Company Background

The Company was incorporated in Malaysia under the Act on 3 November 2022 as a private limited company under the name of Master Tec Group Sdn Bhd. On 15 June 2023, the Company was converted into a public limited company under the present name.

The company is an investment holding company, while MTWC, the sole subsidiary, is principally involved in the manufacturing and distribution of power cables, control and instrumentation cables, and other related products, and the trading of power cables, fibre optic cables, and other related products.

Use of proceeds

1. Capital expenditure for the following: - 66.77% (within 15 months)
   1. Construction of new MV power cable manufacturing plants - 27.22% (within 15 months)
   2. Purchase of new machineries and equipment - 39.55% (within 15 months)
2. General working capital - 26.42% (within 15 months)
3. Defray fees and expenses relating to the Listing - 6.81% (within 3 months)

Capital expenditure for construction of new manufacturing plants and purchase of new machineries and equipment - 66.77% (within 15 months)

The use of the gross proceeds for capital expenditure for the construction of new manufacturing plants and purchase of new machineries and equipment is part of its strategy to venture into the manufacturing of MV power cables, which will further drive the growth of the business operations and financial performance.

The company has earmarked RM41.17 million, representing approximately 66.77% of the proceeds from its Public Issue, of which RM16.78 million will be allocated for the construction of two new manufacturing plants at Lot 1297 and Lot 1304, and RM24.39 million will be allocated for the purchase of new machineries and equipment.

(a) Construction of manufacturing plants

The estimated total construction costs for Plant 4 and Plant 5 on Lot 1297 and Lot 1304 respectively of RM16.78 million will be fully funded by the proceeds from the Public Issue.

The breakdown for the estimated total construction costs is as follows:

(b) Purchase of machineries and equipment

The estimated total cost of new machineries and equipment of RM24.39 million will be fully funded by the proceeds from the Public Issue. 

The details of the machineries and equipment as well as breakdown of the estimated costs are as follows:

General working capital - 26.42% (within 15 months)

The Group’s working capital requirement will increase in tandem with its plan to venture into the manufacturing of MV power cables. Over the FYE Under Review, the Group has registered significant revenue growth at a CAGR of 49.48%. The company will allocate RM16.29 million, representing approximately 26.42% of the proceeds from its Public Issue, for working capital which will be used to finance the purchase of raw materials for the manufacturing of MV power cables. The main raw materials used for the manufacturing of MV power cables include aluminium rods and compounds.

The construction of Plant 4 and Plant 5 are expected to be completed by the 4th quarter of 2024 and the production of MV power cables at Plant 4 and Plant 5 are also expected to commence by the 4th quarter of 2024. Taking into consideration the delivery timing for its main raw materials, the company intends to purchase the main raw materials up to 2 months in advance prior to the commencement of the production of MV power cables.

For the FYE Under Review, the company has recorded increasing sales of MV power cables to customers via its trading arm at a CAGR of 135.89%. In addition, the sales of MV power cables had increased by 107.49% in FPE 2023 as compared to FPE 2022. Moving forward, the company intends to fulfil such orders for MV power cables through the new MV power cable manufacturing capabilities.

Given that most of the suppliers are based locally and have shorter lead times coupled with its JIT inventory management policy, the company generally maintains one month’s quantity of raw materials in its storage to ensure uninterrupted production.

Business model

The business model for the company’s principal business activities is as follows:

Click here to continue the IPO - Master Tec Group Berhad (Part 2)

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