UWC redirects RM384 million placement proceeds to factory expansion and working capital

Traders Union
All News
Financial News
UWC redirects proceeds to expansion

Highlights

UWC has redirected RM80.46 million from debt repayment to factory expansion and working capital, increasing the expansion allocation to RM230.13 million and working capital to RM150.43 million.
The proposed placement of up to 55.19 million shares at RM6.96 per share is expected to reduce UWC's gearing ratio to 0.12 times and increase net assets per share to 74 sen.
UWC's net profit is projected to jump 131.7% to RM93.84 million and revenue to rise 54.1% to RM594.89 million in FY2026, driven by booming semiconductor demand.

This article was translated from the original. Read the original version by our correspondent here.

Placement revision and use of funds details

As reported by The Edge Malaysia, UWC has dropped plans to use part of the RM384.13 million private placement proceeds to repay borrowings, instead redirecting the RM80.46 million to factory expansion and working capital. In a stock exchange filing on Thursday, Maybank Investment Bank, on behalf of the group, said the change involved funds previously allocated for debt reduction.

As a result, RM230.13 million, or about 60% of the expected proceeds, is now allocated for the expansion of existing manufacturing facilities over 24 months, up from RM200 million previously. The allocation for working capital has increased to RM150.43 million from RM100.09 million, with the balance to be used to cover placement expenses.

The proposed placement, announced on Tuesday, involves the issuance of up to 55.19 million shares, or 5% of the company's issued share base. It also marks UWC's first equity fundraising exercise since its listing in 2019.

Impact on semiconductor expansion and financial position

UWC said the expansion would enable it to transition from a component supplier to a full equipment manufacturer for existing wafer fab customers. The shift is expected to broaden its manufacturing responsibilities and deepen the group's involvement in the semiconductor equipment value chain.

The company said the proposed placement would support the capacity and capabilities required to carry out the manufacturing transfer, including investments in production facilities, machinery and assembly infrastructure, as well as related working capital requirements. The expected placement proceeds are based on an assumed price of RM6.96 per share, compared with the share's closing price of RM7.99 on Thursday, valuing the group at RM8.82 billion.

As at 30 Sept, the group's bank borrowings stood at RM105.23 million and remain unchanged. However, the new equity injection is expected to reduce the gearing ratio to 0.12 times from 0.22 times, while net assets per share are set to increase to 74 sen from 43 sen.

UWC shares have surged more than 80% this year, supported by strong earnings growth following the artificial intelligence boom, which has driven higher demand for wafer fabrication equipment. For the financial year ending 31 July 2026, the group's net profit is projected to jump 131.7% to RM93.84 million from RM40.51 million in FY2025, while revenue is expected to rise 54.1% to RM594.89 million from RM386.18 million.

Malaysia's 2027 Budget expectations for the semiconductor sector have come into focus after we previously reported that government support is likely to take the form of targeted incentives such as financing, talent development and ecosystem strengthening, rather than a single large allocation. The article also highlighted the industry's key challenges — factory capacity constraints, longer equipment lead times and a shortage of experienced engineers — as AI-driven demand is expected to remain strong through 2028.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.