IPO

Thursday, June 11, 2015

XIN HWA HOLDING BERHAD

IPO (Rating 3.75 star out of 5 )
Copyright@http://lchipo.blogspot.com/

Date
Open to apply: 11/06/15
Close to apply: 17/06/15
Listing date: 30/06/15

Fundamental
Market: Main Market
Price: RM0.70
EPS: RM0.0875
P/E: 8x
NTA after IPO: RM0.61
Debt ratio: 0.36 (Debt: RM61 mil, Asset: RM171 mil)
Dividend policy: no formal dividend policy

Business
Logistics: Integrated Logistics services, land transport, warehousing, distribution.
Business operation mainly come from Joho, partial in Pulau Pinang, Selangor & N.Sembilan.

Main Revenue
Cargo transporation: 53.24%
Container haulage: 36.5%
Warehousing: 9.97%

Utilisation rate
Land transport opertation: 79.66% (no data on transport used rate for 2011-2012, but truck & Prime mover amount is increasing)
Warehousing & distribution operation: 68.44% (reduce over 4 years from 98.53%)

Principal Market
Malaysia: 90.01%
Singapore: 9.99%

Director
Ng Aik Chuan: 21.08%
Ng Yam Pin: 20.97%
Eng Peng Lam @ Ng Peng Lam: 27.95%

Use of fund
Construction of new warehouse: 17.96% (Pasir Gudang)
Expansion of fleet of vehicles: 42.93% (Truck:10 unit, Trailers:91)
Repay debt: 14.18%
Working capital: 11.65%
Listing expenses: 13.28%

Conclusion
Good thing is:
1. Fundamentally the company is healthy, still have good profit with EPS RM0.0875 (Business return 12.5%).
2. Net Asset of the company after IPO RM0.61 which near to the IPO price.
3. Debt ratio still healthy at 0.36
4. Business is under control of co-founder family, the Ng family.
5. Business in Main board market, which give better security in capital protection.

The bad things:
1. Their revenue to mainly from cargo transportaion, container haulage, & warehousing. But having very less revenue come from freight forwarding & customs brokerage (Strong freight forwarding business will increase sale getting more container).
2. The company use 14.18% IPO fund to pay debt.
3. Heavily depend on cargo transportation (Fuel increase will reduce profit margin).
4. Warehouse ultilisation rate is falling over 4 years from 98.53% to 68.44%. After complete build of Pasir Gudang warehouse might see better revenue (in term of location).
5. China-Thailand Canal project might effect it future business, but not so soon.

Overall, we can see the sincerity of the family wish to growth the business. The IPO can consider as good IPO.