Kejuruteraan Asastera Berhad

IPO (Rating 1.75 star out of 5.0)
Copyright@http://lchipo.blogspot.com/

Date
Open to apply: 30/10/2017
Close to apply: 07/11/2017
Listing date: 17/11/2017

Share Capital
Market Cap: RM80 mil
Public Issue: 112 mil shares (Open to public:80 mil shares)
Enlarged Issued Shares: 320 mil shares

Business (Electrical & Mechanical Engineering Services)
Electrical: 79.4%
FTTH: 3.4%
ELV: 4.4%
Mechanical: 0.8%
Sale of Goods:12%

Major Customer
Rexallent Construction S/B: 17%
Eng Han Group: 15.8%
Pembinaan Bintang Baru S/B: 13.6%
Demi Murni Holding S/B: 0.3%

Remaining Order Book
2017: RM77.96 mil
2018: RM107.32 mil
2019: RM31.64 mil

Fundamental
Market: Ace Market
Price: RM0.25
EPS: RM0.0089 (as 31 May)
P/E: 28.09 (amend..PE11.7)
Cash & fixed deposit after IPO: RM0.0836 per shares
NA after IPO: RM0.11
Debt ratio after IPO: 0.48 (Debt: 41.224 mil, Non-Current Asset: 9.626 mil, Current asset: 67.065 mil)
Dividend policy: -
ROE: 8.01%

Financial 
Trade Receivable: 47.7 days
Trade payable: 130.5 days

Past Financial Proformance (Revenue)
2016: RM93.124 mil (eps: 0.0205)
2015: RM87.098 mil (eps: 0.0142)
2014: RM56.954 mil (eps: 0.0121)

Net Profit Margin
2016: 7.0%
2015: 5.2%
2014: 6.8%

After IPO Sharesholding
Dato' Lai: 61.25%
Choong GS: 3.75%
Lu Chee Leong: 0.03%
Tong Siut Moi: 0.03%

Director Remuneration (from gross profit FPE2017)
Ferdaus Bin Mahmood: RM0-50k
Dato' Lai: RM1.15-1.2 mil
Choong GS: RM150k-200k
Lu Chee Leong: RM0-50k
Tong Siut Moi: RM0-50k
Total director remuneration from gross profit: 16.3% - 19.4%

Use of fund
Capital Expenditure: 11.0%
Repayment borrowing: 8.0%
Working Capital: 60.5%
Set-up New Branch: 3.0%
Listing Expenses: 17.5%

Conclusion
Good thing is:
1. 2018 still have order book RM107 mil.
2. Shares price RM0.25 (attract retail demand)
3. After listing Co-founder Dato' Lai still as major sharesholder.
4. Add..PE11.7 within acceptable range.

The bad things:
1. PE28 too high & too expensive, not a reasonable PE for the company revenue.
2. ROE8.01% is too low, Warren Buffet standard is 15%.
3. Trade payable 130.5days. Is not a good behavious & not a good image as a listing company.
4. Director fee too expensive.
5. 60.5% reserve for working capital is too high. Listing expenses 17.5% is also too expensive. 8% use to pay debt.

Conclusions
It is a below average IPO. Not suitable for long-term investment. Kindly avoid this IPO.
Happen some wrong data input on PE site, valuation still suggest to avoid this counter.

IPO Price: RM0.25
Good time: RM0.14 (PE16), (amend..0.31, PE 15)
Bad time: RM0.065 (PE7), (amend..0.14, PE7)

Company website: http://www.asastera.com/