FoundPac fetches handsome premium in debut on Bursa Malaysia

KUALA LUMPUR: Precision engineering parts fabricator and supplier FoundPac Group Bhd made its debut on the Main Market of Bursa Malaysia Securities Bhd yesterday and closed at 66 sen, a 22% or 12 sen premium from its issue price of 54 sen. About 52.33 million shares were traded.
The group, which derives 97.09% of its revenue from exports to the US and Europe, plans to establish sales offices in Milan, Italy, and California, the US, in the next two years. It has earmarked RM4 million of the initial public offering (IPO) proceeds for this.
“With a presence there, we can generate more orders due to our proximity to customers and we expect customers to give us more orders,” CEO Lee Chun Wah told a press conference after the company’s listing ceremony.
FoundPac views the expansion, amid the weakening ringgit, as one-off expenditure which in the long run will generate more income in US dollars.
On Bank Negara Malaysia’s (BNM) rule for exporters to convert 75% of their export proceeds into ringgit, Lee views the move as positive as the rate offered by banks is better than the counter rate. In addition, once the proceeds are converted into ringgit, they attract a higher interest of 3.25% a year.
“I do not see an impact from the measure. We have to do dual currency investment (DCI). On a weekly basis, we work with banks on DCI, looking at the market rate and the interest rate. With this BNM move, it saves me from a lot of hassle,” said Lee.
About RM8 million of the IPO proceeds is to be used for the purchase of equipment to increase its production capacity while RM3 million will be used to set up a dedicated product design and development (D&D) team.
Lee said the group is involved in D&D, working with many of the research & development (R&D) teams of its overseas customers.
“R&D never stops. We have 94 active customers and six engineers. We’re going to increase headcount and give more support to customers to generate more sales,” he added.
Penang-based FoundPac is principally involved in the design, development, manufacture, marketing and sale of precision engineering parts namely stiffeners, test sockets, hand lids and related accessories.
These precision engineering parts are sold to semiconductor manufacturers and outsourced semiconductor assembly and test companies, or for printed circuit board design houses or fabless semiconductor companies for the testing of integrated circuits.