SORENTO CAPITAL 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: 07 Oct 2024

Close to apply: 15 Oct 2024
Balloting: 18 Oct 2024
Listing date: 28 Oct 2024

Share Capital  
Market cap: RM361.2 mil
Total Shares: 860 mil shares
1st day listing tradable shares: 235.1 mil shares

Industry CARG 

Bathroom and kitchen sanitary wares industry, 2018 – 2023:  3.82%
Number of property transactions, 2018 – 2023: 5.65%
Number of newly launched properties, 2018 – 2023:  -3.06%
Number of secondary market residential property transactions, 2018 – 2023: 3.72%
Industry competitors comparison (net profit%)
1. Sorento Capital Group: 16.12%
2. Rigel Technology (M) Sdn Bhd: 22.01%
3. Leonfast Sdn Bhd: 5.3%
4. Shower Scene (M) Sdn Bhd: 13.46%
5. Others: losses to 2.45%

Business (FYE 2024) 
Marketing, distribution and sale of bathroom and kitchen sanitary wares.
Revenue by distribution channels
1. Dealers: 64.54%
2. Project-based sales: 35.05%
3. Online: 0.41%
Revenue by brands
1. Sorento (House brands): 56.41%
2. Cabana (House brands): 23.85%
3.  Mocha (House brands): 14.63%
4. I-Born : 1.09% 
5. Third party brands: 1.54%
6. Others: 2.48%
Revenue by product segments
1. Bathroom sanitary ware: 83.06%
2. Kitchen sanitary ware: 16.06%
Revenue by geo
1. Central: 65.23%
2. Northern: 14.92%
3. Southern: 12.34%
4. East Coast: 4.75%
5. East Malaysia: 2.76%

Fundamental 
1.Market: Ace Market
2.Price: RM0.37
3.Forecast P/E: 13
4.ROE(Pro forma III): 20.69%
5.ROE: 37.16%(FYE2024) , 49.56%(FYE2023), 39.10%(FYE2022),  32.13%(FYE2021)
6.Net asset: 0.14
7.Total debt to current asset:  0.50 (Debt: 67.393mil, Non-Current Asset: 51.287mil, Current asset: 134.188mil)
8.Dividend policy:  didn’t have formal dividend policy.
9. Shariah status: Yes

Past Financial Performance (Revenue, Earning Per shares, PAT%) 
2024 (FYE 30Jun): RM151.545 mil (Eps: 0.0284), PAT: 16.12%
2023 (FYE 30Jun): RM112.311 mil (Eps: 0.0290), PAT: 22.20%
2022 (FYE 30Jun): RM90.668 mil (Eps: 0.0148), PAT: 14.05%
2021 (FYE 30Jun): RM66.107 mil (Eps: 0.0090), PAT: 11.76%

Major customer (FYE 2024) 
1. OTM Group Sdn Bhd: 2.91%
2. Chin Chun Hardware Sdn Bhd: 2.63%
3. Eco World Trading Sdn Bhd: 2.37%
4. Home Product Center (Malaysia) Sdn Bhd: 2.26%
5. DNC Marketing Sdn Bhd: 2.20%
***total 12.37%

Major Sharesholders  
1. Loo Chai Lai: 10.10% (direct), 62.23% (indirect)
2. Loo Jing Kai: 2.24% (direct)
3. LCL Success: 60% (direct)

Directors & Key Management Remuneration for FYE2025
(from Revenue & other income 2024)

Total director remuneration: RM3.121 mil
key management remuneration: RM1.1 mil – RM1.3 mil
total (max): RM4.421 mil or 6.86%

Use of funds 
1. Branding and promotional marketing: 6mil, 10.46%
2. Expansion of dealer network and enhancement of distribution reach: 6 mil, 10.46%
3. Repayment of bank borrowings: 9mil, 15.69%
4. Working capital for purchase of inventories: 31.35 mil, 54.567%
5. Estimated listing expenses: 5mil, 8.72%

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

Overall is medium investment, and also come with low-to-medium 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.