Betamek to grow revenue through green vehicles expansion

From left: Betamek executive director Fauzi Ghani, independent non-executive chairman Ahmad Subri Abdullah, managing director Mirzan Mahathir, M&A Securities Sdn Bhd managing director of corporate finance Datuk Bill Tan and head of corporate finance Gary Ting

KUALA LUMPUR: Electronics manufacturing services (EMS) provider Betamek Bhd is aiming to grow revenue by leveraging the need for increased usage of electronics as the green vehicle market continues to expand.

“Our future plans are to leverage on new technologies as the automotive industry moves towards hybrid and electric vehicles (EVs),” said Betamek chief operating officer Megat Iskandar Hashim Ismail, in an online media briefing after the virtual launch of the group’s initial public offering (IPO) prospectus yesterday.

“We see this trend continuing for years to come. And as that happens, there is an increased need for more electronics in every vehicle.”

Betamek’s plan is to take advantage of its position in the industry, to grow the group and leverage on opportunities available.

It also plans to use the IPO proceeds to expand its research and development (R&D) activities, to enable it to offer a more diverse range of products.

“By doing so, we hope that we can generate additional revenue streams with additional product lines, and offer more unique solutions,” he added.

Betamek specialises in design and development (D&D), and the procurement and manufacturing of customised electronics and components for the automotive industry.

The group is involved in the D&D and manufacture of vehicle audio products and components, comprising infotainment systems and audio video accessories, as well as accessories such as air conditioning control panels, USB chargers, mirror switches, power sockets and reverse cameras, among others.

In a statement, Betamek managing director Mirzan Mahathir said the group is in discussion with its technology partners to develop and introduce more innovative technologies and product solutions.

“Over the years, we have been expanding our product portfolio by including new automotive electronic solutions and technologies.

“There are still many untapped opportunities for product segments in relation to advanced driver assistance systems, entertainment and connectivity, the Internet of Things and vehicle accessories.

“This IPO exercise will be a great boost to our future R&D activities,” added Mirzan.

Regarding labour shortages in the manufacturing industry, Megat Iskandar pointed out that the group has a 100% Malaysian workforce.

“We are one of the few manufacturing companies in this industry that has a 100% track record of hiring only local workers. We don’t face any labour issues,” he said.

As for supply chain issues, Megat Iskandar said the group has a track record of delivering to its customers without disruption.

“We have cultivated several local suppliers that continue to be on our list of approved suppliers, as well as our suppliers from Hong Kong, Taiwan, Japan and China,” he said.

“Even during this period of global shortages of raw material supplies, we have managed to handle the situation through close collaboration with our customers and the agility of our R&D team to look for alternative components to replace those in short supply,” he added.

On the weakening ringgit versus the US dollar, Betamek chief financial officer Nor’ Azrin Nusi said the group’s overseas suppliers have agreed to trade in their respective currencies.“For example, a majority of our suppliers are from China. We have been talking to them and they have agreed to trade in yuan rather than the US dollar,” he said.

Regarding Betamek’s earnings prospects, Nor’ Azrin pointed out that most of the group’s revenue is derived from automaker Perodua.

“We are confident that as long as Perodua delivers, we will also,” he said.

Betamek, en route to an ACE Market listing on Oct 26, 2022, aims to raise RM33.8mil from the IPO, where the group will issue 67.5 million new shares, representing 15% of the enlarged share capital at 50 sen per share.

Based on the enlarged share capital of 450 million shares, Betamek is expected to have a market capitalisation of RM225mil.

Of the 67.5 million new shares, 22.5 million will be for the Malaysian public via balloting, 13.5 million for its eligible directors, employees, and people who have contributed to the success of Betamek, and the remaining 31.5 million for private placement to selected investors.

Also, Iskandar Holdings Sdn Bhd, owned by Mirzan, the major shareholder of Betamek, will offer 45 million existing shares to selected investors via private placement.

Betamek plans to use RM7mil (20.7%) to fund R&D and RM6.5mil (19.3%) to expand its R&D office space, raw material storage and ancillary facilities to cater for future growth.

Another RM3mil (8.9%) will be used to acquire machinery and equipment for its factory in Rawang to enhance its manufacturing efficiency and capabilities.

The balance will be used to repay bank borrowings of RM10mil (29.6%), while RM3.9mil (11.4%) is for general working capital and the remaining RM3.4mil (10.1%) to defray listing expenses.

The IPO is open for subscription until Oct 7, 2022.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.

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