NORTHEAST GROUP BERHAD

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***Disclaimer***Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision.

Open to apply: 26/09/2024
Close to apply: 03/10/2024
Balloting: 07/10/2024
Listing date: 15/10/2024

Share Capital 
Market cap: RM370 mil
Total Shares: 740 mil shares
1st day listing tradable shares: 226.199 mil shares

Industry CARG   
Industry size of precision engineering (Malaysia), 2020 – 2023: 23.09%
Photonics industry size (Global), 2020 – 2022: 12.26%
E&E industry size (Global), 2020 – 2022: 12.02%
Semiconductor sales (Global), 2020 – 2023: 6.16%
Telecommunications industry (Global) 2020 – 2023: 2.2%
Industry competitors comparison (net profit%)
1. Northeast Group: 19.67%
2. SFP Tech Holdings Berhad: 31.84% (PE39.24)
3. CPE Technology Berhad: 20.85% (PE58.94)
4. Prodelcon Sdn Bhd: 15.77% 
5. Others: -14.39% to 14.38%

Business (FYE 2024)  
Manufacturing of precision engineering components used in the photonics, E&E, semiconductor, telecommunication and optoelectronics industries.
Revenue by segment
1. Photonics: 40.51%
2. E&E : 20.14%
3. Semiconductor: 17.89%
4. Telecommunication: 14.34%
5. Optoelectronics: 7.12%
Revenue by Geo
1. Malaysia: 28.53%
2. USA: 26.98%
3. UK: 21.22%
4. Thailand: 6.48%
5. Others: 16.79%

Fundamental   
1.Market: Ace Market
2.Price: RM0.50
3.Forecast P/E: 19.95
4.ROE(Proforma):  7.96%
5.ROE: 11.96% (FPE2024), 12.86% (FYE2023), 30.12%(FYE2022), 22.26%(FYE2021)
6.Net asset: 0.31
7.Total debt to current asset: 0.18 (Debt: 31.118mil, Non-Current Asset: 93.667mil, Current asset: 170.423mil)
8.Dividend policy: didn’t have formal dividend policy.
9. Shariah status: Yes

Past Financial Performance (Revenue, Earning Per shares, PAT%)  
2024 (FPE 31May): RM62.212 mil (Eps: 0.0167), PAT: 19.87%
2023 (FYE 30Sep): RM93.335 mil (Eps: 0.0248), PAT: 19.67%
2022 (FYE 30Sep): RM144.515 mil (Eps: 0.0514), PAT: 26.34%
2021 (FYE 30Sep): RM113.207 mil (Eps: 0.0268),PAT: 17.5%

Major customer (FYE2024)   
1. Customer A Group of companies: 24.49%
2. Customer B Group of companies: 10.86%
3. Customer F Group of companies: 8.16%
4. Customer E Group of companies: 5.81%
5. Customer G Group of companies: 5.64%
***total 54.96%

Major Sharesholders  
1. Mountain Range: 53.69% (direct)
2. Ng Chay Chin: 4.00% (direct), 53.69% (indirect)
3. Chong Ewe Hean: 3.5% (direct), 53.69% (indirect)
4. Ng Meng Hang: 2.5% (direct)
5. Tang Ah Lek: 3.0% (direct)

Directors & Key Management Remuneration for FYE2024 
(from Revenue & other income 2023)
Total director remuneration: RM3.541 mil
key management remuneration: RM1.10 mil – RM1.25 mil
total (max): RM4.791 mil or 13.51%

Use of funds  
1. Construction of the New Factory: RM40 mil, 47.34%
2. Repayment of bank borrowings: RM20 mil, 23.67%
3. Purchase of new CNC machines: RM12.378 mil, 14.65% 
4. Working capital: RM5.516 mil, 6.53% 
5. Estimated listing expenses: RM6.6 mil, 7.81%

Conclusions (Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision)
Overall is middle to high risk investment, and also come with high grow return opportunities. 

*Valuation is only personal opinion & view. Perception & forecast will change if any new quarter result release. Reader take their own risk & should do own homework to follow up every quarter result to adjust forecast of fundamental value of the company.