THE stock price of BSL Corporation Bhd (BSLCorp) has surged 30% in a single day on Sept 6 and 13 following its memorandum of understanding (MOU) announcement to acquire controlling interest of SD Unify Pte Ltd, a Singaporean company principally involved in manufacturing and repairing semiconductor foundry equipment.
SD Unify is an international procurement office centre of overseas supply chain for OEM semiconductor approved vendor list components. With the customer base of SD Unify including many big players in the semicon industry, BSLCorp can expect to sell its products and services to these big boys following its synergistic acquisition.
Currently, BSLCorp has an existing foothold in semiconductor sector. The acquisition of SD Unify will increase its exposure to this lucrative sector due to worldwide shortage of this product and the booming electric vehicle (EV) segment.
Such corporate manoeuvre will ultimately lead to BSLCorp being re-classified into Bursa Malaysia’s semiconductor or technology sector (from the current industrial products & services sector).
BSLCorp has been receiving high orders due to high volume of backlogs from its customers while the company has been able to record four quarters of consecutive net profit up to end of May 2021.
The acquisition of SD Unify will be financed by BSLCorp’s internal cash and partly from the private placement of up to 58.8 million new BSLCorp shares which was announced on Bursa website on Sept 3.
In the same announcement, BSLCorp has also proposed to undertake share split involving a subdivision of every one existing ordinary share in the company into two shares and bonus issue of up to 127.4 million free warrants in BSLCorp on the basis of one warrant for every two shares.
In order to tap into a wider market segment and to achieve better financial performance, BSLCorp is in continuous discussions with potential customers within the electrical & electronic (E&E) and semiconductor industries to manufacture parts for semiconductor test equipment which are expected to yield higher profitability.
Such new product range is of greater complexity and specifications, hence requires more technologically advanced equipment and machineries.
Accordingly, BSLCorp intends to allocate up to RM30 mil for the manufacturing expansion, of which RM23.60 mil is for the purchase of equipment and machineries which will increase BSLCorp’s monthly production capacity circa 39,000 units of output with a greater mix of product range of greater complexity and specifications (such as parts of semiconductor test equipment), requiring higher accuracy.
In order to cater for the additional equipment and machineries to be installed within its production premises, BSLCorp intends to increase the production floor space by renovating its existing idle production area of about 1,170 sq metres and expanding the gross floor area of its production facilities by circa 1,950 sq metres to 25,039 sq metres.
Moreover, a sum of up to RM4.90 mil will be earmarked for working capital to purchase raw materials to support the enlarged operations of BSLCorp after the manufacturing expansion.
The current monthly production capacity of BSLCorp’s existing production facilities is approximately 146,180 units of output from different range of products.
At the close of yesterday’s trading (Sept 15), BSLCorp was up 4 sen or 2.03% to RM2.01 with 3.25 million shares traded, thus valuing the company at RM197 mil. – Sept 16, 2021