Chemlite Innovation opens application for ACE Market IPO

KUALA LUMPUR (March 5): Chemlite Innovation Bhd, which provides surface finishing treatment services, has opened application for its ACE Market initial public offering (IPO) at 25 sen per share. 

The IPO, which entails the issuance of 120 million new shares and offer-for-sale of 60 million existing shares, is expected to raise RM45 million to fund its new facility. Application for the IPO closes on Mar 12, 2025, and Chemlite, which specialises in metal plating services on intermediate metal products, is scheduled to be listed on March 26, 2025.

"This listing serves as a vital platform for Chemlite Innovation to create greater value for our customers and stakeholders. We are confident that the proceeds raised will enable us to implement our strategic objectives and meet the evolving demands of our global client base with our enhanced capabilities and innovation,” said Heng Chee Khiang, executive director and chief operating officer of Chemlite, during the launch of the group's IPO prospectus on Wednesday. 

At the IPO price of 25 sen, Chemlite will have a market capitalisation of RM150 million. It will be valued at 16.23 times its earnings per share of 1.54 sen for the financial year ended Dec 31, 2024 (FY2024) upon listing. Collectively, the listing will offer investors a 30% stake in the company. 

Penang-based Chemlite specialises in metal plating services on intermediate metal products with expertise in multi-layer metal coatings. The company also provides non-metal plating services on intermediate metal products, including anodising and other non-metal plating services. 

The company mainly caters to the semiconductor, electrical and electronics (E&E) and machinery and equipment (M&E) sectors. The public issue is expected to raise gross proceeds of RM30 million. The company has earmarked 26% of the IPO's proceeds for expansion of the group's facility, 23.3% for setting up cleanrooms, 3.33% for capital expenditure and 1.68% to establish a research and development department. The company also earmarked 18.33% for repayment of bank borrowings, 14% for working capital and the remaining for estimated listing expenses. 

Under the public issue, Chemlite is allocating 30 million to the public, 21 million to eligible persons, 15 million to Bumiputera investors through private placement, and 54 million to identified institutional and select investors by means of private placement. 

The sale of existing shares, meanwhile, will also be done through private placement for Bumiputera investors.

Meanwhile, any proceeds from the offer for sale through private placement will accrue entirely to founder and CEO Chong Yuen Fong and co-founder and chief operating officer Heng Chee Kiang. Post-listing, Chong's stake will be trimmed to 38.5% while Heng’s direct holdings will be diluted to 31.5%. Chemlite reported an increasing trend in profit after tax (PAT) from FY2021 (RM 1.65 million). Earnings increased 92.4% to RM3.18 million for FY2022 and nearly tripled to RM9 million in FY2023 before reaching a higher PAT of RM9.26 million in FY2024.

A similar trend has been shown in revenue, which came in at RM18.40 million for FY2021 and increased 16.9% to RM22.15 million for FY2022. It continued to surge 26.6% to RM28.05 million for FY2023. In FY2024, the revenue further rose 21.9% to RM34.19 million. Metal plating is the biggest revenue contribution, accounting for 85.75% of its total revenue in FY2024. Meanwhile, Malaysia is its biggest market, contributing 75.03% to its total revenue in FY2024, followed by the Philippines at 24.91% and Japan and Singapore combined at just 0.06%.

UOB Kay Hian is the IPO’s principal adviser, sponsor, underwriter and placement agent.