IPO Rating ( 1.75 star out of 5.0)
Open to apply: 20/06/2019
Close to apply: 19/07/2019
Listing date: 01/08/2019
Market Cap: RM mil
Total Shares: 348.991 mil shares (IPO 59.329 mil, Company Insider/Miti/Private Placement 55.489 mil)
Produce slit coils & steel sheets.
Manufacturing & trade of steel product.
Market: Ace Market
Price: RM0.58 (eps: RM0.0323)
P/E & ROE: PE17.96, ROE5.98%
Cash & fixed deposit after IPO: RM0.063 per shares
NA after IPO: RM0.54
Total debt to current asset after IPO: 0.34 (Debt: 46.769 mil, Non-Current Asset: 98.649 mil, Current asset: 136.872 mil)
Dividend policy: No formal dividend policy.
Trade receivable: 72 days
Trade Payable: 45 days
Inventory turnover: 130 days
Past Financial Proformance (Revenue, EPS)
2018: RM260.545 mil (eps: 0.0389)
2017: RM257.701 mil (eps: 0.0543)
2016: RM214.741 mil (eps: 0.0421)
2015: RM212.284 mil (eps: 0.0144)
Net Profit Margin
After IPO Sharesholding
Formula Naga: 33.1%
Director & Key Managemen Remuneration for FYE2019 (from gross profit 2018)
Dato' Kalsom: RM43k
Lim Choon Teik: RM560k
Foong Kok Chuin: RM510k
Sim Puei Chun: RM33k
Khaw Chooi Kee: RM36k
Rusdy Bin Ishak: RM33k
Ir. Tan Tiong Ben: RM33k
Dato' TToh Yew Peng: RM33k
Toh Yew Seng: RM33k
Koay Kah Ee: RM33k
Total director & key management remuneration from gross profit: 5.35%
Use of fund
Land Acquisition: 20.92%
Construction of new factory: 30.08%
Manufacturing of wire mesh: 11.92%
Slitting line: 5.23%
5 Packing machines: 5.23%
Working capital: 17.32%
Listing Expenses: 9.3%
Competitors (Profit after tax margin)
Total 17 competitors with PAT margin -12.47% to 8.04%
Industry Analysis (CAGR 2015-2018, base year 2018)
Steel Comsumption: CAGR 2.16%
Steel processing in M'sia: CARG 0.55%
Steel wire & pipes: CAGR 13.3%
Good thing is:
1. Debt still consider at healthy level.
2. Almost all IPO use to expend business.
The bad things:
1. Listing under Ace Market.
2. PE17.96 is expensive than current Msia country PE16.5
3. ROE5.98% is consider not attractive.
4. Revenue growth average 6% per year, but add in the inflation, the revenue might consider at no growth.
5. Net profit margin is very low.
6. Director fees is over 3% from gross profit.
7. Compare to total 17 competitor, we found that no competitor in same industry able to make profit after tax over 10%.
8. The analysis in the steel industry have very little growth in since 2015.
9. No formal dividend policy.
Overall is a very little profit margin business. The industry itself might be the major problem. Total 17 competitors, non of it able to make profit margin over 10%.
IPO Price: RM0.58
Good time: RM0.42 (PE13)
Bad time: RM0.25 (PE8)