Malaysia-listed security seal specialist Mega Fortris Bhd has abandoned a plan to set up a manufacturing business in Macau for supplying and handling of playing cards in sealed security boxes. The group cited challenges in finding suitable premises in Macau and high rental costs as reasons for the decision.
The information was disclosed in a Tuesday filing, proposing the reallocation of gross proceeds raised from the firm’s initial public offering (IPO) in November.
The group intends now to reassign the use of MYR45.0 million (US$11.1 million) of the IPO proceeds that was originally earmarked for capital expenditure for the new business venture in Macau.
In October, when it announced the IPO, Mega Fortris said it planned to set up a “manufacturing line” in Macau, by purchasing and installing specialised machinery and equipment, which was to be “consigned to a subcontractor and installed at the subcontractor’s premises in Macau”.
The subcontractor – identified as V.S. International Group Ltd – was to be responsible for, amongst others, carrying out the production process and obtaining the relevant local licences and approvals.
In Tuesday’s announcement, Mega Fortris said it had now “reassessed the business strategy” for its playing card business.
“The group will not set up a second manufacturing line in Macau and will instead concentrate all its card manufacturing operations in Malaysia,” stated the company.
The card manufacturing business in Malaysia is expected to “commence operations in the fourth quarter of 2026,” the firm said.
It added: “The group will increase the printing output of its card manufacturing line in Malaysia from an estimated annual production capacity of approximately 19 million decks to approximately 44 million decks to accommodate the revisions in business strategy.”
The group now plans to “set up a warehouse in Macau” to provide playing cards in sealed security boxes to its customers in the city. The Macau facility is “expected to commence operations in the second quarter of 2027,” the company said.
Cost-saving measures, Macau challenges
As per the filing, the facility in Macau will represent an investment of nearly MYR14.5 million and will feature an assembly line to provide a variety of services. These include: “pre-shuffling of playing cards which are to be supplied from the card manufacturing line in Malaysia; insertion of the playing cards into security boxes; sealing the security boxes; and delivering the sealed security boxes to customers in Macau.”
The Macau facility “will also maintain a tracking software system for playing cards security boxes,” and “will undertake the destruction of used playing cards at a later stage as part of the group’s phased roll-out of services,” noted Mega Fortris.
In Tuesday’s filing, the group said that since the IPO, it had “encountered challenges in sourcing suitable industrial premises in Macau to cater for the size and weight requirements” need for its manufacturing line in the city.
“In addition, the group has observed increases in rental cost in Macau, which may result in higher fees chargeable by the subcontractor under the consignment arrangement for the manufacture of playing cards in Macau,” Mega Fortris stated.
The company said concentrating all of its card manufacturing operations in Malaysia was a “viable alternative”, as the group expects to “achieve cost savings of approximately MYR11.2 million from a reduction in the capital expenditure”.
As a result, Mega Fortris said it “will no longer require the services of a subcontractor in Macau,” and announced the termination – by “mutual agreement” – of the memorandum of understanding with V.S. International.
The Malaysia-listed firm now intends to use the MYR45.0 million of the IPO proceeds as capital expenditure for additional production capacity in the card manufacturing line in Malaysia; to establish its warehouse facility in Macau; and as working capital for its day-to-day operations.
As the proposed variation represents a change in the proposed use of about 45.4 percent of the IPO proceeds, the company said it will have to seek the approval from its shareholders.
