MUAR-BASED ready-to-assemble (RTA) furniture specialist Ecomate Holdings Bhd debuted strongly on the ACE Market of Bursa Malaysia by opening at 68 sen for a 35 sen or 106.1% premium over its issue price of 33 sen/share.
Categorised under the Consumer Products and Services sector, Ecomate raised a total of RM16.17 mil from the public issue under its initial public offering (IPO), of which RM6 mil or 37.1% will be used to acquire new machinery and equipment.
Another RM2 mil or 12.4% will be allocated to finance its new factory and hostel construction while RM5.27 mil or 32.6% will be allocated for the purchase of raw material, and the balance RM2.90 mil or 17.9% has been earmarked for listing expenses.
“We believe our robust business model and expansion pipeline put us in a strong position to capture more growth opportunities entailed in the furniture industry, especially the RTA segment,” commented Ecomate’s managing director Jason Koh Jian Hui.
“Indeed, the proceeds raised from this IPO is timely as it allows us to implement our growth strategies expediently. Our immediate plan is to add a new production line in our Factory A to enhance our capacity considering we are operating at near full utilisation rate currently.”
Moving forward, Ecomate will also be constructing its new third factory, Factory C (slated for completion by 2024), which can house another three lines. Altogether, the company will boost its capacity by 316,800 units or about 67% to 787,200 units per annum from the current output of 470,400 units per annum.
“All-in-all, we are upbeat on the future prospect of the furniture industry. The demand for furniture products is underpinned by several factors such as the prevailing geopolitical tension between the North America and China which has routed many furniture orders to Southeast Asia,” opined Koh.
“Coupled with the e-commerce activities gaining much stronger foothold recently as more consumers choose to shop online during the lockdown measures implemented worldwide, purchases of RTA furniture are expected to stay buoyant.”
Commenting on Ecomate’s latest 2Q FY2/2022 results for the financial period ended Aug 31, 2021, Koh attributed the net loss of RM1.8 mil on a revenue of RM6.5 mil to the operational halt that hit the entire furniture industry during the full movement control order (FMCO) which spanned across its reporting period of June 1 to Aug 31.
“Additionally, we also incurred listing expenses of RM700,000 during the quarter under review,” he justified.
“On a positive note, there were no order cancellations during the stoppage as our customers understood the situation. We have since resumed full operations from mid-September and are busy fulfilling the order backlogs to catch up on lost time.”
At the same time, new orders continue to come in too, added Koh.
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for Ecomate’s IPO exercise.
At 11.20am, Ecomate was up 18 sen or 54.5% to 33 sen with 83.4 million shares traded, thus valuing the company at RM154 mil. – Nov 8, 2021
