KUALA LUMPUR: Ta Win Holdings Bhd is venturing new markets with its foray into the electric vehicle (EV) supply chain for its wire, cable and other related products.
Ta Win's subsidiary Cyprium Wire Technology Sdn Bhd (CWT) was recently added to global vendor international technology and mobility company Aptiv PLC's (Aptiv) global automotive supply chain.
The copper wires and rods manufacturer said its recent corporate exercises comprising rights issue and bonus issuance would provide the financial impetus for realising its entry into the EV segment.
Group managing director Datuk Seri Ngu Tieng Ung said Ta Win was upbeat about the EV market as it had invested enormously in the new business segment.
"At this juncture, it would be premature to provide any earnings visibility as we are looking to finalise a sustainable income stream.
"Once we have locked this in and following disclosure requirements, we will keep the market posted," Ngu told the New Straits Times recently.
Ta Win recently announced its rights issue was substantially oversubscribed by investors with the proposed bonus issue of up to RM1.49 billion warrants to encourage shareholder participation in its convertible securities.
"The rights issue will strengthen the fundamental base of Ta Win and gear up its expansion plan to pursue many strategic growth initiatives.
"It also enables Ta Win to raise proceeds to be utilised for working capital, repayment of bank borrowings, as well as the purchase of machinery and equipment," said Ngu.
He added that the exercise would further enhance the group's capital base and lower its gearing level, which creates headroom for it to consider further debt financing for future business expansion if required.
"It affords a good avenue to raise funds without having to incur interest cost if compared to bank borrowings and/or other interest-bearing debt instruments.
"Importantly, it provides entitled shareholders with an opportunity to increase their equity participation in the future growth of our group," he said.
Ngu said the issuance of rights shares on a pro-rata basis would also allow existing shareholders to increase their equity participation without further dilution to their existing holdings.
Ta Win raised to RM153.39 million, comprising 2.56 billion rights shares at an issue price of RM0.06 per rights share.
Ngu said the proceeds would be utilised primarily for Ta Win's business expansion plans.
This consists of 42 per cent as working capital, 27 per cent as repayment of bank borrowings, 23 per cent for machinery and equipment purchase and the remaining for investment in Sin Line Tek.
He said Ta Win had also received approval on the proposed bonus issue of up to RM1.49 billion warrants, allowing the company to reward shareholders for their continuous support.
"This enables them to participate in our convertible securities, which are tradeable on Bursa Securities, without incurring any additional cost," said Ngu.
He said the bonus issue would also provide shareholders with an opportunity to increase their equity participation in Ta Win at a pre-determined exercise price during the tenure of Warrants B, thus allowing shareholders to further participate in the company's future growth when Warrants B are exercised.
"The bonus issue provides us with additional working capital when the Warrants B are exercised in the future.
"The exercise of the Warrants B will also allow us to obtain proceeds without incurring interest expenses as compared to bank borrowings," he added.
CWT managing director Justin Wong Chen Feng said proceeds raised from the exercises would assist Ta Win in its business expansion plans, including its investment in the EV segment.
"In line with Ta Win's ambition to become a major vendor to cater to the global wire harness market, about RM80 million will be allocated out of these two corporate exercises to CWT," he said.
Of the total, he said RM25.5 million would be allocated for high-speed automatic machine upgrades to improve the efficiency of factory production and output; modern laboratory equipment as part of its total quality assurance achievement.
"Most updated Quality Management System and Certification with IATF 16949 and ISO 9001 to fulfil stringent customer requirements for the upcoming automobile, electrical and electronics (E&E), medical and health care, oil and gas and solar projects.
"It also involves a factory renovation and expansion to comply with the environment and safety standard requirements of its few major European, North America and Japanese customers," he said.
Separately, Wong said about RM34.5 million would be allocated for day-to-day operating expenses involving modern business management systems installation such as SAP to increase efficiency in operation, financial and accounting control of CWT, continuous specialised training and strategic human resource hiring to improve efficiency and productivity of its talented pool of workforce; and raw materials purchase.
"The remaining RM20 million will be allocated for the construction of the electron-beam plant," he added.
Wong said the EV industry had been experiencing tremendous growth since the early 2000s in western countries and for the last couple of years in China.
"We believe Southeast Asian countries will be the next target market for EV commercialisation, given the various incentives and favourable local government policies that are being implemented recently, including in Thailand and Singapore," he said.
Similarly, Wong said the EV market was growing rapidly in Malaysia, and the company expected the market to continue to evolve.
This is particularly with the announcement of tax incentives for EV developments by Malaysia Automotive, Robotics and IoT Institute as part of the soon-to-be-announced accelerated EV policy under the National Automotive Policy 2020.
"All these factors will further enhance growth prospects and revenue contribution of CWT to the group," he said.
Wong said CWT has a bright prospect in the EV supply chain for its wire, cable and other related products, including wire harnesses, heat-shrinkable tube and tape, Battery Management System (BMS) and power and signal distribution system (PSD).
"The irradiation cross-linked wire and cable products developed using its patented technology are expected to provide a credible and solid platform for CWT to tap into the lucrative EV market in Malaysia and the rest of Southeast Asia," he said.
Wong said the recent appointment of CWT as a global vendor for Aptiv global automotive supply chain would position the company well in the market.
"This certainly demonstrates CWT's capabilities in the global automotive supply chain while leveraging on Aptiv's global business presence across 44 countries," he added.
Wong said CWT would constantly sourcing opportunities to grow its business, particularly in the EV segment, including the supply chain of wires cable and other related products such as wire harnesses, heat-shrinkable tube and tape, BMS and power and signal distribution system.