Ecomate Holdings Berhad: Prospects and Comparisons to CEKD Berhad

Last Friday, Ecomate Holdings Berhad ("Ecomate") released its IPO Prospectus, which can be downloaded from Bursa Malaysia. 

In the meantime, the share price of the previous IPO, CEKD Berhad, saw a significant surge, nearing a ringgit. Will Ecomate replicate CEKD's performance following its listing? To find out more, be sure to read the following overview of the Ecomate IPO.

Introduction of Ecomate

Ecomate is an investment holding firm headquartered in Muar, Johor. It operates primarily through its wholly-owned subsidiary, Ecomate Sdn Bhd, which focuses on manufacturing ready-to-assemble furniture. This includes the design, development, production, marketing, and sales of various furniture types, such as living room and bedroom furniture.

Ecomate's clientele encompasses a range of distribution channels, including distributors, wholesalers, retailers, and e-commerce sellers. In the last three fiscal years, distributors and wholesalers have been the primary contributors to the company's sales, with the majority of its products exported to countries across Asia, Europe, and North America.

Established in 2016, Ecomate is a newcomer in the furniture industry, with its headquarters in Muar, Johor.

However, this doesn't imply that Ecomate lacks advantages in the sector. In fact, one of its founders, Koh Cheng Huat, serves as the Executive Director and has over 20 years of experience in the furniture industry.

The IPO of Ecomate Holdings Berhad shares similarities with the IPOs of Ramssol Group and CTOS Digital. As a result, the Malaysian Ministry of International Trade and Industry (MITI) did not disclose the term sheet document for Ecomate. 

For those interested in how to access this information via MITI, my previous article provides a detailed guide (available in Mandarin).

The following IPO details for Ecomate have been extracted from its final IPO Prospectus:

• IPO Price Per Share: RM 0.33  
• IPO Application (Begin): 15th October 2021  
• IPO Application (End): 25th October 2021  
• Balloting of Applications: 28th October 2021  
• Tentative Listing Date: 8th October 2021  
• IPO Listing Market: Ace Market

Over the past four financial years, Ecomate’s diluted Earnings Per Share (EPS) for the years ending from 2018 to 2021 were recorded at 0.06 sen, 0.95 sen, 1.16 sen, and 2.43 sen, respectively. This results in a P/E ratio of 13.56 times based on the IPO price of RM 0.33, which I find reasonable, as most Ace Market IPOs fall within a P/E range of 10 to 20.

Following its listing on the Ace Market, Ecomate Holdings Berhad will have an enlarged share capital of 350 million shares. This figure includes the issuance of 49 million new shares, representing 14% of the enlarged capital, along with 30 million existing shares (8.6% of the enlarged capital) offered for sale to select investors via private placement.

The public issue of 49,000,000 new ordinary shares in Ecomate is allocated as follows:

• 17,500,000 new shares for application by the Malaysian public  
• -8,750,000 new shares for eligible directors, employees, and individuals who have contributed to the group's success  
• 22,750,000 new shares via private placement to selected investors  
• 0 new shares for private placement to Bumiputera  

Funds raised by Ecomate through IPO will be used for the following purposes :

• 37.1% for capital expenditure on machinery and equipment  
• 12.4% for factory and hostel construction  
• 32.6%  for the purchase of raw materials  
• 17.9%  for estimated listing expenses  

As noted in the initial version of the IPO prospectus, Ecomate Berhad currently does not have a formal dividend policy.

This is the shareholdings structure of Ecomate Holdings Berhad after IPO:

Disclaimer:  I am not responsible for any gain or loss in your investment.