KHPT Holdings Launches IPO, Subscription Opens on 19 September

The public issue comprises a total of 108,644,300 new shares, distributed as follows:

– 20,119,400 new shares are reserved for application by the Malaysian public.

– 10,059,700 new shares are allocated for application by the company's eligible directors and employees.

– 78,465,200 new shares are designated for private placement to selected investors.

Additionally, there will be a separate private placement of 38,226,600 existing shares to selected investors.

KHPT Holdings Berhad's main business includes the manufacturing and sale of automotive parts, with the primary markets being the new car assembly market and the used car maintenance and repair market in Malaysia. The company excels in mold solutions and services as well as metal stamping technology, and produces products such as engine components, body parts, seat structures, and shock absorber parts.

The group's components are mainly used for the assembly of vehicles by local car manufacturers (namely Proton and Perodua). These automotive parts are custom-made and manufactured according to the specific requirements of each car model, and are sold directly to Proton and Perodua or their first-tier suppliers/manufacturers. The group has been supplying parts for Proton and Perodua vehicles for 29 and 24 years, respectively, including the direct supply of parts and components through their top-tier suppliers/manufacturers.

The company's growth is attributed to its mold solutions and technical engineering capabilities. With experience and the expertise of technical personnel, it is able to design and develop optimized manufacturing processes. Additionally, having in-house mold solution expertise is an advantage for the company, as it ensures the quality of molds and can promptly respond to changes in requirements for molds and fixtures after any adjustments, to accommodate the design or specifications of automotive parts.

The company's main customers are first-tier suppliers/manufacturers for local car manufacturers. During the financial period under review, most major customers have been purchasing automotive parts and components for at least 11 years.

The company's business activities are as follows:

The company's financial growth has demonstrated resilience and strength, with revenue escalating from RM 58,965,000 in 2021 to RM 114,082,000 in 2023. Despite a decline in revenue in 2023 compared to 2022, the overall trend shows significant growth, reflecting a strong period of business expansion.

Gross profit (GP) surged from RM 4,742,000 in 2021 to RM 14,143,000 in 2023, indicating a steady improvement in the company's ability to generate profits from its operations. The gross profit margin has fluctuated but remained relatively high, suggesting that the company maintains a healthy balance between sales and production costs.

Regarding net profit, it grew from RM 153,000 in 2021 to RM 5,533,000 in 2023, demonstrating the company's improved efficiency in converting sales into bottom-line profits. This substantial increase underscores the company's strong operational performance and successful cost management strategies, positioning it well for continued success in the future.

The automotive parts and accessories industry serves a wide range of sectors, including automobile manufacturing, the aftermarket, transportation, industrial applications, and research and development. This industry provides essential components, assemblies, and services that support the manufacturing of complete vehicles and supply the parts needed for the maintenance, upgrading, and repair of existing vehicles, while ensuring that products meet quality and safety standards.

In Malaysia, the automotive parts and accessories industry experienced a period of growth before being impacted by the COVID-19 pandemic in 2019. Due to the economic downturn triggered by the pandemic, the industry's output value declined significantly. However, as economic activities gradually recover post-pandemic, the industry has begun to rebound, and with the increasing demand for automotive parts both domestically and internationally, the industry continues to show an upward trend. It is predicted that by 2024, the sales of the automotive parts manufacturing industry in Malaysia will reach approximately RM26.78 billion.

The growth of the automotive parts and accessories industry in Malaysia also faces a series of risks and challenges. These challenges include a high dependency on the quality of raw materials, as any flaws in the materials can lead to defects in the final product. Moreover, the industry requires continuous technological innovation to maintain competitiveness, especially in the face of rapid growth in the field of new energy vehicles (NEVs). Additionally, competition from other industry participants is a significant challenge, mainly reflected in aspects such as technological capabilities, manufacturing capabilities, pricing, product quality and service, and delivery time.

The Public Issue has successfully raised a total of approximately RM21.729 million. The allocation of these funds is strategically planned as follows:

1. Purchase of Press Machines: The largest allocation, at 50.83% of the total funds, amounts to RM11,046,000. This significant investment is planned for the acquisition of new press machines over a 24-month period.

2. Purchase of Automation Equipment: A substantial 20.71% of the funds, totaling RM4,500,000, is earmarked for the purchase of automation equipment within the same 24-month timeframe.

3. Renovation of TPG Factory: A significant portion, 2.08% or RM452,000, is allocated for the renovation of the TPG factory to modernize its facilities, with the work expected to be completed within 24 months.

4. Purchase of One Overhead Crane: A crucial 1.70%, or RM368,000, is reserved for the purchase of an overhead crane to enhance operational efficiency, with the investment to be made within a 12-month period.

5. Working Capital: A dedicated 3.24% of the funds, totaling RM705,000, is allocated to bolster working capital, also to be utilized within a 12-month period.

6. Estimated Listing Expenses: Lastly, 21.44% of the funds, which is RM4,658,000, is set aside to cover the estimated listing expenses. These costs are expected to be incurred within a shorter 1-month period.