IPO (Rating 2.75 star out of 5.0)
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Date
Open to apply: 31/03/2017
Close to apply: 10/04/2017
Listing date: 21/04/2017
Core Business
Business: Masterbatch, Manufacturing of Tyre retreaders, rubber material traders, rubber works.
Revenue (260 Customer)
MasterBatch:89.3% (Pre-cured tread liner, camelback & others)
Local: 45% (2015: 22% of local market shares), 2016 (43%)
Export (23 countries): 55% (2015), 57% (2016)
Major Customer
Kohshin Retread (Japan): 9.346mil (17%)
Fundamental
Market: Ace Market
Price: RM0.36 (Promoter & director average cost per shares: RM0.25)
EPS: RM0.031 (9mths, 1yr forecast 0.041)
P/E: 8.78 (based on forecast eps 1yr 0.041)
Cash & fixed deposit after IPO: RM0.0515 per shares
NA after IPO: RM0.28
Debt ratio after IPO: 0.27 (Debt: 25.431mil, Asset:92.952mil, Current asset: 50.056mil)
Dividend policy: 40%-60% of PAT
Financial Ratio
Trade Receiveables turover: 111.1 days
Trade Payable Turnover: 31.3 days
Inventory Turnover: 102.3 days
Current Ratio: 2.5
Gearing Ratio: 0.3
ROE: 10.09%
Cost (2016)
Materials: 75.5%
Labour cost: 9.2%
Overheads: 15.3%
Past Financial Proformance (Revenue)
2016 (9mths): RM 55.066 mil (eps: 0.031)
2015: RM75.297 mil (eps: 0.024)
2014: RM81.387 mil (eps: 0.022)
2013: RM80.816 mil (eps: 0.027)
Net Profit Margin
2016: 13.52%
2015: 7.74%
2014: 6.53%
2013: 8.11%
After IPO Sharesholding
Eu Ah Seng: 10.28%
Tai Hin & Son PG Sdn Bhd: 48.59%
Dato' Seri Cheah (51.35% on Tai Hin)
Cheah Familiy (48.65%)
Director Remuneration (from gross profit 2015)
Tan Sri Dato' Dr.Sak Cheng Lum: RM50k
Dato' Seri Cheah RM300k-350k
Eu Ah Seng: RM250k-300k
Cheah Siang Tee: RM300k-350k
Cheah Eu Lee: RM50k
Tuan Haji Mohd Isa Bin Talib: RM50k
Ng Meng Kwai: RM50k
Ong Beow Chieh: RM50k
Total director from Gross profit RM0.85mil (4.93%) to RM1.25mil (7.25%)
Use of fund
New Manufacturing Lines & autonation system: 12.580mil (72.8%)
IPR & overseas brading: 1.5mil (8.7%)
Listing Expenses: 3.2mil (18.5%)
Conclusion
Good thing is:
1. Big portion of IPO fund use to expand business
2. PE still below 10
3. More than 50% is expprt, not highly depend on local market
4. Low debt
5. Have clear dividend policy
The bad things:
1. Listing on Ace market
2. Director might too many & diretor fee is expensive
3. ROE% only 10%, Net profit margin might not attractive.
4. Lisitng expenses is unaccetable expensive in %
Conclusions
We see the intention of the IPO is to grow the business bigger. It should be a fair deal.
IPO Price: RM0.36
Good time: 0.53 (PE13)
Bad time: 0.245 (PE6)