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Date
Open to apply: 17/05/2019
Close to apply: 29/05/2019
Listing date: 12/06/2019
Share Capital
Market Cap: RM183.953 mil
Shares Issue to sell: 116.615 mil shares (IPO 16.426 mil, Company Insider & placement 100.189 mil)
Business
Manufacturing cutting tools (Drilling, milling, engireering needs cutting tools), trading on others brand cutting tools, & Coating.
Geo
Local: 19.9%
Europe: 50.7%
Asia: 28.9%
Others: 0.5%
Fundamental
Market: Main Market
Price: RM0.56 (eps: RM0.0372)
P/E & ROE: PE15, ROE12.17%
Cash & fixed deposit after IPO: RM0.054 per shares
NA after IPO: RM0.34
Total debt to current asset after IPO: 0.968 (Debt: 59.947 mil, Non-Current Asset: 111.018 mil, Current asset: 61.925 mil)
Dividend policy: Board suggestion at 30% dividend policy.
Financial Ratio
Trade receivable: 77 days (Ave over 4yrs)
Trade Payable: 22 days (Ave over 4 yrs)
Past Financial Proformance (Revenue, EPS)
2018: RM85.296 mil (eps: 0.0483)
2017: RM85.152 mil (eps: 0.0587)
2016: RM75.162 mil (eps: 0.0497)
2015: RM68.876 mil (eps: 0.0420)
Net Profit Margin
2018: 16.1%
2017: 17.5%
2016: 17.5%
2015: 16.5%
After IPO Sharesholding
Ku He @ Khoo Yee Her: 62.6%
Khoo Seng Giap: 0.1%
Tan Kim Chuan: 0.1%
Dato'Khoo Ah Chye: 0.1%
Director Remuneration for FYE2019 (from gross profit 2018)
Ku He @ Khoo Yee Her: RM1.008 mil
Khoo Seng Giap: RM0.5001 mil
Tan Kim Chuan: RM0.3939 mil
Dato'Khoo Ah Chye: RM38.5k
Peter Ho Kok Wai: RM46.5k
Chua Put Moy: RM41.5k
Lee Ee Sian: RM44.5k
Oei Kok Eong: RM41.5k
Total director remuneration from gross profit: 5.6%
Use of fund
Purchase of new machineries & equipment: 80.3%
Working Capital: 6.9%
Listing Expenses: 12.8%
Competitor PE & ROE
Halcyon Technology (Thailand): PE5.34, ROE16.83
NS Tool (Japan): PE13.65, ROE15.48
Msia competitors (non-listed) Revenue: RM5mil-RM11.9mil
Industry Analysis (CAGR 2019-2023, base year 2018)
Cutting tools Market size: CAGR 3.8%
Conclusion
Good thing is:
1. PE15 is acceptable.
2. Market network is diversified.
3. Have clear dividend policy.
4. Revenue is increasing over past 4 years.
5. Net prfoti margin above 15%.
6. Almost all IPO funds use to expand business (except listing expenses).
7. The company plan to increase monthly production 43.5% by end of FYE 2021.
The bad things:
1. Director remuneration over 3% gross profit.
2. ROE12.17% less than 15%.
3. The industry CAGR only 3.8%
4. Competitor have better PE & ROE.
Conclusions
Overall is a good IPO. The IPO consider fair & we saw the intention of growing the business. However, the industry involved, having a slow growing phase.
After world war II, development develop rapidly, & most building is aging. Might or might not, there is possiblilities that the industry will need some growth in futures.
IPO Price: RM0.56
Good time: RM0.665 (PE18)
Bad time: RM0.0375 (PE10)