Did you know that foam products are all around you in your daily life? You might not notice them often, unless you’re talking about mattresses or sofas. However, foam is actually hidden inside many of the devices we use every day, like your TV, PC, laptop, handphone, car, and vacuum cleaner. Foam serves a variety of purposes, such as shock absorption, sound insulation, and protection.
As for non-foam products, like tape, they’re also used in these devices, helping to keep components in place—like the parts inside your phone.
Now that you know, you might even spot these products the next time you dismantle an old PC or handphone. But let’s shift gears and take a closer look at a new IPO that manufactures both foam and non-foam products.
Business Breakdown: What Does WTEC Do?
WTEC Group Berhad (“WTEC”), through its subsidiaries, is primarily involved in the manufacturing and trading of foam and non-foam products. The company primarily serves the automotive and electrical & electronic industries, with additional involvement in sectors such as construction, medical, and personal protective equipment. WTEC’s main markets are Malaysia and Vietnam, while other complementary markets include Australia, Thailand, and others. For example, WTEC supplies automotive manufacturers with car seat components, where foam products are used for shock absorption, sound absorption, and insulation.
The Basics: IPO Details & Key Dates
When it comes to IPO, the dates are common and must see.
- Listing on: Bursa Malaysia’s ACE Market
- IPO Price: RM 0.25 / share
- Market Cap: RM 120 million (based on the enlarged share base)
- PE Ratio: 12.76x (FYE24 earnings)
Mark your calendars! The IPO opens on April 9, 2025, and closes on April 15, 2025. Balloting’s happening on April 17, and the listing date is set for April 29.
Where’s the Money Going?
One of the first things to check in any IPO is how they plan to use the funds. Here’s the breakdown for WTEC:
- Purchase and renovation of new factory: RM 9.425 million (13.31%)
- Purchase of new machinery and equipment: RM 3 million (12.9%)
- Sales and marketing expenses: RM 1 million (4.44%)
- Working capital: RM 5.117 million (22.7%)
- Estimated listing expenses: RM 4 million (17.74%)
Financials: Revenue Growth & Margins
Next, let’s look at WTEC’s financials.
- Revenue: WTEC’s revenue posted RM 52.03 million in FYE2024, compared to RM 50.86 million in FYE2023 increased by RM 1.17 million or 2.3%.
- Gross Profit Margin (GPM): WTEC’s gross profit margin achieved 38.6% in FYE2024 which higher than 36.2% in FYE2023.
- Net Profit Margin (NPM): Net profit margin for WTEC achieved 15.8% in FYE2024, down 2.6% from 18.4% in FYE2023 due to higher administrative expenses incurred.
Balance Sheet: Financial Health at a Glance
One of the interesting facts about WTEC is that the borrowing of the Group at a very low and healthy level, where the IPO proceeds will be used for capital expenditures and working capital purposes. Let us zoom into the balance sheet and look at the figure.
- Long-Term & Short-Term Borrowings: As of FYE2024, WTEC’s total borrowing stood at RM 1.77 million, with RM 1.24 million due within a year and RM 0.53 million payable later. Its gearing ratio stood at a very healthy level which was 0.03 times.
- Total Liabilities / Total Assets: As of FYE2024, WTEC’s total liabilities over total assets stood at around 26%.
- Cash and Bank Balances: As of FYE2024, WTEC’s cash and bank balances stood at RM 7.05 mil, which is 15.8% of total assets and 60.6% of total borrowings.
Based on the analysis of contribution to revenue by business activities, we can see that WTEC’s revenue largely contributed by foam products, followed by trading division, last was non-foam products.
Whereas from the analysis of contributions to revenue by user industries, automotive and electrical & electronics industries contributed around 70% of the Group total revenue.
Conclusion
In conclusion, WTEC Group Berhad offers a glimpse into the foam and non-foam manufacturing sector, serving industries such as automotive and electrical & electronics. The company has shown modest revenue growth, along with a healthy balance sheet and relatively low borrowing levels. The upcoming IPO, with its planned use of proceeds for capital expenditures and working capital, is a step towards supporting further operations. WTEC anticipates a revenue increase of at least 10% in the financial year ending Dec 31, 2026 (FY26), compared to FY24, supported by enhanced production capabilities funded through its initial public offering (IPO) proceeds. While the company’s outlook remains cautiously optimistic, potential investors should carefully assess the risks and opportunities before making any decisions, especially in light of market conditions and its financial performance.