• QES announced the Proposed Share Issuance of 83,276,260 new ordinary shares (10.0% of existing share base) at RM0.53 per share to Ray Tech Singapore Pte Ltd (RTS), a wholly owned subsidiary of Unicomp Technology Group (Shanghai STAR Market: 688531) — one of the two Chinese equipment partners with whom QES signed MOUs in May 2026. Gross proceeds amount to RM44.1m, with completion targeted in Q3 2026.
• The strategic rationale is compelling: the placement converts a commercial MOU into an equity-anchored strategic partnership with a leading X-ray semiconductor inspection equipment provider. Unicomp now has a direct financial incentive in QES's manufacturing success, substantially de-risking the MOU-to-contract conversion and cementing technology access agreements.
• We view this placement as materially superior to a conventional working capital or balance sheet raise. The investor is not a financial institution but QES's own strategic manufacturing partner, effectively converting an MOU relationship into a durable, equity-anchored commitment.
• We maintain our BUY call with an unchanged TP of RM 0.74 based on 20x P/E applied toFY27F fully diluted EPS of 3.68 sen, alongside a three-star ESG rating.
Placement Details. QES has proposed a private placement of 10% of its total issued shares at RM0.53 per share to Ray Tech Singapore Pte Ltd (RTS), a wholly-owned subsidiary of Unicomp, a company listed on the Shanghai Stock Exchange. The proposed placement will be undertaken under a specific mandate and is subject to shareholders' approval at an Extraordinary General Meeting (EGM), instead of being issued under the Company's existing general mandate.
The issue price of RM0.53 per share represents a 1.36% discount to the 5-day VWAP. Post completion, RTS will hold approximately 9.09% of QES's enlarged share base of 916,038,860 shares. Notably, RTS is entitled to nominate one representative to the QES Board of Directors, provided it holds at least 9.0% of the enlarged share capital. This governance right reinforces the strategic depth of the partnership beyond a purely financial transaction, aligning Unicomp's interests closely with QES's long-term manufacturing strategy. Based on the Issue Price of RM0.53 per Issuance Share, the Proposed Share Issuance is expected to raise gross proceeds of approximately RM44.14m.
Our View. During our recent engagement with the Company's Investor Relations, management had initially guided that the Group intended to fund its capital expenditure requirements fully via internal resources. However, the Group has since opted for equity raising, and we believe the rationale is sound on two fronts.
First, the scale of the BKIP cleanroom investment (RM19.0m) is non-trivial relative to the Group's annual free cash flow generation, and committing internal funds fully to capex would leave limited buffer for working capital — a risk the Group is clearly unwilling to accept given the strong and accelerating Manufacturing orderbook. Second, and more importantly, the decision to raise equity from Unicomp specifically — rather than drawing on bank borrowings or a general placement — signals that management viewed this as an opportunity to simultaneously solve the funding need and cement a strategic relationship, rather than treating the two as separate decisions.
The net result is a balanced capital deployment playbook: equity proceeds fund the two most pressing near-term requirements — infrastructure build (cleanroom) and operational liquidity (working capital) — while internal cash generation is preserved to service ongoing business operations and sustain the dividend. We view this as a disciplined approach that avoids overleveraging the balance sheet at a time when the Group is entering its most capital-intensive growth phase, and one that delivers considerably more strategic value than a conventional bank borrowing would have achieved at equivalent cost.
Forecast. Unchanged.
Maintain BUY with an unchanged TP of RM 0.74. We maintain our BUY call with an unchanged TP of RM 0.74 based on 20x P/E applied to FY27F fully diluted EPS of 3.68 sen, alongside a three star ESG rating. Our prior forecast had already incorporated the stronger operating momentum observed in May 2026 — notably the step-up in Glenmarie utilisation to above 75% and the improved Manufacturing orderbook — alongside a degree of conservatism to account for potential EPS dilution arising from possible fundraising exercises, whether via equity placement or bank borrowings. The announcement of the Proposed Share Issuance to Unicomp today, while confirming one such fundraising pathway, does not constitute a material deviation from what our valuation framework had already anticipated.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.055849 | 4.088329 |
| EUR | 4.656215 | 4.661037 |
| CNY | 0.599726 | 0.600351 |
| HKD | 0.517395 | 0.521043 |
| SGD | 3.143106 | 3.165416 |