6. business overview 6.1 our background and history 6.1.1

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Registration No.: 202101026123 (1426423-D)

Registration No.: 202101026123 (1426423-D) 6. BUSINESS OVERVIEW

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6.1 Our background and history

6.1.1 Overview

We are an electronics manufacturing solutions provider, specialising in surface mount technology manufacturing solutions for the E&S Industries. We primarily provide our solutions and services to electronics and semiconductor companies, who are looking to:- (i) commission new integrated production lines for their production facilities. This involves

the design and planning of production line systems, sourcing of individual machinery, equipment, tools and software, as well as the assembly, configuration and integration of the processes and hardware into the integrated production lines; and

(ii) automate their production facilities. This involves incorporating smart factory solutions

that integrate and connect the processes within the facility, including the remote management and monitoring of production processes, and management of materials and finished products,

(collectively, the “integrated solutions”). In addition to the abovementioned integrated solutions, we are involved in the following:- (i) sales of individual machinery, equipment and tools to electronics and semiconductor

companies who are looking to upgrade and/or modify their existing production line systems; and

(ii) provision of after-sales technical support and training services for our integrated

solutions.

Our main customer base comprises electronics and semiconductor companies which carry out the assembly of the advanced semiconductor packaging products as well as assembly and testing of printed circuit board assembly (“PCBAs”). Our customers are primarily from the following sectors:- (i) semiconductor companies such as integrated device manufacturers (“IDMs”) and

outsourced semiconductor assembly and test service providers/houses (“OSATs”); and

(ii) electronic product manufacturers, such as outsourced electronics manufacturing service providers (“EMS”) and electronic products brand owners.

Our integrated solutions Our Group’s primary expertise is in the provision of integrated solutions for production line systems and smart factory solutions, as set out below:- - Production line systems

Our expertise is in the design, development, assembly, configuration, integration, testing and commissioning of integrated production line systems for SMT manufacturing. We design and customise integrated production line systems with the aim of achieving smooth production operation and optimal production yield for our customers.

Our integrated production line systems are typically used in the assembly of advanced semiconductor packaging products and PCBAs.

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Registration No.: 202101026123 (1426423-D) 6. BUSINESS OVERVIEW (cont’d)

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For illustration purposes, we have set out below the typical assembly process of advanced semiconductor packaging products and PCBA:-

denotes the processes that our Group provides manufacturing solutions

denotes the processes that our Group is able to provide via customisation of production line systems

- Smart factory solutions

Smart factories are Industrial Revolution 4.0 (“IR 4.0”) factory environments where machinery, equipment and tools are interconnected using internet-of-things (“IoT”) technology. Production facilities in smart factories are integrated and connected, with automated processes throughout the production facility, from the receipt of raw materials and supplies to the production and assembly of end-products.

We provide our customers with smart factory solutions which enable the remote management and monitoring of production processes, and management of materials and finished products to, from and within the production facilities.

Further details on our solutions and business activities are set out in Section 6.2 of this Prospectus.

Mounting of microchips and other electronic components onto the substrate to form the advanced semiconductor packaging products (SMT process)

E.g. smartphones, electric vehicles, aerospace equipment, high-end testers, medical equipment and

auto-electronics

Printed circuit board/ PCBA

Final electronic products

Advanced semiconductor

packaging products Microchips and other

electronic components Stage

Examples

Process

Mounting of advanced semiconductor packaging products and other electronic components onto the printed circuit board to form the PCBA (SMT process)

Integration of PCBA with other parts to form finished electronics products (box build assembly and packaging process)

Note: The diagram above is for illustration purposes, and does not depict all types of microchips and other electronic components, advanced semiconductor packaging products, PCBAs and final electronic products

Parties involved

Electronics companies (i.e. EMS and brand owners)

Electronics companies (i.e. EMS and brand

owners) IDMs and OSATs Foundries and IDMs

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6.1.2 History of our business Our Company was incorporated in Malaysia on 6 August 2021 as a private limited company. On 23 September 2021 we converted to a public company and assumed our present name to facilitate our Listing. We are based in Malaysia and we primarily serve customers located in Malaysia (save for Melaka and Johor), Thailand and Vietnam. Our Group’s history can be traced back to 2004 when our wholly owned subsidiary, SiP Technology, was incorporated by our co-founder, Lye Yhin Choy, and headquartered in 2 industrial lots in Bukit Tengah, Pulau Pinang (which were later acquired by SiP Technology in 2010, and continues to accommodate our principal office, warehouse and workshop as at the LPD). We commenced our business operations in 2004, with a team of 7 engineers, providing configuration and integration services of SMT machinery and equipment to electronics and semiconductor manufacturers based in Malaysia (save for Melaka and Johor), providing key SMT machinery and equipment primarily focusing on solder paste printers, reflow ovens, and conveyor systems. In 2004, we were also appointed by suppliers of SMT machinery and equipment, such as Speedline Technologies Asia Pte Ltd (“Speedline”) (which was later acquired by ITW EAE) and Supplier D to distribute their range of SMT machinery and equipment.

In 2005, we began incorporating additional design, assembly, testing, and commissioning services to our service offering, enabling us to provide more customised production line processes to our customers. We began securing new contracts for the commissioning of integrated production line systems, where we were involved in the full design, assembly, configuration and testing processes. Such notable contracts secured during 2005 were from amongst others, a multinational EMS’ Malaysia-based operations which primarily serve the automotive and industrial electronics sector, as well as our first overseas customer, a multinational EMS’ Thailand-based operations which primarily serve the aerospace, medical and defence sectors. In 2006, we were appointed as a distributor by Supplier A for the supply of surface mount placement machines and Kolb Fertigungstechnik GmbH (which was a related company to Kolb Cleaning Technology GmbH (“Kolb”)) for the supply of cleaning machinery, equipment, tools and consumables. As a distributor for these brands, we were able to expand our product offerings, enabling us to incorporate more complex and additional SMT processes into our integrated production line systems. In 2007, we acquired an additional industrial lot adjacent to our premises. With the additional floor space, we were able to set up our application and training centre, inclusive of a demonstration room, to carry out simulations to enable showcasing proof of concept, customisations of machinery and equipment for prospective customers, and training services. In the same year, we also began working with our Affiliate, SiP Thailand, on a collaborative effort to provide localised sales and marketing, and after-sales technical support and maintenance for our customers based in Thailand. In 2008, we were appointed as a distributor by Koh Young Technology Inc (“Koh Young”), an established manufacturer of measurement and inspection machinery and equipment, enabling us to incorporate additional testing and inspection processes to our integrated solutions. In 2009, we secured our first customer in Vietnam, a multinational EMS’ Vietnam-based operations primarily serving the industrial and energy, networking and telecommunications and point-of-sale sectors, by securing a contract for the customisation, configuration and integration of SMT machinery and equipment. In line with our growing customer base in Vietnam, in 2011, we began working with our Affiliate, SiP Vietnam, on a collaborative effort to provide localised sales and marketing, and after-sales technical support and maintenance for our customers based in Vietnam.

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Meanwhile, we continued to grow our presence in Malaysia and in 2010, we expanded our application and training centre with the acquisition of an additional industrial lot adjacent to our premises in Bukit Tengah, Pulau Pinang. The expanded facility also enabled us to set up our rework department in 2012, and we began to undertake PCBA repair and troubleshooting services for our customers in 2013. We were appointed as a distributor by Supplier B in 2014, and INERTEC Löttechnik GmbH (“INERTEC”) in 2016. Our appointments by these established SMT machinery and equipment manufacturers allowed us to include other types of conveyor systems and selective wave soldering equipment as part of our integrated production line systems. In line with the electronics and semiconductor industry shifting towards smart factory solutions, which integrate and automate production facilities with IR 4.0 capability, we began incorporating smart factory solutions to our solutions offerings. We were able to venture into smart factory solutions by leveraging on the technical capabilities of our engineering division, which had increased to 26 engineers by December 2018, as well as our relationship with key suppliers which supplied the hardware and software required to implement such solutions. In 2018, we secured our first contract to design, assemble, configure, integrate, test and commission a smart factory solution for a conglomerate in Vietnam that is involved in manufacturing of electronics products such as smartphones. Subsequently, in 2019, we secured a major contract to design, assemble, configure, integrate, test and commission a complete smart factory, including providing integrated production line systems, for the same conglomerate in Vietnam. On 6 August 2021, we incorporated Cnergenz as an investment holding company to facilitate our Pre-IPO Reorganisation. Following the completion of the Pre-IPO Reorganisation, SiP Technology became a wholly-owned subsidiary of Cnergenz on 7 September 2021. On 24 September 2021, we signed Collaboration Agreements and Licence Agreements with our Affiliates, which grants them certain rights to use our “SiP Technology” trademark and trade name in their respective locations, and formalise our past and future collaborative efforts with these Affiliates, under the terms of the respective agreements. Details of the Collaboration Agreements and Licence Agreements are set out in Sections 6.19 and 6.18 of this Prospectus respectively.

6.1.3 Milestones and achievements

The key milestones of our Group are set out below:-

Year Key milestones 2004 Incorporation of SiP Technology and commencement of our business operations

Appointed as a distributor by Speedline and Supplier D to distribute their range of SMT machinery and equipment, primarily solder paste printers, reflow ovens and conveyor systems

2005 Secured a contract to provide integrated production line systems for a multinational EMS’ Malaysia-based operations which primarily serve the automotive and industrial electronics sector

Secured a contract with our first overseas customer, to provide SMT machinery and equipment for a multinational EMS’ Thailand-based operations which primarily serve the aerospace, medical and defence sectors

2006 Appointed as a distributor by Supplier A for the supply of surface mount placement machines

Appointed as a distributor by Kolb Fertigungstechnik GmbH for the supply of cleaning machinery, equipment, tools and consumables

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Year Key milestones 2007 Set up our application and training centre, inclusive of a demonstration room, to carry

out simulations to enable showcasing proof of concept, customisations of machinery and equipment for prospective customers, and training services

Began working with our Affiliate, SiP Thailand on a collaborative effort to provide localised sales and marketing, and after-sales technical support and maintenance for our customers based in Thailand

2008 Appointed as a distributor by Koh Young, enabling us to incorporate additional testing and inspection processes to our integrated production line systems

2009 Secured a contract with our first customer in Vietnam, a multinational EMS’ Vietnam-based operations primarily serving the industrial and energy, networking and telecommunications and point-of-sale sectors, to provide customisation, configuration and integration of SMT machinery and equipment

2011 Began working with SiP Vietnam on a collaborative effort to provide localised sales and marketing, and after-sales technical support and maintenance for our customers based in Vietnam

2014 Appointed as a distributor by Supplier B, enabling us to include other types of conveyor systems as part of our integrated production line systems

2016 Appointed as a distributor by INERTEC, enabling us to include selective wave soldering equipment as part of our integrated production line systems

2018 Ventured into the provision of smart factory solutions Secured our first contract to commission a smart factory solution for a conglomerate

in Vietnam 2019 Secured a major contract to commission a complete smart factory, including providing

integrated production line systems, for the same conglomerate in Vietnam 2020 Appointed as a distributor by Teradyne Inc, enabling us to incorporate additional

circuit testing processes to our integrated solutions 2021 Incorporation of Cnergenz and completion of our Pre-IPO Reorganisation

6.1.4 Awards and recognition

Since our incorporation until the LPD, we have received several awards and recognitions, primarily from our suppliers, including:-

Year Awards and recognitions 2005 Outstanding Distributor Award by Speedline 2006 Appreciation Award by Supplier A 2009 Outstanding Performance Award by Speedline 2010 Outstanding Performance Award by Speedline 2011 Outstanding Performance Award by Speedline

Best Electrovert Sales in Asia by Speedline 2014 Best Sales Award by Koh Young 2015 Top Seller Award by Kolb 2016 Best Challenger Award by Koh Young 2017 Best Contender by Koh Young

Top 20 Preferred Supplier by SMT Technologies Sdn Bhd

2019 Best Performing Distributor by ITW EAE In addition to the above, our sales team, led by Lye Yhin Choy, our Chief Executive Officer, and Kong Chia Liang, our Chief Operating Officer, have also been recognised by our suppliers for their sales and marketing capabilities. In particular, Kong Chia Liang, our Chief Operating Officer received the “Most Valuable Sales Person” award from Speedline in 2005, and Lye Yhin Choy, our Chief Executive Officer received the “Best Sales Person” award from Koh Young in 2018.

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6.2 Our principal business activities, solutions and services

6.2.1 Business model Our Group’s principal activities and solutions are categorised and summarised in the diagram below:-

Integrated production line systems

Machinery, equipment and tools

Solutions Target customers

Electronics

companies (i.e. EMS and electronic products brand owners)

Semiconductor companies (i.e. IDMs and OSATs)

Technical support services and material support

Maintenance, upgrade and calibration services

Onsite technical personnel support

PCBA repair services

Training services

Provision of after-sales technical support and training services for the Group’s integrated solutions.

Product/services

Smart factory solutions

64.8%

34.2%

1.0%

74.4%

25.0%

0.6%

54.0%

44.7%

1.4%

REVENUE CONTRIBUTION BY PRODUCTS/SERVICES

FYE 2019 FYE 2020

Integrated solutions

Individual machinery, equipment and tools

After-sales technical support and training services

Geographical markets

Primarily serves Malaysia (save for Melaka and

Johor), Thailand and Vietnam (comprising

99.1% - 100.0% of our Group’s

revenue)

Integrated solutions Design, customisation, development, assembly, configuration, integration, testing and commissioning of integrated production line systems and smart factory solutions

Individual machinery, equipment and tools Sales of individual SMT machinery, equipment and tools as well as tools and consumables customised based on customers’ specifications

FYE 2018

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6.2.2 Integrated solutions

Our range of solutions under this segment are as follows:-

(i) Operational process for our integrated solutions

We have the capability to provide a full range of services to our customers for integrated solutions, which typically involves the following processes:-

(a) Design and customisation We collaborate with our customers to design and customise the processes and solutions required in producing our customer’s intended product, including the varying layout designs and types of advanced semiconductor packaging products and PCBA required. Our engineering division has the capability to design and customise integrated production line systems that are tailored to meet our customers’ operational requirements and budget for different types of advanced semiconductor packaging products and PCBAs. In addition, based on our in-depth understanding of our customers’ processes and facilities, we also have the capability to design and customise smart factory solutions that meet our customers’ production facility and operational requirements. At the design and customisation stage, we also work with our suppliers, who are reputable and established manufacturers of machinery and/or equipment for a particular SMT process, for the sourcing of production line system components, comprising machinery, equipment and tools. These suppliers are typically international companies such as Supplier A, ITW EAE, Koh Young, INERTEC, Kolb, Supplier B and Supplier D. We may also customise the system components required for the solutions offered.

Design and customisation

Assembly and configuration

Integration with existing production line systems

Testing and commissioning

*Includes the sourcing of machinery and equipment

*

Standard SMT production line

systems

Customised SMT production line

systems

Integrated production

line systems

Smart factory solutions

We design, develop, assemble, configure, integrate, test and commission integrated production line systems used in the E&S Industries

Where our customers require additional processes or have specific operational requirements, we customise standard SMT production line systems, via the integration of machinery, equipment or processes/components into the standard SMT production line systems

Our smart factory solutions enable the remote management and monitoring of production processes, and management of materials and finished products to, from and within the production facilities

Our solutions may be provided on a modular basis depending on the required functionalities and costs, or integrated with our customer’s existing production line systems

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(b) Assembly and configuration

Upon finalisation of the design layout, we will assemble the components required for the integrated solution, comprising machinery, equipment and tools, based on our solution design, and configure these components with required software to enable their functionality. This enables the integration of different components to form our solution.

(c) Integration with existing production line systems

In order to provide our customers with a seamless production flow, we will integrate our solutions with our customers’ existing production line system (if required). This process involves the configuration of our machinery and equipment to enable connectivity with the existing production line systems, in order for the processes performed to be sequenced and coordinated.

(d) Testing and commissioning

Upon the assembly, configuration and integration with existing production lines system (if required), we carry out tests to ensure that the functionality and integration of our solutions perform according to requirements before handover of the entire solution to our customers.

(ii) Integrated production line systems

Our core expertise is in the design, development, assembly, configuration, integration, testing and commissioning of integrated production line systems for SMT manufacturing. We design and customise integrated production line systems with the aim of achieving smooth production operations and optimal production yield for our customers. A primary aspect of our services includes the integration of key machinery and equipment required in forming a standard production line system, which is illustrated below:-

Where our customers require additional processes or have specific operational requirements, we are able to customise our standard SMT production line systems to incorporate additional machinery, equipment or processes/components to meet such requirements. For example, such customisation may include:-

- addition of processes to enhance the workflow of the production line, incorporation of

additional testing and inspection procedures to improve accuracy, and automation of the management of materials; and/or

- varying and/or modifying the components and machinery and equipment used in the production line system.

In order to enable such customisation, we utilise our technical capabilities to combine the processes, components and machinery into a single integrated fully functional system.

SMT printing Solder paste

inspection

SMT component placement

Forming of solder joint

(reflow oven) Post-solder joint

inspection

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(iii)

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:-

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Our smart factory solutions enable the remote management and monitoring of production processes, and management of materials and finished products to, from and within the production facilities. Our solutions comprise:-

(i) modular solutions, targeting certain processes and systems depending on the required

functionalities and costs; and

(ii) integration of such solutions with the customer’s existing production line system, manufacturing execution system (“MES”), material requirements planning (“MRP”) system and/or enterprise resource planning (“ERP”) software.

Our key solutions offered under our smart factory solutions are set out as follows:-

No. Key solutions Description 1. Real time

warehouse management

This system will track all incoming and outgoing materials on a real-time basis. This information will be fed instantaneously into our customer’s ERP system. This enables the customer to be informed on inventory levels on a real-time basis.

2. Automated storage system for parts preparation

This automated storage system automatically tracks and supplies parts to the offline material setup / kitting area on a real-time basis. This ensures fast and accurate preparation setup for the production operations. We also offer semi-automated storage system for parts preparation.

3. Automated storage system for parts replenishment

This automated storage system signals for materials to be supplied automatically on an on-demand basis by the production line system. This ensures that all machinery and equipment involved in the production line systems are running without stoppages due to the delay in parts replenishment.

4. Production planning and scheduling solution

This solution allows production orders to be planned and scheduled on a real-time basis. This ensures that machinery utilisation is optimised with the highest overall equipment effectiveness (“OEE”).

5. Production monitoring solution

This solution allows information regarding production operations to be monitored and tracked on a real-time basis. This information includes, but not limited to, quality, production yield, OEE and production volume.

6. Command and control centre (“C&C Centre”)

The C&C Centre is where all the monitoring of production activities are carried out. All data and information for the production facility are automatically recorded, stored and analysed in the C&C Centre. These data and information allow for remote supervision and status control of the electronics and semiconductor manufacturing solutions, as well as production management.

Our smart factory solutions allow businesses to automate their production facility processes, therefore enabling:-

optimised equipment utilisation as the solutions minimise setup time and the number of

setups, improves operational efficiency and minimises operational issues; elimination of material management problems as the solutions allow for real-time and

accurate tracking of material location, quantity and consumption, as well as integration with inventory management systems;

real-time insight into production performance as the solutions reports on machine

performance and downtime; comprehensive traceability solutions on electronic components, processes and quality;

and reduced labour costs and human errors as minimal human intervention is required.

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6.2.3 Individual machinery, equipment and tools

Our sales of individual machinery, equipment and tools are catered to customers in the E&S Industries who are looking to upgrade and/or modify their existing integrated production line systems. Our services under this segment comprise:-

(i) sourcing new individual machinery, equipment or tools, based on our customers’

operational requirements and budgets, as well as tools and consumables customised based on customers' specifications. In delivering the customised machinery and equipment, we will also source, configure, test and commission these machinery and equipment accordingly;

(ii) refurbishment of used machinery and equipment, and sale of pre-owned machinery and

equipment; and

(iii) configuring and integrating such machinery, equipment or tools with our customers’ existing production line systems.

Under this segment, we provide standard machinery, equipment and tools, typically used in SMT production line systems. We are also able to refurbish key machinery and equipment to improve functionality and performance, and customise tools and consumables based on our customers’ specifications, examples of which are set out as follows:-

Key equipment Description/Usage Material processing equipment

Prepares and processes materials through various processes such as chemical and physical treatments. Examples of such equipment include:- centrifugal mixer for mixing of solder paste lead forming / trimming machine to pre-form components before

placement onto the PCB nitrogen generator to prepare an oxygen-free environment during the

soldering process Infrared rework system Removes soldered components from the PCBA for reworking Maintenance equipment Cleans dismantled components and parts of machines during the

maintenance process. Examples of such equipment include:- stencil cleaner for cleaning solder paste from stencils batch PCB cleaner for cleaning solder paste or flux from PCBAs flux removal system for removing flux from machine parts, pallets and

tooling Analytical equipment Analyses certain parameters as a form of quality control. Examples of such

equipment include oxygen analyzer and material analysis equipment. 6.2.4 Provision of after-sales technical support and training services

We also provide the following after-sales technical and training services to support our customers, comprising:-

(i) Technical support services and material support

We provide our existing customers with technical support services to troubleshoot any issues concerning any machinery, equipment and/or integrated solutions provided by us. Our service department is on standby to provide technical support services 24 hours daily to our customers. We also repair and replace spare parts such as motors, electronic control cards and mechanical parts, and have the technical expertise to configure and upgrade software used in the machinery, equipment and/or integrated solutions provided by us.

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(ii) Maintenance and upgrading services

We offer maintenance services which include the maintenance and upgrading of our existing customers’ machinery, equipment and/or integrated solutions provided by us. We also upgrade or enhance processes of our customers’ existing production line systems and solutions.

(iii) On-site technical personnel support

As we collaborate with our customers to design and customise the processes required in producing our customer’s intended product, and the solutions required in carrying out these processes, we are familiar with the existing customers’ processes. Our customers may request for personnel assistance in operating the production line systems and solutions. As such, we may second personnel from our service department to our customers’ production facility, when required.

(iv) PCBA repair services

We provide PCBA repair services which includes troubleshooting and reworking of our customers’ PCBAs.

(v) Training services

We provide training to our customers and their employees to educate them on the usage of our integrated solutions, and to improve their technical knowledge on the processes carried out by the machinery, equipment and/or production line systems and solutions. Our training services are typically carried out on-site at our customers’ facilities or at our Group’s training centre located at our facility in Bukit Tengah, Pulau Pinang.

6.3 Principal business location and principal markets

We principally operate at our facility located in Bukit Tengah, Pulau Pinang, which houses our headquarters, warehouse, application and training centre, demonstration room and workshop. Our principal markets comprise customers in Malaysia (save for Melaka and Johor), Thailand and Vietnam. In addition, we have Affiliates in other countries which bear the same “SiP” name as our subsidiary, SiP Technology, and operate in the same business. SiP Technology and our Affiliates in Singapore, China and Taiwan, which operate independently with dedicated management teams in their respective locations, have in place Collaboration Agreements under which, amongst others, they refer potential customers to each other, based on the customer’s locations. We also have Affiliates in Thailand and Vietnam, which similarly operate independently from us, and which were established to undertake business ventures in Thailand and Vietnam, respectively, through collaborations with SiP Technology. Pursuant to the Collaboration Agreements entered into between SiP Technology and the New Affiliates, the New Affiliates’ roles are primarily to undertake local marketing activities and provide after-sales and technical support services to our customers in Thailand and Vietnam. Further details of our Collaboration Agreements with our Affiliates are as set out in Section 6.19 of this Prospectus.

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6.4 Our revenue breakdown

(i) Revenue by products/services

A breakdown of our revenue by products/services is as follows:-

Disaggregated revenue analysis Principal activity

FYE 31 December 2018 2019 2020

(RM’000) (%) (RM’000) (%) (RM’000) (%) Provision of

integrated solutions for SMT manufacturing

Design, customisation, development, assembly, configuration, integration, testing and commissioning of:- (i) integrated production line

systems; and (ii) smart factory solutions

121,743

64.8

190,517

74.4

71,716

54.0

Sales of standalone SMT machinery and equipment

Sales of individual SMT machinery, equipment and tools as well as tools and consumables customised based on customers’ specifications

64,120 34.2 63,949 25.0 59,383 44.7

Others Provision of after-sales technical support and training services for our integrated solutions

1,891 1.0 1,513 0.6 1,719 1.3

Total revenue 187,754 100.0 255,979 100.0 132,818 100.0 (ii) Revenue by geographical location

Our revenue for the financial years under review was mainly derived from Malaysia (save for Melaka and Johor) and Vietnam, both of which collectively contributed approximately 90.1% to 93.4% to our revenue for the past 3 FYEs 31 December 2018, 2019 and 2020. The breakdown of our revenue by geographical location is as follows:-

Audited

FYE 31 December 2018 2019 2020

(RM’000) (%) (RM’000) (%) (RM’000) (%)

Malaysia 81,861 43.6 80,808 31.6 103,152 77.7 Vietnam 87,354 46.5 158,182 61.8 18,179 13.7 Thailand 18,521 9.9 16,938 6.6 10,350 7.8 Asia (excluding Malaysia, Thailand and

Vietnam)(1) - - - - 1,113 0.8

Others(2) 18 ^ 51 ^ 24 ^ Total revenue 187,754 100.0 255,979 100.0 132,818 100.0

Note:- ^ Negligible (1) Comprising Singapore and South Korea

(2) Comprising Australia and Mexico

Further details on our financial information is set out in Section 11 of this Prospectus.

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6.5 Operational process flow The typical process flow for our integrated solutions and individual machinery, equipment and tools are as follows:-

(i) Process study and simulation

Upon receipt of an inquiry for our integrated solutions and/or individual machinery, equipment or tools, our sales and engineering divisions will work closely with the prospective customer to manage the inquiry. Our sales and engineering personnel will first understand the prospective customer’s needs and requirements and study the required operational processes of the prospective customer. With the understanding of these processes, our engineering personnel will then propose a suitable manufacturing solution tailor-made to meet the prospective customer’s requirements and operational processes. In cases where complex customisations are required for be performed on the machinery and equipment, we will first consult our suppliers to ensure the solution proposed is functional.

Installation and configuration

Planning and procurement

Process study and simulation

Design and customisation

Training

Final buy-off

Product stabilisation support

Proposal acceptance and receipt of purchase order

Des

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On-site integration

Inte

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STAG

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OPERATIONAL PROCESSES

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At our customers’ request, we may also conduct an output study of the proposed manufacturing solution at our demonstration room or at our customers’ site, using demonstration units to simulate the potential finished product and operational output levels.

(ii) Design and customisation After the process study and simulation stage, if the prospective customer agrees to proceed with the proposed manufacturing solution, we will then provide a detailed design plan of the manufacturing solution, which incorporates:- system functionalities, as well as design and site requirements; and/or

schematic design of the solution including, amongst others, the machinery,

equipment and related tools and software required for implementing the solutions.

The solution design will depend on the complexity and type of processes offered, and may be customised to meet the requirements of the prospective customer. We will also test the solution design to determine its functionality and efficiency. Our sales and engineering personnel will liaise with our customer to finalise the proposed solution design. Thereafter, a proposal consisting of both the final solution design and a quotation for the manufacturing solutions will be submitted to our customer for approval. Our proposal may include a cost benefit analysis, if required.

(iii) Planning and procurement Upon the prospective customer’s acceptance of the final solution design and quotation, the prospective customer will issue a purchase order to us, and we will be formally engaged to provide the manufacturing solution. Our sales and engineering personnel will prepare a detailed design plan schedule setting out the deliverables, costing, resource allocations, administrative procedures, as well as design, technical and quality requirements. We will also begin the process of procuring the required machinery, equipment, tools and software from the relevant suppliers to implement the manufacturing solution, which may involve customisation by our suppliers based on the final design plan. Where required, we may also undertake the customisation of certain machinery, equipment, tools or software required for the solutions, which are undertaken either in-house or outsourced to third-parties. Upon delivery of the machinery, equipment and tools to our customer’s site, our engineering personnel will conduct quality inspection and functionality testing to ensure that the machinery, equipment and tools meet our design specifications and purchase orders. In circumstances where our customer’s site is based overseas (i.e. in Thailand or Vietnam), we may engage our New Affiliates to conduct the quality inspection and functionality testing.

(iv) Assembly and configuration Upon the completion of the quality inspection and functionality testing, our engineering personnel and/or our New Affiliates will proceed with the assembly, installation and configuration of the machinery, equipment and tools, in accordance with the final design plan.

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The configuration process may also involve collaborations with our suppliers to customise any software required in the configuration of these machinery and equipment such that the manufacturing solution meets our customer’s requirements and functionality.

(v) On-site integration

If required, our engineering personnel and/or our New Affiliates will integrate the newly installed solutions with the customers’ existing systems, to ensure connectivity between the processes.

(vi) Training Upon request, we will provide training to our customer and their employees to enable them to operate the new manufacturing solution effectively. Training is typically carried out by our engineering personnel and/or our New Affiliates.

(vii) Final buy-off After the machinery, equipment and tools forming our manufacturing solution are fully assembled, integrated and configured our engineering personnel and/or New Affiliates together with our customer will conduct a final buy-off to ensure that the newly installed manufacturing solutions are performing in accordance with our customer’s requirements. This typically involves a setting up and running the manufacturing solution under both simulated and real-time environments, to ensure that the installed and configured machinery, equipment, tools and software are fully functional, and if applicable, readily integrated with the customer’s existing production line systems. This is carried out and witnessed by the customer together with our engineering personnel. After completion of the final buy-off, the completed manufacturing solution will then be handed over to the customer, signifying the completion of the engagement.

(viii) Product stabilisation support We provide after-sales technical support services for our manufacturing solutions, if required. Typically, a warranty period of 1 year is provided for our manufacturing solutions and individual machinery, equipment and tools, during which machinery, equipment and tool replacement will be under our suppliers’ warranty, excluding any repair and replacement services.

6.6 Quality assurance and quality control (“QA/QC”)

We recognise the importance of providing quality solutions and services that meet our customers’ needs and requirements. Our suppliers, who are reputable and established manufacturers of machinery, equipment and/or tools for particular SMT processes, generally undertake the necessary QA/QC procedures to ensure that the machinery, equipment and tools supplied meet the required specifications. In addition, our suppliers are generally responsible for providing warranties for any defects relating to their machinery, equipment and tools. Our customers may also undertake a pre-acceptance buy-off test with our suppliers, whereby visual inspection and functional testing will be performed by our supplier together with the potential customer. This is to ensure that the machinery, equipment and tools are functioning in accordance with the specifications set out by the customers before delivery.

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Upon delivery of machinery, equipment and tools at our customers’ site, our QC procedures entail the following:-

Process flow stage Procedures Procurement of machinery, equipment or tools

Upon arrival of the machinery, equipment and/or tools at our customer’s site, our engineering personnel will conduct quality inspection and functionality testing to ensure that the machinery, equipment and tools meet our design specifications and purchase orders

On-site integration Upon completion of the assembly, configuration and on-site integration of the manufacturing solution, our engineering personnel will carry out test runs on the entire manufacturing solution, to ensure that the solution as well as the machinery, equipment and tools are operating in accordance with the final design plan

Final buy-off A final QC check will be conducted on the complete manufacturing solution at our customer’s site, to ensure that the newly installed manufacturing solution is performing in accordance with our customer’s requirements

The final QC check typically involves setting up and running the entire manufacturing solution, under both simulated and real-time environments, to validate that the system integrity and performance is in line with the customer’s requirements.

This is carried out and witnessed by the customer together with our engineering personnel.

6.7 Technology used

The following technological tools are used in carrying out our processes:- (i) Design drafting software and programming tools

We utilise standard engineering design drafting software and programming tools to create and customise solutions offered to our customers.

(ii) Closed loop control systems

We utilise closed loop control systems in the customisation of machinery, equipment and hardware to assist in generating the intended solution. A closed loop control system will guide the design customisation process by providing a feedback signal if the output deviates from the intended output of the solution.

In addition to the above, we adopt the machinery, equipment, tools and software sourced from our suppliers in the design and customisation of our integrated solutions.

6.8 Design and development

Our design and development activities are typically undertaken in consultation with our customers and suppliers, and carried out during the development of our solutions involving the design, configuration and integration of machinery, equipment and tools utilised. We work with our customers and suppliers to develop optimised design plans and configurations, to meet the customers specifications and intended output. All design and development activities are undertaken by personnel in our engineering division. As at the LPD, there are 32 engineers and technicians in our engineering division, which is headed by our Service Manager, Jerry Tan Kok Seong. Moving forward, in line with our future plans of expanding our offering of smart factory solutions, we intend to establish our R&D division to undertake our design and development activities, as detailed in Section 6.23 of this Prospectus.

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6.9 Insurance We have purchased insurance policies to cover a variety of risks that are relevant to our business needs and operations and customary in our industry, such as fire, flood, burglary, public liability and freight insurance for our operations, including group personal accident and group hospitalisation and surgical scheme for our employees. These insurance policies have specifications and insured limits that we believe are appropriate taking into consideration our risk levels and exposure to such loss, the cost of such insurance, applicable regulatory requirements and the prevailing industry practice in Malaysia.

6.10 Business development and marketing activities

All of our local and international business development and sales activities are spearheaded by Lye Yhin Choy and Kong Chia Liang, our Promoters and Executive Directors. The sales of our solutions and services typically require in-depth knowledge of electronics manufacturing processes and solutions. As such, both our sales and engineering divisions are engaged in the sales and marketing stages of our solutions, which enables us to accurately convey technical information, and offer in-depth details of our solutions. Our demonstration room in our facility enables us to simulate test runs of customised electronics manufacturing solutions, which enables us to showcase our solutions, the potential finished solution that will be implemented, and potential operational output levels to our customers. Our potential customers typically approach us via the following methods:- (i) Referrals and cross-selling

With over 17 years of experience as an electronics and semiconductor manufacturing solution provider, we have an established network of past and existing customers. These customers routinely refer new business to us by ‘word of mouth’ due to our track record of providing quality solutions and services that meet our customers’ needs and requirements. We will continue to cultivate and enhance our working relationship with our customers by continuously maintaining the quality of our solutions and services. As we offer a wide range of solutions, we are also able to leverage on our existing customer base by offering additional or more comprehensive solutions to cater to our customers’ evolving needs and requirements. Our customers may also benefit from the cross-selling of our solutions, as we are already familiar with our customers’ operational processes and requirements, and are able to offer optimised solutions that meet such needs and requirements. We also obtain new customers through referrals via our suppliers. Customers may reach out to suppliers to procure solutions for their businesses. As our suppliers are typically only involved in the manufacturing and sale of individual machinery, equipment and/or tools, they may refer these leads to us to offer our solutions and services.

(ii) Tradeshows, exhibitions and events We have participated in various tradeshows, exhibitions and events organised by associations, event management companies and government agencies, located both locally and internationally, to gain further exposure to potential customers and/or suppliers. Our participation in these tradeshows, exhibitions and events provide us a platform to showcase our capabilities to the industries, enabling us to attract prospective customers, as well as keep abreast with the latest trends and developments in the industry.

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Examples of the various tradeshows, exhibitions and events that we have attended between 2015 and 2019 are as follows:-

Date Name of event Organiser Location June 2015 NEPCON Malaysia Reed Exhibitions Pte Limited Pulau Pinang August 2015 SMTA Tabletop

Exhibition Persatuan Surface Mount Technology Pulau Pinang

Pulau Pinang

September 2015 NEPCON Vietnam Reed Tradex Co Ltd Vietnam September 2016 SMTA Tabletop


Pulau Pinang

October 2016 NEPCON Vietnam Reed Tradex Co Ltd Vietnam April 2017 SEMICON

Southeast Asia Semiconductor Equipment and Materials International (“SEMI”)

Kuala Lumpur

September 2017 NEPCON Vietnam Reed Tradex Co Ltd Vietnam October 2017 SMTA Tabletop


Pulau Pinang

May 2018 SEMICON Southeast Asia

SEMI Kuala Lumpur

August 2018 SMTA Tabletop Exhibition

Persatuan Surface Mount Technology Pulau Pinang

Pulau Pinang

October 2018 NEPCON Vietnam Reed Tradex Co Ltd Vietnam November 2019 SMTA Tabletop


Pulau Pinang

In conjunction with our 15th anniversary, we organised a technology event in July 2019 to showcase our smart factory solutions to our customers. The event also included various seminars which were presented by our suppliers. We also work with our suppliers to conduct private exhibitions to showcase their latest technology to our customers. In view of the travel restrictions arising from the COVID-19 pandemic since early 2020, we have temporarily suspended our participation in tradeshows, exhibitions and events. Nonetheless, we intend to continue participating in future local and international tradeshows, exhibitions and events once reasonably feasible.

(iii) Corporate website

We have established a corporate website at https://cnergenz.com which provides information on our Group and details of our solutions and services, to prospective customers.

6.11 Types, sources and availability of supplies Our key supplies include physical hardware components (i.e. machinery, equipment and tools), spare parts and consumables. For third-party physical hardware components, such components include machinery, equipment and tools. We source these physical hardware components from suppliers including Supplier A, ITW EAE, Koh Young, INERTEC, Kolb, Supplier B, and Supplier D. These supplies are generally readily available from our suppliers. In addition, we procure spare parts for the machinery, equipment and tools we provide to our customers and consumables used to facilitate our customers’ production process. This includes nozzles, cleaning detergents, oil and grease, filters and fluids.

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6.12 Operational capacities and output

As our Group is primarily an electronics manufacturing solutions provider, we do not have any operating capacities as we do not undertake any direct manufacturing activities. It is pertinent to note that our Group is involved in the integration of production line systems and smart factory solutions, as well as the sale of individual machinery, equipment and tools. The machinery, equipment and tools used in our solutions or sold by our Group are sourced from respective suppliers. The output of solutions offered by our Group would be dependent on the size of our engineering team and technical expertise of our engineers. In addition, additional floor space will also enable our Group to run our solutions concurrently.

6.13 Seasonality

We do not experience any material seasonality in our business.

6.14 Employees

As at the LPD, we have 52 employees, all of which are permanent employees located in Malaysia. A summary of our Group’s total employees as at the FYE 2020 and the LPD are set out below:-

Divisions No. of employees

FYE 2020 As at the LPD Directors, key senior management and technical personnel 4 5 Finance and administration 6 10 Sales 2 4 Engineering 31 32 IT - 1 Total 43 52

As at the LPD, none of our employees belong to any trade union. We have not experienced any labour disputes in the past.

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ufac

ture

r. C

usto

mer

J

is

a su

bsid

iary

of

a

glob

al

man

ufac

turin

g so

lutio

ns p

rovi

der l

iste

d on

the

NAS

DAQ

in th

e U

SA.

Thai

land

-

Indi

vidu

al m

achi

nery

, eq

uipm

ent a

nd to

ols

7,57

7 4.

0 -

- -

- 14

Cus

tom

er K

A po

wer

man

agem

ent s

olut

ions

pro

vide

r an

d el

ectri

c co

mpo

nent

s m

anuf

actu

rer,

liste

d on

th

e St

ock

Exch

ange

of T

haila

nd. C

usto

mer

K

is a

lso

a su

bsid

iary

of

a gl

obal

pro

vide

r of

po

wer

an

d th

erm

al

man

agem

ent

solu

tions

lis

ted

on th

e Ta

iwan

Sto

ck E

xcha

nge.

Thai

land

-

Indi

vidu

al m

achi

nery

, eq

uipm

ent a

nd to

ols

7,00

5 3.

7 -

- -

- 11

Tota

l 14

3,54

1 76

.4

205,

362

80.2

88

,039

66

.3

To

tal r

even

ue o

f our

Gro

up

187,

754

100.

0 25

5,97

9 10

0.00

13

2,81

8 10

0.00

Not

es:-

- N

ot a

pplic

able

as

the

cust

omer

was

not

one

of t

he to

p 5

cust

omer

s fo

r the

resp

ectiv

e fin

anci

al y

ear.

65

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

65

Our

sol

utio

ns a

re ty

pica

lly c

arrie

d ou

t on

a pr

ojec

t-to-

proj

ect b

asis

. As

such

, the

com

posi

tion

of o

ur to

p 5

cust

omer

s ch

ange

s fro

m y

ear-

to-y

ear,

depe

ndin

g on

the

natu

re o

f the

sol

utio

ns p

rovi

ded

and

proj

ects

und

erta

ken,

as

wel

l as

the

leng

th o

f ou

r en

gage

men

t with

cus

tom

ers,

whi

ch a

re in

fluen

ced

by th

e fo

llow

ing

fact

ors:

-

the

valu

e of

eac

h en

gage

men

t sec

ured

for

our

solu

tions

. Typ

ical

ly, p

rovi

sion

of i

nteg

rate

d so

lutio

ns c

arry

hig

her

valu

e co

mpa

red

to in

divi

dual

pu

rcha

se o

rder

s fo

r mac

hine

ry, e

quip

men

t and

tool

s, d

ue to

the

tech

nica

l com

plex

ity in

volv

ed in

suc

h so

lutio

ns a

nd th

e la

rge

scal

e of

mac

hine

ry

and

equi

pmen

t req

uire

d; a

nd

th

e du

ratio

n an

d re

sour

ces

requ

ired

in th

e im

plem

enta

tion

of s

uch

enga

gem

ents

, whi

ch is

dep

ende

nt o

n th

e co

mpl

exity

of s

ervi

ces,

and

may

re

quire

spe

cific

des

ign,

cus

tom

isat

ion

and

inte

grat

ion

serv

ices

. Our

sol

utio

ns a

re c

arrie

d ou

t eith

er o

n a

cont

ract

bas

is o

ver a

per

iod

of u

p to

12

mon

ths

(i.e.

for

the

prov

isio

n of

inte

grat

ed p

rodu

ctio

n lin

e sy

stem

s an

d sm

art f

acto

ry s

olut

ions

) or

bas

ed o

n on

e-of

f pur

chas

e or

ders

whi

ch a

re

typi

cally

fulfi

lled

in a

muc

h sh

orte

r pe

riod

of u

p to

3 to

6 m

onth

s (i.

e. fo

r th

e pr

ovis

ion

of in

tegr

ated

pro

duct

ion

line

syst

ems

and

for

indi

vidu

al

mac

hine

ry, e

quip

men

t and

tool

s).

Our

top

5 cu

stom

ers

for e

ach

FYE

31 D

ecem

ber 2

018,

201

9 an

d 20

20 c

ontri

bute

d 76

.4%

, 80.

2% a

nd 6

6.3%

resp

ectiv

ely

to o

ur re

venu

e, a

nd p

rimar

ily

com

pris

es E

MS

and

elec

troni

c pr

oduc

t bra

nd o

wne

rs, t

o w

hom

our

Gro

up p

rovi

des

elec

troni

c m

anuf

actu

ring

solu

tions

and

indi

vidu

al m

achi

nery

, equ

ipm

ent

and

tool

s. O

ur G

roup

als

o pr

ovid

es a

fter-

sale

s te

chni

cal s

uppo

rt se

rvic

es, m

aint

enan

ce a

nd m

ater

ial s

uppo

rt to

all

the

abov

e m

entio

ned

cust

omer

s.

A m

ajor

ity o

f our

ser

vice

s ar

e pr

ovid

ed b

ased

on

purc

hase

ord

ers

from

our

cus

tom

ers.

How

ever

, the

re a

re in

stan

ces

whe

reby

, due

to th

e si

ze a

nd v

alue

of

the

orde

r, ou

r Gro

up w

ill e

nter

into

con

tract

s w

ith o

ur c

usto

mer

s fo

r ou

r int

egra

ted

solu

tions

. For

inst

ance

, sal

es g

ener

ated

from

the

follo

win

g pa

rties

w

ere

unde

rtake

n on

a c

ontra

ct b

asis

:-

(a)

Cus

tom

er I

for t

he p

rovi

sion

of i

nteg

rate

d pr

oduc

tion

line

syst

ems

and

smar

t fac

tory

sol

utio

ns, w

hich

had

gen

erat

ed R

M80

.0 m

illion

in re

venu

e in

th

e FY

E 20

18;

(b)

Cus

tom

er F

for t

he d

evel

opm

ent o

f a s

mar

t fac

tory

, whi

ch h

ad g

ener

ated

RM

149.

4 m

illion

in re

venu

e in

the

FYE

2019

; and

(c

) C

usto

mer

C fo

r the

pro

visi

on o

f int

egra

ted

prod

uctio

n lin

e sy

stem

s, w

hich

had

gen

erat

ed R

M10

.3 m

illion

in re

venu

e in

the

FYE

2020

.

In a

dditi

on, w

hile

mos

t of o

ur to

p 5

cust

omer

s flu

ctua

ted

from

yea

r to

yea

r, ou

r G

roup

rec

orde

d re

curr

ing

reve

nue

from

Cus

tom

er A

and

Cus

tom

er B

. H

owev

er, s

uch

sale

s w

ere

gene

rate

d on

indi

vidu

al p

urch

ase

orde

rs, f

or th

e pu

rcha

ses

of in

divi

dual

mac

hine

ry, e

quip

men

t, so

ftwar

e an

d to

ols

for

the

cust

omer

's e

xist

ing

prod

uctio

n lin

e sy

stem

s, to

cat

er to

thei

r ong

oing

cap

ital e

xpen

ditu

re p

lans

. In

vie

w o

f the

abo

ve, o

ur G

roup

is n

ot d

epen

dent

on

any

parti

cula

r cu

stom

er. O

ur G

roup

stri

ves

to m

aint

ain

long

-term

bus

ines

s re

latio

nshi

ps w

ith o

ur

maj

or c

usto

mer

s, b

y pr

ovid

ing

qual

ity s

olut

ions

and

ser

vice

s th

at m

eet o

ur c

usto

mer

s’ n

eeds

and

requ

irem

ents

, as

wel

l as

tech

nica

l sup

port

serv

ices

afte

r th

e co

mpl

etio

n of

eac

h pr

ojec

t, w

hich

are

key

fact

ors

that

may

lead

to o

ur c

usto

mer

s se

ekin

g ou

t our

ser

vice

s fo

r th

eir

futu

re u

pgra

de a

nd e

xpan

sion

ac

tiviti

es.

66

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

66

6.16

M

ajor

sup

plie

rs

Our

top

5 su

pplie

rs fo

r the

fina

ncia

l yea

rs u

nder

revi

ew a

re a

s fo

llow

s:-

Supp

liers

Cou

ntry

Su

pplie

s pr

ocur

ed

FYE

31 D

ecem

ber

*Len

gth

of

busi

ness

re

latio

nshi

p (y

ears

)

2018

20

19

2020

D

escr

iptio

n (R

M’0

00)

(%)

(RM

’000

) (%

) (R

M’0

00)

(%)

Supp

lier A

A

man

ufac

ture

r of

se

mic

ondu

ctor

s an

d re

late

d so

lid-s

tate

dev

ices

, lis

ted

on th

e H

ong

Kon

g St

ock

Exc

hang

e.

Sing

apor

e S

urfa

ce m

ount

pl

acem

ent m

achi

nes

61,9

34

40.2

95

,092

44

.8

32,6

21

30.0

14

ITW

EAE

A D

ivis

ion

of

Illin

ois

Tool

Wor

ks, I

nc.

(“ITW

EAE

”)

A m

anuf

actu

rer

of

fast

ers,

co

mpo

nent

s,

equi

pmen

t, co

nsum

able

sy

stem

s,

and

a va

riety

of s

peci

alty

pro

duct

s an

d eq

uipm

ent,

liste

d on

the

NYS

E in

th

e U

SA.

Uni

ted

Stat

es

Prin

ter,

reflo

w o

ven

and

sold

erin

g sy

stem

s 36

,830

23

.9

46,8

17

22.0

31

,675

29

.1

16

Koh

Youn

g Te

chno

logy

In

c

A m

anuf

actu

rer a

nd d

evel

oper

of

3D m

easu

rem

ent a

nd in

spec

tion

equi

pmen

t us

ed

for

test

ing

accu

racy

and

relia

bilit

y in

var

ious

m

achi

nerie

s,

liste

d on

th

e KO

SDAQ

, Sou

th K

orea

.

Sout

h Ko

rea

3D m

easu

rem

ent a

nd

insp

ectio

n eq

uipm

ent,

tool

s an

d so

ftwar

e

18,9

21

12.3

35

,589

16

.8

12,1

20

11.2

13

INER

TEC

Löt

tech

nik

Gm

bH

A m

anuf

actu

rer

of

sold

erin

g eq

uipm

ent

Ger

man

y So

lder

ing

equi

pmen

t, to

ols,

and

sof

twar

e -

- -

- 3,

699

3.4

4

Kolb

Cle

anin

g Te

chno

logy

Gm

bH

A fu

ll se

rvic

e pr

ovid

er o

f cle

anin

g sy

stem

s,

clea

ning

ch

emic

als,

te

chno

logy

, pr

oces

s an

d so

ftwar

e de

sign

Ger

man

y C

lean

ing

mac

hine

ry,

equi

pmen

t and

tool

s -

- 3,

687

1.7

2,81

2 2.

6 14

Supp

lier B

A m

anuf

actu

rer o

f ins

trum

ents

us

ed to

mea

sure

ele

ctric

ity a

nd

elec

trica

l sig

nals

Sout

h Ko

rea

Con

veyo

r sys

tem

s -

- 11

,727

5.

5 -

- 6

67

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

67

Supp

liers

Cou

ntry

Su

pplie

s pr

ocur

ed

FYE

31 D

ecem

ber

*Len

gth

of

busi

ness

re

latio

nshi

p (y

ears

)

2018

20

19

2020

D

escr

iptio

n (R

M’0

00)

(%)

(RM

’000

) (%

) (R

M’0

00)

(%)

Supp

lier C

A pr

ovid

er

of

elec

troni

c m

anuf

actu

ring

serv

ices

fo

r co

mpu

ter

perip

hera

ls, c

onsu

mer

el

ectro

nics

an

d au

tom

otiv

e.

Supp

lier

C i

s a

subs

idia

ry o

f a

prov

ider

of

el

ectro

nic

man

ufac

turin

g so

lutio

ns,

liste

d on

the

Mai

n M

arke

t of

Bur

sa

Secu

ritie

s

Thai

land

So

ftwar

e 6,

014

3.9

- -

- -

3

(as

at 2

018)

Supp

lier D

A

desi

gner

and

man

ufac

ture

r of

au

tom

ated

pro

duct

ion

syst

ems

Sing

apor

e C

onve

yor s

yste

ms

5,05

8 3.

3 -

- -

- 16

To

tal

128,

757

83.6

19

2,91

2 90

.8

82,9

27

76.3

Tota

l cos

t of s

ales

and

ser

vice

s of

our

Gro

up

154,

066

100.

0 21

2,34

9 10

0.00

10

8,64

8 10

0.0

N

otes

:- -

Not

app

licab

le a

s th

e su

pplie

r was

not

one

of t

he to

p 5

supp

liers

for t

he re

spec

tive

finan

cial

yea

r.

* Le

ngth

of b

usin

ess

rela

tions

hip

is a

s at

202

0, s

ave

as d

iscl

osed

in th

e ta

ble

abov

e.

O

ur G

roup

is d

epen

dent

on

our p

rimar

y su

pplie

rs, n

amel

y Su

pplie

r A, I

TW E

AE a

nd K

oh Y

oung

all

of w

hom

hav

e co

llect

ivel

y ac

coun

ted

for 7

6.4%

, 83.

6%

and

70.3

% to

our

Gro

up’s

tota

l cos

t of s

ales

and

ser

vice

s fo

r the

pas

t 3 F

YEs

31 D

ecem

ber 2

018,

201

9 an

d 20

20. W

e pr

ocur

e ou

r sup

plie

s fro

m th

ese

prim

ary

supp

liers

via

the

follo

win

g di

strib

utio

n ag

reem

ents

:- (i)

di

strib

utor

ship

agr

eem

ent w

ith S

uppl

ier A

ent

ered

into

on

2 Fe

brua

ry 2

021

for t

he a

ppoi

ntm

ent o

f SiP

Tec

hnol

ogy

as a

non

-exc

lusi

ve d

istri

buto

r (w

hich

is re

new

able

yea

rly) f

or th

e sa

le o

f Sup

plie

r A’s

pro

duct

s in

Mal

aysi

a (s

ave

for M

elak

a an

d Jo

hor)

, Tha

iland

and

Vie

tnam

;

(ii)

dist

ribut

or a

gree

men

t with

ITW

EAE

ent

ered

into

on

1 Ju

ne 2

018

for t

he a

ppoi

ntm

ent o

f SiP

Tec

hnol

ogy

as th

e ex

clus

ive

dist

ribut

or fo

r the

sal

e of

ITW

EAE

pro

duct

s in

Mal

aysi

a (s

ave

for M

elak

a an

d Jo

hor)

; and

(iii)

dist

ribut

ion

agre

emen

t with

Koh

You

ng e

nter

ed in

to o

n 1

Janu

ary

2021

for t

he a

ppoi

ntm

ent o

f SiP

Tec

hnol

ogy

as a

non

-exc

lusi

ve d

istri

buto

r of

Ko

h Yo

ung

prod

ucts

in M

alay

sia

(sav

e fo

r Mel

aka

and

Joho

r), T

haila

nd a

nd V

ietn

am,

(c

olle

ctiv

ely,

the

“Dis

trib

utio

n Ag

reem

ents

”).

68

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

68

The

Dis

tribu

tion

Agre

emen

ts w

ith th

ese

esta

blis

hed

mul

tinat

iona

l man

ufac

ture

rs o

f SM

T eq

uipm

ent e

nabl

e ou

r Gro

up to

pur

chas

e th

e fu

ll ra

nge

of p

rodu

ct

offe

rings

, com

pris

ing

mac

hine

ry, e

quip

men

t and

tool

s re

quire

d fo

r ou

r so

lutio

ns. S

uch

dist

ribut

ion

arra

ngem

ents

als

o re

duce

the

need

for

our

Gro

up to

so

urce

our

sup

plie

s fro

m m

ultip

le s

uppl

iers

. Not

with

stan

ding

our

dep

ende

ncy

on o

ur p

rimar

y su

pplie

rs, t

hese

sup

plie

rs a

lso

rely

on

our G

roup

to m

arke

t th

eir p

rodu

cts

to o

ur G

roup

’s n

etw

ork

of c

usto

mer

s. W

e do

not

env

isag

e an

y m

ajor

dis

rupt

ion

to th

ese

supp

lier r

elat

ions

hips

giv

en th

e co

llabo

rativ

e na

ture

of

our

eng

agem

ents

with

the

m,

and

the

long

est

ablis

hed

busi

ness

rel

atio

nshi

ps,

span

ning

ove

r 10

yea

rs.

Nev

erth

eles

s, in

the

eve

nt s

uch

adve

rse

circ

umst

ance

s ar

ise,

our

Gro

up b

elie

ves

that

we

are

able

to s

ourc

e si

mila

r com

pone

nts

from

oth

er e

stab

lishe

d m

anuf

actu

rers

in th

e in

dust

ry, m

inim

isin

g di

srup

tion

to o

ur G

roup

’s s

uppl

y ch

ain

and

oper

atio

ns.

6.17

M

ajor

lice

nses

and

per

mits

As

at t

he L

PD

, det

ails

of t

he m

ajor

lice

nces

and

per

mits

hel

d by

our

Gro

up a

re a

s fo

llow

s:-

(i)

Atom

ic E

nerg

y Li

cenc

e is

sued

by

the

Atom

ic E

nerg

y Li

cens

ing

Boa

rd (“

AELB

”)

Com

pany

D

escr

iptio

n of

lic

ence

/ ap

prov

al

Appr

ovin

g au

thor

ity

Perm

it /

Lice

nce

/ R

egis

trat

ion

no.

Issu

e da

te /

Ex

piry

dat

e Sa

lient

con

ditio

ns

Stat

us

of

com

plia

nce

SiP

Te

chno

logy

A

tom

ic

Ene

rgy

Lice

nce

for

Cla

sses

C, E

and

H

AE

LB

LPTA

/A/1

795

8 Ju

ly 2

021

/ 7

July

202

4 (i)

S

iP T

echn

olog

y is

requ

ired

to e

nsur

e th

at o

nly

Kon

g C

hia

Lian

g (a

s th

e pe

rson

resp

onsi

ble

for t

he li

cenc

e) a

nd K

oh

Kia

n H

wee

(as

the

rad

iatio

n pr

otec

tion

offic

er)

deal

with

th

e A

ELB

. (ii

) S

iP T

echn

olog

y is

req

uire

d to

obt

ain

the

appr

oval

of t

he

AE

LB a

t lea

st 1

4 da

ys b

efor

e an

y re

cogn

ition

, cha

nge

or

recr

uitm

ent,

of th

e pe

rson

resp

onsi

ble

for t

he lic

ence

or t

he

radi

atio

n pr

otec

tion

offic

er, a

s th

e ca

se m

ay b

e.

(ii

i) S

iP

Tech

nolo

gy

is

proh

ibite

d fro

m

mak

ing

any

mod

ifica

tions

to

all l

icen

sed

radi

atio

n eq

uipm

ent

with

out

obta

inin

g th

e pr

ior a

ppro

val o

f the

AE

LB.

(iv)

The

licen

ce is

non

-tran

sfer

able

.

Com

plie

d

Pu

rsua

nt to

Sec

tion

12 o

f the

Ato

mic

Ene

rgy

Lice

nsin

g Ac

t 198

4 (“

AELA

”), n

o pe

rson

may

, unl

ess

he is

the

hold

er o

f a v

alid

lice

nce

issu

ed b

y th

e AE

LB:-

(i)

site

, con

stru

ct o

r ope

rate

a n

ucle

ar in

stal

latio

n; o

r

(ii)

deal

in, p

osse

ss o

r dis

pose

of a

ny ra

dioa

ctiv

e m

ater

ial,

nucl

ear m

ater

ial,

pres

crib

ed s

ubst

ance

or i

rrad

iatin

g ap

para

tus.

69

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

69

A br

each

of a

ny c

ondi

tions

of t

he a

tom

ic e

nerg

y lic

ence

issu

ed b

y th

e A

ELA

is a

n of

fenc

e an

d th

e lic

ence

hol

der m

ay, o

n co

nvic

tion,

be

liabl

e to

im

pris

onm

ent f

or a

term

not

exc

eedi

ng 1

0 ye

ars

or a

fine

not

exc

eedi

ng R

M10

0,00

0 or

bot

h. A

ELB

also

has

the

right

to re

voke

or c

ance

l the

ato

mic

en

ergy

lice

nce

at a

ny ti

me

with

out p

rior n

otic

e if

the

licen

ce h

olde

r is

foun

d to

be

in b

reac

h of

the

AELA

and

its

regu

latio

ns.

(ii

) B

usin

ess

prem

ises

and

adv

ertis

emen

t lic

ence

s fo

r our

offi

ces

and

war

ehou

ses

W

e ar

e re

quire

d to

obt

ain

busi

ness

pre

mis

es a

nd a

dver

tisem

ent l

icen

ce fr

om th

e re

leva

nt lo

cal c

ounc

ils a

nd a

utho

ritie

s in

acc

orda

nce

with

the

Loca

l Gov

ernm

ent A

ct 1

976

and

the

rele

vant

by-

law

s an

d re

gula

tions

. Th

e m

ajor

ity o

f our

bus

ines

s pr

emis

es a

nd a

dver

tisem

ent l

icen

ces

obta

ined

for o

ur b

usin

ess

prem

ises

con

tain

a c

ondi

tion

that

suc

h lic

ence

sha

ll be

dis

play

ed a

t the

lice

nsed

pre

mis

es, w

hich

we

have

com

plie

d w

ith. P

ursu

ant t

o su

bsec

tion

107(

6) o

f the

Loc

al G

over

nmen

t Act

197

6, a

ny p

erso

n w

ho f

ails

to

exhi

bit

or p

rodu

ce h

is li

cenc

es o

n th

e pr

emis

es s

hall

be li

able

to

a fin

e no

t ex

ceed

ing

RM

500

or t

o im

pris

onm

ent

for

a te

rm n

ot

exce

edin

g 6

mon

ths

or to

bot

h. F

urth

er, a

s a

gene

ral p

enal

ty, t

he L

ocal

Gov

ernm

ent A

ct 1

976

prov

ides

that

a lo

cal a

utho

rity

may

, by

by-la

w, r

ule

or re

gula

tion

pres

crib

e fo

r the

bre

ach

of a

ny b

y-la

w, r

ule

or re

gula

tion,

a fi

ne n

ot e

xcee

ding

RM

2,00

0 or

a te

rm o

f im

pris

onm

ent n

ot e

xcee

ding

1

year

or

both

and

in t

he c

ase

of a

con

tinui

ng o

ffenc

e a

sum

not

exc

eedi

ng R

M20

0 fo

r ea

ch d

ay d

urin

g w

hich

suc

h of

fenc

e is

con

tinue

d af

ter

conv

ictio

n.

(ii

i) O

ther

s

We

had,

on

19 A

ugus

t 202

1, s

ubm

itted

an

appl

icat

ion

to th

e M

alay

sian

Inve

stm

ent D

evel

opm

ent A

utho

rity

(“M

IDA”

) to

appl

y fo

r a m

anuf

actu

ring

licen

se to

und

erta

ke th

e de

sign

and

ass

embl

y of

sm

art m

anuf

actu

ring

equi

pmen

t for

use

in th

e el

ectro

nics

and

sem

icon

duct

or in

dust

ries

at o

ur

new

faci

lity.

Upo

n ap

prov

al o

f the

man

ufac

turin

g lic

ense

, we

will

be a

ble

to d

esig

n an

d de

velo

p ou

r pro

prie

tary

rang

e of

sm

art f

acto

ry s

olut

ions

, as

set o

ut in

our

futu

re p

lans

in S

ectio

n 6.

23 o

f thi

s Pr

ospe

ctus

.

Save

as

disc

lose

d ab

ove,

ther

e ar

e no

oth

er re

leva

nt la

ws,

regu

latio

ns, r

ules

or r

egul

ator

y re

quire

men

ts g

over

ning

the

cond

uct o

f our

Gro

up’s

bus

ines

s an

d/or

env

ironm

enta

l iss

ue w

hich

may

mat

eria

lly a

ffect

our

Gro

up’s

bus

ines

s or

ope

ratio

ns. A

s at

the

LPD

, the

re is

no

non-

com

plia

nce

with

suc

h la

ws,

re

gula

tions

, rul

es o

r reg

ulat

ory

requ

irem

ents

and

/or e

nviro

nmen

tal i

ssue

s.

70

Reg

istra

tion

No.

: 202

1010

2612

3 (1

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23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

70

6.18

Tr

adem

arks

and

oth

er in

telle

ctua

l pro

pert

y rig

hts

Our

sub

sidi

ary,

SiP

Tec

hnol

ogy,

has

bee

n op

erat

ing

unde

r th

e ‘S

iP T

echn

olog

y’ n

ame

sinc

e th

e co

mm

ence

men

t of

its

busi

ness

in 2

004.

The

‘SiP

Te

chno

logy

’ nam

e w

as c

once

ptua

lised

by

our c

o-fo

unde

rs, L

ye Y

hin

Cho

y an

d K

ong

Chi

a Li

ang,

in 2

004

toge

ther

with

the

foun

ders

of S

iP T

echn

olog

y’s

first

affi

liate

s, S

iP S

inga

pore

, SiP

Chi

na a

nd S

iP T

aiw

an d

urin

g th

e in

corp

orat

ion

and

com

men

cem

ent s

tage

of t

heir

resp

ectiv

e bu

sine

sses

. ‘Si

P’ s

tand

s fo

r ‘system

-in-place’ a

nd a

lso

‘sys

tem

-in-package’,

a co

mm

only

use

d te

rm in

the

sem

icon

duct

or in

dust

ry w

hich

refe

rs to

a n

umbe

r of i

nteg

rate

d ci

rcui

ts,

whi

ch p

erfo

rms

all o

r mos

t of t

he fu

nctio

ns o

f an

elec

troni

c sy

stem

, and

is ty

pica

lly u

sed

insi

de e

lect

roni

c pr

oduc

ts.

Th

e ‘S

iP T

echn

olog

y’ n

ame

has

beco

me

an e

stab

lishe

d na

me

in M

alay

sia,

Tha

iland

, Vie

tnam

, Sin

gapo

re, I

ndon

esia

and

Phi

lippi

nes

as a

relia

ble

prov

ider

of

ele

ctro

nics

man

ufac

turin

g so

lutio

ns. I

n vi

ew o

f the

impo

rtanc

e of

the

‘SiP

Tec

hnol

ogy’

nam

e, o

ur G

roup

has

take

n st

eps

to re

gist

er th

e ‘S

iP T

echn

olog

y’

trade

mar

k in

thes

e lo

catio

ns. T

he d

etai

ls o

f the

‘SiP

Tec

hnol

ogy’

trad

emar

k ar

e se

t out

in A

ppen

dix

I of t

his

Pros

pect

us, a

nd s

umm

aris

ed a

s fo

llow

s:-

No.

Tr

adem

ark

Ow

ner’s

nam

e C

lass

Te

rrito

ries

Stat

us o

f ap

plic

atio

n 1.

SiP

Tec

hnol

ogy

Res

pect

ive

clas

s as

se

t ou

t in

Ap

pend

ix I

of th

is P

rosp

ectu

s M

alay

sia,

Th

aila

nd,

Vie

tnam

, S

inga

pore

, In

done

sia

and

Phi

lippi

nes

Pen

ding

app

rova

l

Furth

er, o

ur G

roup

has

ent

ered

into

Lic

ence

Agr

eem

ents

with

eac

h of

the

Affil

iate

s gr

antin

g th

e Af

filia

tes

certa

in ri

ghts

to u

se th

e Si

P Te

chno

logy

trad

emar

k an

d tra

de n

ame

(“SiP

Tra

dem

arks

”) su

bjec

t to

the

term

s of

the

Lice

nce

Agre

emen

ts. U

nder

the

Lice

nce

Agre

emen

ts, t

he A

ffilia

tes

are

requ

ired

to, a

mon

gst

othe

r thi

ngs:

-

(i)

at a

ll tim

es a

dher

e an

d co

nfor

m s

trict

ly to

the

use

requ

irem

ents

of t

he S

iP T

rade

mar

ks a

s m

ay b

e di

rect

ed b

y Si

P Te

chno

logy

from

tim

e to

tim

e;

(ii

) pr

eser

ve th

e go

odw

ill an

d re

puta

tion

asso

ciat

ed w

ith th

e S

iP T

rade

mar

ks;

(ii

i) no

t cau

se o

r per

mit

anyt

hing

whi

ch m

ay d

amag

e or

end

ange

r the

SiP

Tra

dem

arks

or t

he g

oodw

ill ge

nera

ted

by th

e Si

P Tr

adem

arks

or a

ssis

t or

suffe

r oth

ers

to d

o so

; and

(iv)

not

use

any

nam

e or

mar

k th

at is

sim

ilar

to t

he S

iP T

rade

mar

ks o

r an

y va

riatio

ns o

f th

e Si

P T

rade

mar

ks w

hich

are

like

ly t

o be

con

fuse

d or

as

soci

ated

with

the

SiP

Trad

emar

ks.

The

regi

stra

tion

of th

e Si

P Tr

adem

arks

as

desc

ribed

abo

ve, a

nd th

e Li

cenc

e Ag

reem

ents

wou

ld e

nabl

e ou

r Gro

up to

saf

egua

rd o

ur in

tere

st a

nd re

puta

tion

in t

he m

arke

t, re

gula

te t

he u

sage

of

the

SiP

Tra

dem

arks

by

the

Affil

iate

s, a

nd a

vail

ours

elve

s of

sta

tuto

ry a

nd c

ontra

ctua

l rem

edie

s in

the

eve

nt o

f un

auth

oris

ed u

se o

f the

SiP

Tra

dem

arks

.

71

Reg

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No.

: 202

1010

2612

3 (1

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23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

71

6.19

C

olla

bora

tion

arra

ngem

ents

Col

labo

ratio

n Ag

reem

ents

with

the

Firs

t Affi

liate

s U

nder

the

Col

labo

ratio

n A

gree

men

ts w

ith e

ach

of t

he F

irst

Affil

iate

s, S

iP T

echn

olog

y an

d th

e Fi

rst

Affil

iate

s ha

ve a

gree

d th

at t

hey

will

refe

r po

tent

ial

cust

omer

s to

eac

h ot

her b

ased

on

the

cust

omer

’s lo

catio

n. F

or e

xam

ple,

if a

pot

entia

l cus

tom

er a

ppro

ache

s S

iP S

inga

pore

for p

rocu

rem

ent o

f int

egra

ted

solu

tions

in M

alay

sia

(sav

e fo

r M

elak

a an

d Jo

hor)

, Tha

iland

or

Viet

nam

, SiP

Sin

gapo

re w

ill re

fer

such

cus

tom

er to

SiP

Tec

hnol

ogy.

Fur

ther

, the

par

ties

have

agr

eed

that

in c

ases

whe

re a

ny o

f the

ir cu

stom

ers

relo

cate

s its

exi

stin

g or

pro

pose

d m

anuf

actu

ring

faci

lity

to a

noth

er p

arty

’s te

rrito

ry, t

he la

tter w

ill

assi

st t

he f

orm

er i

n th

e pr

ovis

ion

of t

echn

ical

ser

vice

s, t

rain

ing

serv

ices

, an

d w

here

app

licab

le,

perfo

rm c

omm

issi

onin

g an

d te

stin

g of

ele

ctro

nics

m

anuf

actu

ring

solu

tions

for t

he c

usto

mer

. For

exa

mpl

e, in

the

even

t a c

usto

mer

of S

iP S

inga

pore

relo

cate

s its

exi

stin

g or

pro

pose

d m

anuf

actu

ring

faci

lity

in S

inga

pore

to

Pula

u P

inan

g, M

alay

sia,

SiP

Sin

gapo

re w

ill r

each

out

to

SiP

Tec

hnol

ogy

for

the

prov

isio

n of

the

ser

vice

s de

scrib

ed a

bove

, an

d S

iP

Tech

nolo

gy w

ill ch

arge

SiP

Sin

gapo

re th

e re

leva

nt s

ervi

ce fe

es fo

r suc

h se

rvic

es.

Thro

ugh

the

Col

labo

ratio

n Ag

reem

ents

with

the

Firs

t Affi

liate

s, e

ach

of S

IP T

echn

olog

y an

d th

e Fi

rst A

ffilia

tes

affir

ms

thei

r com

mer

cial

com

mitm

ent t

o th

e ot

her p

arty

, and

agr

ees

to c

olla

bora

te w

ith th

e ot

her p

arty

on,

am

ongs

t oth

ers,

the

follo

win

g m

atte

rs:-

(a

) in

the

even

t a c

usto

mer

of a

par

ty (P

arty

A) r

eloc

ates

its

exis

ting

or p

ropo

sed

man

ufac

turin

g fa

cilit

y fro

m P

arty

A’s

terri

tory

to th

e te

rrito

ry o

f the

ot

her p

arty

(Par

ty B

) (“N

ew T

errit

ory”

):-

(1)

Party

A w

ill us

e its

bes

t end

eavo

urs

to:-

(i)

proc

ure

the

deliv

ery

by th

e su

pplie

rs o

f pro

duct

s to

the

cust

omer

in th

e N

ew T

errit

ory;

(ii)

com

ply

with

all

appl

icab

le la

ws,

by-

law

s an

d th

e re

quire

men

ts o

f any

gov

ernm

enta

l, m

unic

ipal

, sta

tuto

ry o

r reg

ulat

ory

auth

ority

in

the

New

Ter

ritor

y re

latin

g to

the

Col

labo

ratio

n A

gree

men

t and

per

form

ance

of t

he o

blig

atio

ns u

nder

the

Col

labo

ratio

n A

gree

men

t;

(iii)

resp

ond

prom

ptly

to a

ll in

quiri

es fr

om th

e cu

stom

er in

clud

ing

com

plai

nts

and

repo

rts o

f pro

duct

inci

denc

es a

nd n

otify

ing

Par

ty B

pr

ompt

ly o

f all

such

mat

ters

;

(2)

Party

B w

ill us

e its

bes

t end

eavo

urs

to a

ssis

t Par

ty A

in th

e pr

ovis

ion

of te

chni

cal s

ervi

ces,

trai

ning

ser

vice

s an

d w

here

app

licab

le, t

est

com

mis

sion

ing

of e

lect

roni

cs m

anuf

actu

ring

solu

tions

for t

he c

usto

mer

in th

e N

ew T

errit

ory;

(b)

each

of t

he F

irst A

ffilia

tes

will

use

its b

est e

ndea

vour

s to

not

sel

l pro

duct

s di

rect

ly o

utsi

de th

eir r

espe

ctiv

e te

rrito

ries,

or e

stab

lish

and

mai

ntai

n an

y br

anch

of d

istri

butio

n fo

r pro

duct

s ou

tsid

e th

eir r

espe

ctiv

e te

rrito

ries

purs

uant

to th

eir r

espe

ctiv

e di

strib

utor

ship

arr

ange

men

ts w

ith th

e su

pplie

rs;

72

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

72

(c)

each

of t

he p

artie

s w

ill u

se it

s be

st e

ndea

vour

s to

pro

mot

e th

e se

rvic

es o

f the

oth

er p

arty

to p

rosp

ects

that

requ

ire th

e se

rvic

es to

be

perfo

rmed

in

any

of t

he o

ther

par

ty’s

terri

torie

s. In

the

even

t a p

rosp

ect b

ased

in M

elak

a, J

ohor

, Sin

gapo

re, I

ndon

esia

, Phi

lippi

nes,

Chi

na o

r Tai

wan

(“Fi

rst

Affil

iate

s’ T

errit

orie

s”) i

nten

ds to

set

up

a m

anuf

actu

ring

faci

lity

in M

alay

sia

(sav

e fo

r Mel

aka

and

Joho

r), T

haila

nd o

r Vie

tnam

(“SI

P Te

chno

logy

’s

Terr

itorie

s”),

the

rele

vant

Firs

t Affi

liate

will

prom

ote

the

serv

ices

of S

IP T

echn

olog

y to

the

pros

pect

. Lik

ewis

e, in

the

even

t a p

rosp

ect b

ased

in

any

of S

IP T

echn

olog

y’s

Terri

torie

s in

tend

s to

set

up

a m

anuf

actu

ring

faci

lity

in a

ny o

f the

Firs

t Affi

liate

s’ T

errit

orie

s, a

nd re

quire

the

serv

ices

to

be p

erfo

rmed

in s

uch

loca

tion,

SIP

Tec

hnol

ogy

will

prom

ote

the

serv

ices

of t

he re

leva

nt F

irst A

ffilia

te to

the

pros

pect

;

(d)

the

parti

es w

ill co

oper

ate

and

wor

k to

geth

er to

exp

lore

and

pur

sue

any

mar

ketin

g op

portu

nitie

s ac

ross

thei

r cus

tom

er b

ase;

and

su

ch o

ther

com

mer

cial

col

labo

ratio

ns a

s m

ay b

e ag

reed

bet

wee

n th

e pa

rties

from

tim

e to

tim

e.

Col

labo

ratio

n Ag

reem

ents

with

the

New

Affi

liate

s U

nder

the

Col

labo

ratio

n A

gree

men

ts w

ith e

ach

of S

iP T

haila

nd a

nd S

iP V

ietn

am, S

iP T

echn

olog

y an

d th

e N

ew A

ffilia

tes

have

agr

eed

that

the

New

Affi

liate

s w

ill re

fer

to S

iP T

echn

olog

y po

tent

ial c

usto

mer

s th

at r

equi

re in

tegr

ated

sol

utio

ns o

r re

late

d se

rvic

es to

be

perfo

rmed

in T

haila

nd, V

ietn

am, o

r M

alay

sia

(sav

e fo

r Mel

aka

and

Joho

r). F

or e

xam

ple,

if a

pot

entia

l cus

tom

er a

ppro

ache

s S

iP V

ietn

am fo

r pro

cure

men

t of i

nteg

rate

d so

lutio

ns in

Mal

aysi

a (s

ave

for

Mel

aka

and

Joho

r), T

haila

nd o

r Vie

tnam

, SiP

Vie

tnam

will

refe

r suc

h cu

stom

er to

SiP

Tec

hnol

ogy.

Fur

ther

, the

New

Affi

liate

s ha

ve a

gree

d to

und

erta

ke

loca

l and

liai

son

activ

ities

for S

iP T

echn

olog

y, a

nd p

rovi

de a

fter-

sale

s te

chni

cal s

uppo

rt se

rvic

es fo

r SiP

Tec

hnol

ogy’

s ex

istin

g or

pot

entia

l cus

tom

ers,

in

Thai

land

and

Vie

tnam

, as

the

case

may

be.

Th

roug

h th

e C

olla

bora

tion

Agre

emen

ts w

ith th

e N

ew A

ffilia

tes,

eac

h of

SIP

Tec

hnol

ogy

and

the

New

Affi

liate

s af

firm

s th

eir c

omm

erci

al c

omm

itmen

t to

the

othe

r par

ty, a

nd a

gree

to c

olla

bora

te w

ith th

e ot

her p

arty

on,

am

ongs

t oth

ers,

the

follo

win

g m

atte

rs:-

(a

) ea

ch o

f the

New

Affi

liate

s w

ill us

e its

bes

t end

eavo

urs

to p

rom

ote

the

dist

ribut

ion

and

sale

of p

rodu

cts

dist

ribut

ed b

y SI

P Te

chno

logy

in T

haila

nd

or V

ietn

am, a

nd it

will

ensu

re th

at it

, am

ong

othe

rs:-

(i)

do

es n

ot s

ell d

irect

ly o

r in

dire

ctly

the

prod

ucts

out

side

Tha

iland

or

Vie

tnam

or

esta

blis

h an

d m

aint

ain

any

bran

ch o

f dis

tribu

tion

for

the

pr

oduc

ts o

utsi

de T

haila

nd o

r Vie

tnam

, and

doe

s no

t get

invo

lved

, eith

er d

irect

ly o

r ind

irect

ly, i

n th

e di

strib

utio

n in

Tha

iland

or V

ietn

am o

f an

y go

ods

that

com

pete

dire

ctly

with

the

prod

ucts

; (ii

) co

mpl

ies

with

all

appl

icab

le la

ws,

by-

law

s an

d th

e re

quire

men

ts o

f an

y go

vern

men

tal,

mun

icip

al,

stat

utor

y or

reg

ulat

ory

auth

ority

in

Thai

land

or

Viet

nam

, as

the

cas

e m

ay b

e, r

elat

ing

to t

he C

olla

bora

tion

Agr

eem

ent

and

perfo

rman

ce o

f th

e ob

ligat

ions

und

er t

he

Col

labo

ratio

n A

gree

men

t;

(iii)

resp

onds

pro

mpt

ly to

all

inqu

iries

from

cus

tom

ers,

incl

udin

g co

mpl

aint

s an

d re

ports

of p

rodu

ct in

cide

nces

and

not

ifyin

g SI

P Te

chno

logy

pr

ompt

ly o

f all

such

mat

ters

;

73

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

73

(iv)

does

not

mak

e re

pres

enta

tions

and

war

rant

ies

to c

usto

mer

s ot

her t

han

thos

e re

pres

ente

d by

SIP

Tec

hnol

ogy

for t

he p

rodu

cts

from

tim

e to

tim

e;

(b

) ea

ch o

f the

New

Affi

liate

s w

ill us

e its

bes

t end

eavo

urs

to p

rom

ote

the

serv

ices

of S

IP T

echn

olog

y to

pro

spec

ts th

at r

equi

re th

e se

rvic

es to

be

perfo

rmed

in T

haila

nd o

r Vie

tnam

, as

the

case

may

be.

In th

e ev

ent a

pro

spec

t bas

ed in

Tha

iland

or V

ietn

am in

tend

s to

set

up

a m

anuf

actu

ring

faci

lity

in M

alay

sia

(sav

e fo

r Mel

aka

and

Joho

r), a

nd re

quire

the

rele

vant

ser

vice

s to

be

perfo

rmed

in s

uch

loca

tion,

the

rele

vant

New

Affi

liate

will

pr

omot

e th

e se

rvic

es o

f SIP

Tec

hnol

ogy

to th

e pr

ospe

ct;

(c

) SI

P Te

chno

logy

will

proc

ure

the

deliv

ery

by it

s su

pplie

rs o

f the

pro

duct

s to

cus

tom

ers

in T

haila

nd o

r Vie

tnam

, as

the

case

may

be;

(d)

SIP

Tec

hnol

ogy

will

wor

k to

geth

er w

ith th

e re

leva

nt N

ew A

ffilia

te in

the

even

t any

of t

he c

usto

mer

s of

SIP

Tec

hnol

ogy

requ

ire it

s se

rvic

es to

be

perfo

rmed

in T

haila

nd o

r Vie

tnam

. In

parti

cula

r, th

e N

ew A

ffilia

te w

ill:-

(i)

as

sist

SIP

Tec

hnol

ogy

in t

he c

onfig

urat

ion,

inte

grat

ion,

tes

ting

and

com

mis

sion

ing

of e

lect

roni

c m

anuf

actu

ring

solu

tions

or

indi

vidu

al

mac

hine

ry, e

quip

men

t and

tool

s, fo

r the

cus

tom

ers,

whe

re re

quire

d; a

nd

(ii

) pr

ovid

e af

ter s

ales

tech

nica

l sup

port

and

mai

nten

ance

ser

vice

s to

the

cust

omer

s as

and

whe

n re

quire

d;

(e

) th

e pa

rties

will

coo

pera

te a

nd w

ork

toge

ther

to e

xplo

re a

nd p

ursu

e an

y m

arke

ting

oppo

rtuni

ties

acro

ss th

e cu

stom

er b

ase

of th

e N

ew A

ffilia

tes;

an

d

(f)

su

ch o

ther

com

mer

cial

col

labo

ratio

ns a

s m

ay b

e ag

reed

bet

wee

n th

e pa

rties

from

tim

e to

tim

e.

6.

20

Dep

ende

ncy

on c

ontr

acts

, lic

ence

s or

oth

er a

rran

gem

ents

Sa

ve fo

r th

e m

ajor

lice

nses

and

per

mits

as

set o

ut in

Sec

tion

6.17

of t

his

Pros

pect

us, o

ur G

roup

is n

ot h

ighl

y de

pend

ent o

n an

y co

ntra

cts,

lice

nces

or

othe

r arr

ange

men

ts a

s at

the

LPD

.

74

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

74

6.21

M

ater

ial p

rope

rtie

s, m

achi

nery

and

equ

ipm

ent

6.21

.1

Prop

ertie

s ow

ned

by o

ur G

roup

As a

t the

LPD

, det

ails

of t

he p

rope

rties

ow

ned

by o

ur G

roup

are

as

follo

ws:

-

No.

R

egis

tere

d ow

ner

Part

icul

ar o

f titl

e/

Post

al a

ddre

ss

Des

crip

tion/

Ex

istin

g us

e

Land

/ B

uilt-

up

area

(s

q m

)

Dat

e of

cer

tific

ate

of c

ompl

etio

n an

d co

mpl

ianc

e or

eq

uiva

lent

La

nd

stat

us

Expr

ess

cond

ition

/ En

cum

bran

ces

NB

V as

at

31-D

ec-

2020

(R

M’000

)

1.

SiP

Te

chno

logy

Ti

tle

Lot 6

790,

Muk

im 1

1, D

aera

h S

eber

ang

Per

ai T

enga

h, P

ulau

P

inan

g A

ddre

ss

40, L

oron

g IK

S B

ukit

Teng

ah,

Tam

an IK

S B

ukit

Teng

ah, 1

4000

P

ulau

Pin

ang

Offi

ce a

nd w

areh

ouse

24

3 21

Apr

il 20

03

Free

hold

E

xpre

ss c

ondi

tion

Ligh

t ind

ustri

al u

se

only

E

ncum

bran

ce

Non

e

418

2.

SiP

Te

chno

logy

Ti

tle

Lot 6

791,

Muk

im 1

1, D

aera

h S

eber

ang

Per

ai T

enga

h, P

ulau

P

inan

g A

ddre

ss

38, L

oron

g IK

S B

ukit

Teng

ah,

Tam

an IK

S B

ukit

Teng

ah, 1

4000

P

ulau

Pin

ang

Offi

ce a

nd w

areh

ouse

243

21 A

pril

2003

Fr

eeho

ld

Exp

ress

con

ditio

n Li

ght i

ndus

trial

use

on

ly

Enc

umbr

ance

N

one

385

3.

SiP

Te

chno

logy

Ti

tle

Lot 6

792,

Muk

im 1

1, D

aera

h S

eber

ang

Per

ai T

enga

h, P

ulau

P

inan

g A

ddre

ss

36, L

oron

g IK

S B

ukit

Teng

ah,

Tam

an IK

S B

ukit

Teng

ah, 1

4000

P

ulau

Pin

ang

Offi

ce a

nd w

areh

ouse

24

2 21

Apr

il 20

03

Free

hold

E

xpre

ss c

ondi

tion

Ligh

t ind

ustri

al u

se

only

E

ncum

bran

ce

Non

e

265

75

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

)

Reg

istra

tion

No.

: 202

1010

2612

3 (1

4264

23-D

) 6.

B

USI

NES

S O

VER

VIEW

(con

t’d)

75

No.

R

egis

tere

d ow

ner

Part

icul

ar o

f titl

e/

Post

al a

ddre

ss

Des

crip

tion/

Ex

istin

g us

e

Land

/ B

uilt-

up

area

(s

q m

)

Dat

e of

cer

tific

ate

of c

ompl

etio

n an

d co

mpl

ianc

e or

eq

uiva

lent

La

nd

stat

us

Expr

ess

cond

ition

/ En

cum

bran

ces

NB

V as

at

31-D

ec-

2020

(R

M’0

00)

4.

SiP

Te

chno

logy

Ti

tle

Lot 6

793,

Muk

im 1

1, D

aera

h S

eber

ang

Per

ai T

enga

h, P

ulau

P

inan

g A

ddre

ss

34, L

oron

g IK

S B

ukit

Teng

ah,

Tam

an IK

S B

ukit

Teng

ah, 1

4000

P

ulau

Pin

ang

Offi

ce a

nd w

areh

ouse

24

3 21

Apr

il 20

03

Free

hold

E

xpre

ss c

ondi

tion

Ligh

t ind

ustri

al u

se

only

E

ncum

bran

ce

Non

e

265

6.

21.2

Pr

oper

ties

rent

ed b

y ou

r Gro

up

As

at t

he L

PD, d

etai

ls o

f the

pro

perti

es re

nted

by

our G

roup

are

as

follo

ws:

No.

Te

nant

La

ndlo

rd

Addr

ess

Des

crip

tion/

Ex

istin

g us

e

Land

/ B

uilt-

up

area

(s

q m

)

Dat

e of

cer

tific

ate

of c

ompl

etio

n an

d co

mpl

ianc

e or

eq

uiva

lent

Te

nanc

y pe

riod

Appr

oxim

ate

annu

al re

ntal

(R

M)

1.

S

iP

Tech

nolo

gy

Kej

urut

eraa

n Ja

nale

trik

Sdn

Bhd

35

& 3

7, L

oron

g IK

S B

ukit

Teng

ah,

Tam

an I

KS

Buk

it Te

ngah

, 14

000

Pul

au P

inan

g

Sto

rage

39

0

21 A

pril

2003

15

Jul

y 20

21

to 1

4 Ju

ly

2022

51,6

00

2.

SiP

Te

chno

logy

W

ong

Sun

Hee

32

, Lo

rong

IK

S

Buk

it Te

ngah

, Ta

man

IK

S B

ukit

Teng

ah,

1400

0 P

ulau

Pin

ang

Offi

ce

24

3 21

Apr

il 20

03

1 M

ay 2

021

to 3

0 Ap

ril

2023

18,0

00

3.

SiP

Te

chno

logy

Lye

Yhin

Cho

y an

d K

ong

Chi

a Li

ang

30

, Lo

rong

IK

S

Buk

it Te

ngah

, Ta

man

IK

S B

ukit

Teng

ah,

1400

0 P

ulau

Pin

ang

Offi

ce a

nd

war

ehou

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6.21.3 Material machinery and equipment

Due to the nature of our operations, we do not utilise any key machinery and equipment in the design, customisation, development, assembly, configuration, integration, testing and commissioning of electronics manufacturing solutions, and individual machinery and equipment.

6.22 Competitive strengths

Our competitive strengths are set out below:- (i) We have the technical capability to provide manufacturing solutions that are

relevant to the changing technological landscape of the E&S Industries The E&S Industries generally undergo rapid technological advancements. New and advanced electronic products that are smaller and more lightweight, with improved energy efficiency and faster speeds are constantly being introduced to the market. Such advancements have hence required E&S manufacturers and design houses to evolve and develop new product designs, specifications and processes, to cater to the changing market trends. As a primary provider of electronics manufacturing solutions, we have been designing, developing, assembling, integrating, configuring, testing and commissioning electronics and semiconductor manufacturing solutions to suit the evolving nature of the E&S Industries since the commencement of our business in 2004. In line with the changing technological landscape, our integrated solutions have evolved over time, incorporating newer processes and components, more efficient and functional system builds and design, and modular and customisable upgrades to enhance production flow and solutions. As we work closely with our customers who are established SMT manufacturers in the E&S Industries, to design and customise the processes required in producing the intended products, we are able to leverage on our technical capability as well as our customer’s industry know-how. Our in-depth understanding of our customers’ processes also allows us to provide feedback to our suppliers to assist in their efforts to design and develop advanced machinery and equipment catering to our customers’ operational needs. We are also able to develop and introduce new range of integrated solutions in line with market trends and requirements. Realising the rising shift towards smart factories in the manufacturing of electronics products, we began to offer smart factory solutions since 2018. As at the LPD, our smart factory solutions enable the remote management and monitoring of production processes, and management of materials and finished products to, from and within the production facilities. We are also in the early development stages of expanding our offerings of solutions under this segment. Our knowledge and understanding of SMT manufacturing and the E&S Industries, coupled with our technical ability to adapt our solutions to the rapid technological advancements within the E&S Industries, has been and will continue to be key in remaining competitive as an electronics manufacturing solutions provider.

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(ii) We have a proven track record in meeting the stringent selection and quality requirements set by our customers, which comprise multinational companies As a solutions provider to certain multinational companies, some of whom are our Top 5 customers during the financial years under review, we are subjected to rigorous and thorough due-diligence prior to securing a project, to ensure that the product quality, operating standards and our business conduct meet their requirements. These multinational companies also carry out regular follow-up assessments to ensure compliances have been maintained. In order to meet these stringent quality requirements, we manage every aspect of our engagements and have implemented quality control and assurance measures to ensure that the integrity and performance of our solutions are in line and comply with our customers’ needs and requirements. Our proven track record in complying with these requirements, and securing and retaining multinational companies as our customers, is a testament to our engineering capability and solution quality, customer service and industry track record. This will enable us to sustain and grow our business amongst multinational companies.

(iii) We have an established network of reputable suppliers that offer a wide array of

machinery, equipment and tools We have established long business relationships with our suppliers for our source of machinery, equipment and tools. Our suppliers generally comprise reputable brand owners and manufacturers of machinery, equipment and tools used for the E&S Industries, such as Supplier A, ITW EAE and Koh Young.

Leveraging on the expertise and our network of reputable suppliers, we are able to build reliable and quality solutions for our customers, and offer a wide array of products, solutions and processes to our customers. Our suppliers generally provide machinery, equipment, tools and/or software for 1 or 2 key processes, and do not typically provide full integrated production line systems. As such, our suppliers collaborate with us for the following reasons:- (i) we have the capability to offer full integrated solutions that incorporate and

integrate machinery, equipment and tools sourced from different reputable suppliers;

(ii) our knowledge and understanding of SMT manufacturing built over the years

allow us to work closely with suppliers to undertake the design customisation of their machinery, equipment and tools that are tailored to our customers’ varying operational needs and requirements for various products; and

(iii) our in-depth understanding of the industry and technological trends enables us

to provide valuable technical feedback to our suppliers on their design and development of machinery, equipment and tools. This enables them to cater for new technological advancements and enhance the performance and reliability of their solutions.

We have long established working relationships with our network of suppliers, some of which span over 13 years as disclosed in Section 6.16 of this Prospectus. We believe that our strong network of suppliers will continue contributing to our business development and growth. In addition, with our track record and capability, we believe that we will be able to continue our working relationships with our suppliers, as well as continue expanding our network of reputable suppliers of machinery and equipment to complement and enhance our solutions.

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(iv) We are well-positioned to benefit from the growing E&S Industries in Malaysia, Thailand and Vietnam E&S manufacturing in Malaysia, Thailand and Vietnam has been growing, as indicated by the growing exports of E&S products from these countries. Exports of E&S products from Malaysia, Thailand and Vietnam have been growing at CAGRs of 8.4%, 3.3% and 17.6% respectively between 2016 and 2020. E&S manufacturing in Malaysia, Thailand and Vietnam has been growing largely because multinational companies from the E&S Industries have been relocating their manufacturing facilities to these countries. E&S manufacturing in Malaysia, Thailand and Vietnam has also been supported by global demand for E&S products. The rising worldwide demand for E&S products has been largely driven by: (i) the technological revolution with 5G adoption and the emergence of IoT, artificial

intelligence and big data analytics, which have resulted in the emergence of a new wave of final electronic products such as autonomous cars and smart home devices; and

(ii) rapid technological advancements which have led to continuous introductions of new product innovations and advancements and smart factory solutions.

We are based in Malaysia and have an established market presence in Thailand and Vietnam through our Affiliates. Thus, we are able to tap into the opportunities arising from the growing E&S Industries and the corresponding capital investment and demand for manufacturing solutions in these regions. As an electronics manufacturing solutions provider supporting the E&S Industries, our Group is well-positioned to capitalise and leverage on the outlook and growth opportunities set out in Section 7 (the Industry Overview section) of this Prospectus.

(v) We have an experienced and technically-strong management team, and a sizable

engineering division We are led by an experienced and technically strong management team. Our co-founders, Lye Yhin Choy and Kong Chia Liang, have played a vital role in leading our growth and success. Leveraging on over 25 years of experience in SMT manufacturing solutions, our co-founders are pivotal to the overall strategy and corporate direction of our Group. Our co-founders are supported by a team of experienced and dedicated key senior management and technical personnel with extensive experience across a range of business activities, from operations (i.e. engineering, training and application) to finance and sales. Their expertise and experience are instrumental in driving our growth strategies. Please refer to Section 8 of this Prospectus for further details on the profiles of our co-founders and key senior management and technical personnel.

In addition, our sizable engineering division comprising 32 engineers and technicians undertakes the technical aspects of our solutions, involving the design, development, assembly, configuration, integration, testing and commissioning as well as undertaking after-sales technical support, maintenance, upgrade and calibration services. The experience and expertise of our engineering division equipped with the necessary skillset and technical expertise will enable us to maintain and grow our business.

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6.23 Future plans and strategies Our future plans and prospects are set out below:- (i) We intend to expand our facility

We presently operate from our facility in Bukit Tengah, Pulau Pinang which has a built-up area of approximately 22,800 sq ft. The current facility houses our principal office, training and application centre (including our demonstration room and R&D centre), workshop and assembly area, all of which share the same floor space of 16,000 sq ft. In view of the prospects of the SMT manufacturing solutions industry in Southeast Asia as set out in Section 7 of this Prospectus (in particular the projected CAGR growth of the SMT manufacturing solutions industry in Southeast Asia, of 7.5% from USD355.3 million (RM1.5 billion) in 2021 to USD410.9 million (RM1.7 billion) in 2023) as well as the anticipated demand for smart factory solutions in the E&S Industries, we intend to scale up our operations and expand our facility to enable us to develop and market a wider range of manufacturing solutions offerings. The new facility will have an estimated built-up area of 130,000 sq ft, and will encompass, amongst others, the following:- A 66,000 sq ft workshop and assembly area, which will enable our Group to

carry out modifications, customisations and refurbishment works on machinery and equipment in-house. This will also enable our Group to develop prototypes of new integrated systems and solutions, and conduct testing and trial runs.

Presently, as a result of space constraints at the current facility, our Group carries out modifications and customisations on machinery and equipment on-site at the customers’ premises. This arrangement has some limitations as it is subject to:- - availability of manpower as our Group would need to place our

engineers on-site to carry out such works. Further, if such solutions are carried out for overseas customers, our Group may be limited by the technical capabilities and know-how of our Affiliates; and

- timing restrictions as our Group would typically be bound by the

prescribed timeframe requirements of each project. Such limitations therefore affect our ability to provide more advanced or complex customised solutions to our customers. Our Group also carries out modifications, customisations and refurbishment works on machinery and equipment at its present workshop and assembly area, which measures 4,000 sq ft in size. Due to such floor space constraints, our Group is only able to carry out such modifications, customisations and refurbishments on a project-to-project basis, thus limiting our ability to scale up our operations for this segment.

A larger floor area would enable our Group to allocate dedicated floor space and area to carry out and run multiple modifications, customisations and refurbishment works concurrently, thereby enabling our Group to grow this segment.

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A fully equipped training and application centre to conduct specialised machinery and equipment training for our customers and/or their employees, and demonstration centre, which will enable our Group to showcase our full range of integrated solutions using demonstration units, which will comprise a range of our automated SMT production lines and smart factory solutions, and display new machinery and equipment offered by our suppliers. The proposed new demonstration centre will allow us to utilise more and/or newer machinery and equipment, thus allowing us to provide a more accurate simulation for our potential customers and showcase proof of concept. Our Group presently utilises our demonstration units as a key marketing tool for our integrated solutions, as these units are able to demonstrate our solutions capabilities to potential customers, thus enabling the customers to visualise the integrated solutions in real-time. Meanwhile, the training and application centre also supports a key function of our after-sales support, to ensure that customers’ and their employees are able to run our integrated solutions in accordance with their intended functions and specifications. Our Group’s current training and application centre and demonstration room share the same floor space of 7,200 sq ft. This limits our ability to schedule and run training, demonstration, and design and development activities concurrently. The additional and dedicated floor space would enable our Group to allocate specific functional areas for our training and application centre and demonstration centre, supporting our marketing and after-sales activities.

A R&D centre which will which will enable us to establish our R&D division and undertake research and development on smart factory solutions (details are illustrated in Section 6.23(ii) of this Prospectus).

As disclosed in Section 3.6.1 of this Prospectus, we had, in June 2021, submitted an application to the PDC for the PDC Land Acquisition. While pending the approval from PDC, we have also commenced the preliminary assessment on the design planning and construction of our new facility on the Proposed PDC Land. The envisaged key milestones in relation to the construction of our new facility are set out as follows:-

4th quarter of 2021 (Prior to the completion of the PDC Land Acquisition)

Commencement on feasibility and assessment studies on the Proposed PDC Land for the construction of the new facility

Appointment of architect and other third party consultants to commence preparation of planning permission and building plans

2nd quarter of 2022 (Completion of the PDC Land Acquisition)

Approval of building plan for construction from Majlis Bandaraya Pulau Pinang

Commencement of construction works 1st to 2nd quarter of 2023 Completion of construction of the facility

Target submission of application for certificate of completion and compliance (or its equivalent)

3rd to 4th quarter of 2023 Expected approval and issuance of certificate of completion and compliance (or its equivalent)

Expected relocation into new facility and commencement of operations

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We have earmarked RM[●] million from our IPO proceeds to fund the expansion of our facility, which includes the PDC Land Acquisition cost, construction costs and capital expenditure requirements. In the event the amount required for expansion of our facility is higher than estimated, the balance will be funded from internally generated funds and/or bank borrowings.

(ii) We intend to grow our smart factory solutions segment Presently, our smart factory solutions enable the remote management and monitoring of production processes, and management of materials and finished products to, from and within the production facilities. Our smart factory solutions, which we began to offer since October 2018, comprise components, such as machinery, equipment and software, which are sourced from established and reputable suppliers.

With the knowledge and understanding of SMT manufacturing processes and smart factory implementation experience that we have gained over the years, we understand our customers’ operational needs for smart factory solutions. Thus, we intend to leverage on this knowledge and understanding to design and develop our proprietary range of smart factory solutions. By doing so, we will be able to tap upon the growing market trend in the E&S Industries to shift towards smart factories. Such expansion plans will involve collaborations with our suppliers and will include, amongst others:- (a) undertaking R&D activities into the design and integration of hardware and

software, as well as prototyping, testing, verification and certification on the solutions; and

(b) development of the conceptual plans with our suppliers, including sourcing of

key equipment and machinery, software, and technological solutions required to implement and assemble our smart factory solutions.

To facilitate and expedite our expansion in the smart factory solutions segment, we plan to establish our R&D division by recruiting up to 10 new engineers to be tasked to undertake R&D activities as well as implementation works for our customers. We envisage the expansion of our R&D division will incur costs of RM[●] million, including system build and design, integration of hardware and software, as well as prototyping, testing, verification and certification, and will be funded via our IPO proceeds allocated towards R&D expenditure, details of which are set out in Section 3.6.2 of this Prospectus. We expect the expansion of our smart factory solutions to broaden our range of solutions and enable us to cater to a wider range of industries. This, in turn, will enhance our competitiveness amongst other international solutions providers in the market. Our success in developing new and innovative solutions that cater to global demand and requirements, is envisaged to contribute towards further growth in our operations and financial performance.

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(iii) We will continue to grow and develop our SMT production line solutions

Our offering of SMT production line solutions have evolved from single line processes since 2005, to full-scale developments of integrated production facility solutions and specialised services catered to the E&S Industries. We were able to achieve this through the expansion of our network of suppliers over the years, as well as the growth and development of our engineering capabilities. Moving forward, we believe our growth in the electronic manufacturing solutions industry will be supported by the following:- - working closely with our network of customers and suppliers to continuously

develop and offer new and innovative solutions to the market;

- securing new suppliers, which will enable us to enhance and upgrade our product offerings to service E&S Industries; and

- keeping abreast with the latest developments in the E&S Industries, which will

enable us to cater our product offerings in line with technological trends, as well as utilise latest technologies in our product offerings.

6.24 Interruptions to business and operations

Our Group has not experienced any other interruption in business that had a significant effect on our operations during the period prior to the date of this Prospectus, save for disruptions arising from the impact of the COVID-19 pandemic disclosed in Section 6.25 of this Prospectus.

6.25 Impact of COVID-19

Since COVID-19 was officially declared a pandemic by the Director General of the World Health Organisation on 11 March 2020, we have closely monitored the development of the outbreak to manage the impact on our operations and business. Impact of COVID-19 on our business operations in Malaysia Throughout 2020 and 2021, different phases of the MCO were implemented in Malaysia to curb the spread of the COVID-19 pandemic, details of which are set out below together with the implications on our operations:-

MCO Standard operating procedures (“SOPs”) Implications on our

operations MCO (18 March 2020 – 3 May 2020)

Between 18 March 2020 and 17 April 2020, we were restricted from operating from our office and were not able to travel to customers’ premises

On 18 April 2020, we received the MITI

approval that allowed 50.0% of our workforce to operate in our office during the first MCO

Since the receipt of the MITI approval on 18 April 2020, we have implemented internal COVID-19 SOPs allowing not more than 40.0% of our workforce to operate in our office at all times. The remainder of our workforce was instructed to work remotely from home

Conditional MCO (4 May 2020 – 9 June 2020)

There were no restrictions to operate in our office and/or customers’ premises

Recovery MCO (10 June 2020 – 31 March 2021)


Total Lockdown (1 June 2021 – 28 June 2021)


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MCO Standard operating procedures (“SOPs”) Implications on our

operations National Recovery Plan (Phase 1) (15 June 2021 onwards)

On 5 July 2021, we received the MITI approval that allowed 60.0% of our workforce to operate in our office during Phase 1

National Recovery Plan (Phase 2) (7 July 2021 onwards)

Under Phase 2 of the National Recovery Plan, we are allowed to operate at 100.0% of our workforce

Since Phase 2 of the National Recovery Plan, we had revised our SOPs to increase our on-site workforce restrictions to not more than 50.0% at all times. The remainder of our employees were instructed to work remotely.

Since the implementation of the first MCO, we experienced delays in shipment of machinery, equipment and tools, resulting in delays of up to 6 months for several of our projects. Nevertheless, there were no cancellations of orders or penalties imposed by our customers for any delays as at the LPD. Notwithstanding the MCOs, we continued to secure orders from new and existing customers in Malaysia for our solutions, and such new orders contributed to our growth in revenue from Malaysia, from RM80.8 million in FYE 2019 to RM103.2 million in FYE 2020.

Impact of COVID-19 on our business operations in Thailand and Vietnam Our operations in Thailand and Vietnam were impacted by the COVID-19 pandemic since the beginning of 2020. Due to the closure of international borders and travel restrictions imposed, we were not able to carry out installation and integration works at our overseas customers’ premises and as a result, secured lesser new orders from overseas customers since 2020.

The COVID-19 pandemic and general slowdown in worldwide economic activity had impacted IDMs and electronic product brand owners throughout the E&S Industries, leading to delays in new product launches. Such delays had consequently affected the entire value chain, leading to delays in commencement of production lines for these new products in Thailand and Vietnam, thus impacting our revenue stream. Such factors above had contributed to lower revenue generated from international markets. Impact of COVID-19 on our supply chain Throughout 2020 and 2021, we experienced delays in shipping of machinery, equipment and tools from our suppliers largely contributed by:- (i) delays in shipments due to congestion of shipping ports arising from limited capacity;

and

(ii) shortage in components used by our suppliers to manufacture the machinery and equipment.

As at the LPD, while we encountered delays in implementation of our solutions (as set out above), we have not experienced any cancellation of orders for our integrated solutions and/or individual machinery and equipment. Such delays did not have a material impact on our operations to-date.

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Measures and steps taken in our business operations in response to COVID-19 pandemic Our Group has implemented COVID-19 SOPs to ensure compliances with the regulations imposed by the Malaysian Government and local councils, as well as to safeguard the safety and health conditions of our employees. These COVID-19 SOPs include the following:-

(i) all employees are required to provide declaration of health conditions and travel history

prior to returning to our office; (ii) our employees and visitors are required to wear face masks at all times, regularly

sanitise their hands, and practise social distancing;

(iii) our employees and visitors are required to measure and record their body temperature before entering the office;

(iv) we have installed ultraviolet-C lighting which will be turned on after work hours to

disinfect our facility. We also perform daily sanitisation at our offices;

(v) all employees are required to visit nearby hospitals for diagnosis and treatment immediately if they display any COVID-19 symptoms; and

(vi) each employee is provided with a contact tracing device to be carry by them at all times. In the event of any employee is detected COVID-19 positive, we will be able to perform contact tracing records from these devices.

In the event of an outbreak of COVID-19 at our office or customers’ sites, our COVID-19 SOPs include the following:-

(i) immediate suspension of operations at the affected area within our facility for the

timeframe stipulated by the Ministry of Health and notifying the Ministry of Health of the outbreak;

(ii) all employees that were in close contact with the infected person(s) are to be tested for COVID-19 and practise self-quarantine;

(iii) infected employees will be quarantined based on instructions from the Ministry of Health; and

(iv) the facility will be disinfected and sanitised. Since the implementation of the first MCO on 18 March 2020 until the LPD, our Group incurred additional cost of approximately RM0.16 million to implement precautionary measures at our premises to minimise the risk of COVID-19 infections and to comply with the SOPs imposed by the Malaysian Government. Such additional cost incurred is not expected to have a material impact on our financial performance.

6. business overview 6.1 our background and history 6.1.1

Documents