KUALA LUMPUR: Ecomate Holdings Bhd (Ecomate) aims to raise about RM16.2 million via an initial public offering (IPO) to acquire machinery and equipment to enhance its automation processes and increase production capacity, which is nearing full utilisation.
Managing Director Jason Koh Jian Hui said the new machinery would allow the company to capture a bigger share of the growing ready-to-assemble (RTA) furniture markets," he said at a virtual press conference today.
The Muar-based furniture specialist today launched its prospectus virtually in conjunction with the company's upcoming listing on the ACE Market of Bursa Malaysia, scheduled on November 8.
The IPO entails a total issuance of 49 million new shares, priced at 33 sen per share to partly fund its expansion plans.
This issuance represents about 14.0 per cent of Ecomate's enlarged share capital, along with an offer for sale of 30 million existing shares via private placement to selected investors.
Of the total company's public issuance, 17.50 million new shares are available for the Malaysian public, 8.75 million new shares are available for the eligible directors, employees and persons who have contributed to the success of the group, while 22.75 million new shares by way private placement to selected investors.
Of the total proceeds, Ecomate will utilise RM6.0 million (37.1 per cent) to acquire machinery and equipment, RM2.0 million (12.4 per cent) for the construction of a third factory that is expected to house three additional production lines and one block of a four-storey detached hostel.
Further, the company will allocate RM5.3 million (32.6 per cent) to purchase raw materials to support production activities, and the remaining of RM2.9 million (17.9 per cent ) to defray estimated listing expenses.
Koh said Ecomate would allocate a portion of the proceeds for constructing a new factory and hostel in Muar Furniture Park.
The company also aims to be the leading RTA furniture manufacturer in the region after debuting on the Bursa Malaysia.
"Over the past 20 months, the Covid-19 pandemic has, admittedly, taken a toll on the global economy and brought disruptions to our business operations.
"Nevertheless, we managed to sustain our growth momentum and, in fact, turned in a record-high net profit in the financial year ended February 28, 2021 (FY21)," he said.
Ecomate posted revenue and profit after tax and non-controlling interest (PATNCI) at RM56.3 million and RM8.5 million, respectively, for FY21.
Koh said the lockdown restrictions and remote working policy implemented globally to curb the spread of the Covid-19 pandemic had propelled the demand for furniture.
"Consumers are increasingly pivoting towards purchasing furniture products online to enhance their home experience.
"We are capitalising on this opportunity swiftly as we primarily sell RTA furniture products that are shipped in flat packs," he said.
Compared to fully-assembled furniture, he said Ecomate's flat-pack format is much suitable for sale via e-commerce platforms due to its compact nature that enhances logistics efficiency.
"Coupled with the affordable price range through the use of eco-friendly materials in our furniture such as chipboard and medium density fibreboards, our products appeal widely to mass consumer groups around the globe," he said.
Koh said the company is upbeat on its outlook to accelerate its expansion plans while keeping up with the robust order flows, especially via e-commerce sales channels for RTA furniture.
He said Ecomate's operations have resumed on full scale following full vaccination of its workforce.
"Hence, the company is currently kept busy fulfilling the sizeable order backlogs to catch up on the lost time during the Full Movement Control Order," he added.
Established in 2016, Ecomate is an export-oriented furniture producer based in Muar, Johor, focusing on the production of RTA furniture products where it undertakes its design, development production, and marketing and sales activities.
The company offers a diverse range of flat-packed furniture products, including but not limited to coffee tables, console tables, bookshelves as well as wardrobes.
It exports to customers from more than 30 countries across six continents - Asia, Europe, North America, Australasia, Africa, and South America.