KUALA LUMPUR: Bursa Malaysia's ACE Market-bound CEKD Bhd intends to buy a factory here for RM8.8 million in the next two years to streamline its operations, according to its managing director Yap Kai Ning.
She said that the factory was for its wholly-owned Hotstar (M) Sdn Bhd, which manufactures die-cutting moulds and tools.
Yap stated that Hotstar had been operating from rented premises in three sites in Kepong, Selangor for years.
"We would like to acquire a factory at a location that is close to our current facility in order to consolidate and streamline our manufacturing. This will boost our overall productivity," she said following the virtual launch of the company's prospectus today.
CEKD plans to raise RM24.23 million through an initial public offering (IPO) on the ACE Market this month.
The IPO entails a public offering of 50.59 million new shares at 48 sen each.
"This IPO will improve our position in the industry in die-cutting solutions and raise our profile, which will help us with our expansion goal," Yap said.
The estimated RM4 million from the IPO proceeds would be used to reduce the company's debt, she added.
"We have roughly RM11 million outstanding to the bank, and by reducing the debt, we will save a lot in interest each year," she said.
CEKD's primary activity is the production of die-cutting moulds and tools and the provision of die-cutting solutions. It also deals in consumables, tools, and accessories.
Yap said the company has a broad customer base from various industries, including paper printing and packaging, electrical and electronics, automotive, plastic packaging, textile and leather.
As of August 6 this year, the company had a vast and diverse customer base of 1,309, which Yap expects to grow as it enters new foreign markets.
From fiscal years 2018 through 2020, CEKD had an average gross profit margin of 48.3 per cent.
Yap said the company had been able to maintain a healthy profit because of the nature of its business.
"As a result of the e-commerce industry's pent-up demand, our company continues to grow in a sustainable manner. We receive orders every morning for delivery in the afternoon, therefore our turnover is pretty quick and high," she said.
The IPO comprises the issuance of 9.73 million new shares to the Malaysian public.
Some 9.73 million will be allocated to eligible directors, employees, and contributors to the company, 6.81 million shares will be reserved for private placement to selected investors, and 24.32 million shares will be reserved for private placement to Bumiputera investors approved by the International Trade and Industry Ministry.