ASM Automation’s RM21.8m IPO Powers Ahead with Factory Growth, R&D Expansion and 1.27x Oversubscription

IPO Details

• Purpose of IPO:
  ASM Automation aims to raise RM 21.82 million, with allocations as follows:

  • RM 11.40 million to build a new factory,

  • RM 2.30 million for machinery purchase,

  • RM 2.00 million for R&D activities,

  • RM 1.92 million for working capital,

  • RM 4.20 million for listing expenses.
    Approximately 83% of proceeds are allocated toward business growth, indicating a strongly growth-driven IPO.

• Oversubscription Rate:
  The public tranche was oversubscribed by 1.27 times, indicating moderate retail investor interest.

• IPO Placement:
  ASM is offering 128.344 million new shares at RM 0.17 each, raising RM 21.82 million.

• Enlarged Share Capital:
  Total post-IPO issued shares: 534.765 million.

• First-Day Outlook:
  The IPO reflects a modest float with strong growth use of proceeds. Given oversubscription and market sentiment, the IPO is likely to perform modestly well, with expected early trading range of RM 0.17–RM 0.20.

Institutional Investors, Anchor Investors, Subscription Levels

• Allocations:

  • 26.74 million shares to the Malaysian public,

  • 10.696 million to directors, eligible employees, and key contributors,

  • 66.846 million shares to Bumiputera investors via private placement,

  • 24.062 million to other selected investors.

• Insider Selling Before IPO:
  Two major shareholders:

  • Chan Kok Heng (Managing Director) and

  • Leong Weng Khin (Executive Director)
    sold 53.48 million existing shares as part of the IPO. Post-IPO, Chan holds ~50.9% and Leong holds ~15.1%.
    Insider selling may cause caution but is structured and transparent.

• Principal Adviser / Sponsor / Underwriter / Placement Agent:
  M&A Securities Sdn Bhd

• Financial Adviser:
  Eco Asia Capital Advisory Sdn Bhd

• First-Day Outlook:
  With reputable ACE Market advisers involved and structured allocations, the IPO is well supported and likely to debut steadily or slightly higher.

Business Model and Industry

• ASM designs, fabricates, installs, and services automation systems and machinery, particularly for the F&B sector.

• The industrial automation industry is growing at a global CAGR of 8–10%, driven by demand for smart manufacturing solutions.

Financial Health (FY2022–2024)

• Revenue grew from RM 35.05 million (FY2022) to RM 39.13 million (FY2024) (~12% CAGR).

• Profit After Tax (PAT) increased from RM 3.38 million to RM 7.11 million, showing strong profit scalability.

• Gross Margin improved from ~25% in FY2022 to ~33% in FY2024.

• Company has no disclosed debt burden; IPO proceeds are not being used for debt repayment, indicating a healthy balance sheet.

Market Position

• ASM serves a niche market with custom automation solutions in F&B. This offers high value and potential for recurring contracts.

• Market capitalization post-listing is estimated around RM 90.9 million, aligning with its FY2024 PAT at a P/E of ~12×, which is reasonable and competitive.

Management Team

• Chan Kok Heng – Managing Director

• Leong Weng Khin – Executive Director
  Both founders have more than a decade of industry experience and continue to hold significant ownership post-IPO.

a) Sector & Trends

• Strong automation demand regionally and globally, especially in post-pandemic manufacturing realignment.

• Malaysia supports automation growth through industrial and SME development grants.

b) IPO Timing

• IPO closes on 19 June 2025, listing on 2 July 2025.

• Mid-year listings typically benefit from investor rebalancing activities.

c) Economic Environment

• Malaysia’s economy is expected to grow by ~4% in 2025, supported by moderate inflation and stable policy frameworks.

d) News & Developments

• No adverse news reported. The sector remains a positive investment theme, with industrial automation linked to Malaysia’s IR4.0 roadmap.

e) Market Conditions

• ACE Market has seen moderate demand for quality growth stocks.

• ASM fits the profile of a focused, profitable, growth-oriented company with healthy financials.

f) Prospectus Analysis

• Prospectus highlights expansion plans, minimal debt, and a clear growth trajectory. R&D investment stands out as a long-term value driver.

g) Risk Factors

• Customer concentration – overreliance on key clients.

• Supply chain risks – especially around custom machinery components.

• Liquidity risks – typical of small-cap ACE Market counters.

h) Growth Strategy

• RM 11.4 million investment in a new factory signifies scale-up plans.

• RM 2 million in R&D signals innovation efforts.

• Promoters retain 65–70% ownership, indicating long-term commitment.

a) Metrics vs Peers

Note: ASM’s P/B ratio is not calculated as post-IPO book value per share is not disclosed.

b) IPOs During Same Period

• ASM is the only notable ACE Market IPO for early July 2025. No conflicting listings enhance focus and liquidity on this stock.

c) Sector 10-Day Performance

• Manufacturing/automation counters on the ACE Market have posted 2–4% gains over the last 10 days.

• This indicates stable to mildly positive sentiment toward the sector.

• Malacca Securities estimates ASM’s fair value at RM 0.21, applying a P/E of 15× on forecasted FY2026 EPS of 1.38 sen.

• Target implies a 23.5% upside over IPO price of RM 0.17.

IPO Allotment Results

• Public application closed on 19 June 2025.

• IPO allotment results expected to be published by 30 June 2025.

• Public portion was oversubscribed by 1.27 times, indicating healthy retail interest.

Final Assessment & Price Range Estimate

• IPO Price: RM 0.17

• Estimated First-Day Trading Range: RM 0.17 – RM 0.21

• Expected Performance: Likely to open mildly to strongly above IPO price, depending on broader sentiment.

✅ Worth Subscribing

• Profitably growing, strong use of proceeds, niche automation business.

• Strong promoter retention and balanced risk profile.

• First-day gains of 10–25% possible based on peer sentiment and valuation.

 Prospectus Download

• The prospectus will be available on Bursa Malaysia’s official website under the IPO summary section for ACE Market listings.

Thank you