KUALA LUMPUR – Volcano Bhd, an international manufacturer of nameplates and plastic-injection moulded parts, made a strong debut on Bursa Malaysia’s ACE Market today, opening at 70 sen – a premium of 35 sen over its offer price of 35 sen.
At the opening bell, the company saw 10.06 million shares changing hands.
Executive director and CFO Khoo Boo Wui said proceeds from the listing will be used to accelerate the company’s factory expansion to accommodate new machinery.
“We plan to have additional laser-cutting and plastic-injection moulding machines. We will expand our factory size to accommodate the new machinery,” he told a virtual press conference after the listing ceremony this morning.
The expansion of its plant in Thailand, with a built-up area of 937 sq m, to place five new plastic-injection moulding machines is expected to be completed by the second half of 2024, he said.
Volcano recorded an overall oversubscription rate of 176.6 times the new shares made available to the Malaysian public.
Its foreign market accounts for more than 95% of overall revenue in the financial year ended December 31, 2020 (FY20).
Multinational companies comprise 90% of its sales, including leading brands Bernina, Hewlett Packard, Fisher & Paykel Thailand, Donaldson Thailand, Sharp Indonesia and Panasonic Thailand.
Volcano chairman Wong Wan Chin in a statement said the group seeks to capitalise on its current regional presence, particularly in Thailand and Singapore, to tap the immense business opportunities available from the rising growth of the electrical and electronics, and automotive industries.
Rakuten Trade in a research note said with the additional capacity of its nameplate manufacturing process, the company can fulfil high-complexity orders with a lower defect rate.
Its current laser-cutting production capacity stands at 32.3 million units per year, and its laser-cutting machines’ utilisation rate was high in 2020 at 88.7%.
Via the initial public offering, the firm is set to add six laser-cutting machines and five pick-and-paste machines to enhance automation in its manufacturing process.
“On top of the four machines purchased using internal funds, laser-cutting production capacity will jump to 55.5 million units per year, implying a 71.4% expansion,” said Rakuten.
The research house said Volcano has a formal dividend policy of at least 30%, translating into a projected yield of 2.2% and 2.6% in FY21 and FY22, respectively.
“Its balance sheet was healthy prior to the listing, with zero borrowings and a net cash position of RM12.9 million. Post-listing, we expect the net cash position to be strengthened to RM20.3 million.” – Bernama, April 6, 2021
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