is seeking to raise RM33 million under its listing on the ACE Market of Bursa Malaysia for business expansion. 

MD Lim Teik Hoe said the group has planned to use 47% or RM15.5 million raised from the IPO to purchase new machinery over the next three years for its existing and new factory in Nibong Tebal, Penang. 

He said a further 19.5% or RM6.4 million of the proceeds will be used to part-finance the construction of a new factory, as it expands its production capacity and service offerings to take advantage of the rapid growth in the semiconductor industry. 

“The new factory, which is adjacent to its current factory, is expected to have a total built-up area of 91,110.1 sq ft (8,464.4 sqm). 

“The construction will be carried out in three phases and targeted for completion by December 2023. 

“The remainder of the proceeds will be used for the repayment of bank borrowings amounting to RM4.6 million (13.9%), RM1.5 million (4.6%) to extend its existing factory to add an additional area for capacity expansion, RM1.2 million (3.6%) to purchase and integrate a new enterprise resource planning system to streamline and automate its processes for more efficient operations and RM3.8 million (11.4%) for estimated listing expenses,” he added.

Lim said over the past two years, the group had received substantial continuous incremental orders for metal fabricated parts, particularly precision-machined components used in the semiconductor industry, from its major customers. 

“Despite the Movement Control Order restrictions in 2020, our revenue for the financial year ended Dec 31, 2020 grew 42.8% to RM83.7 million from RM58.6 million a year ago,” he noted. 

He said the new machinery would further increase its capacity by approximately 25% and improve its service offerings to meet the increasing demand from customers operating in the booming semiconductor industry. 

As part of its listing exercise, the company is issuing 117.8 million new shares in Coraza, representing 27.5% of the enlarged share capital at an issue price of 28 sen per share. 

Of the 117.8 million new shares, 21.4 million new shares will be made available to the Malaysian public via balloting. 

As part of its listing exercise, the existing shareholders of the company will also make an offer for sale of 21.4 million existing shares to selected investors by way of private placement. 

Based on the enlarged share capital of 428.3 million shares, Coraza is expected to have a market capitalisation of RM119.9 million. 

The IPO is open for subscription from today to Jan 6, 2022. Coraza is scheduled to be listed on the ACE Market of Bursa Securities by Jan 20, 2022. 

M&A Securities Sdn Bhd is the advisor, sponsor, underwriter and placement agent for the IPO exercise.