IPO Rating ( 2.5 star out of 5.0)
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Date
Open to apply: 23/10/2018
Close to apply: 30/10/2018
Listing date: 13/11/2018
Share Capital
Market Cap: RM60.900 mil
Shares Issue to sell: 68 mil shares
Enlarged Issued Shares: 243.6 mil shares
Business
Digital Security Solution (software licensing protection) & Electric Identification Product under Softkey Malaysia.
Revenue on Geo (2017)
M'sia: 12.2%
Oversea: 87.8%
Fundamental
Market: Ace Market
Price: RM0.25 (eps: RM0.0.025)
P/E & ROE: PE10.1, ROE19.84%
Cash & fixed deposit after IPO: RM0.0886 per shares
NA after IPO: RM0.125
Total debt to current asset after IPO: 0.25 (Debt: 8.487 mil, Non-Current Asset: 5.579 mil, Current asset: 33.556 mil)
Dividend policy: -
Financial
Trade Receivable: 172.8 days
Trade payable: 243.5 days
Past Financial Proformance (Revenue, EPS)
2017: RM44.767 mil (eps: 0.025)
2016: RM24.753 mil (eps: 0.018)
2015: RM16.978 mil (eps: 0.012)
Competitors (revenue)
Mimos Berhad: 34.2 mil
Securemetric: 44.77 mil
Pacific Intech: 16.73 mil
Eighth Intuition: 11.14 mil
Blue Fortress: 8.72 mil
Net Profit Margin
2017: 13.59%
2016: 17.53%
2015: 17.24%
After IPO Sharesholding
Law Seeh Key: 51.87%
Nioo Yu Siong: 9.27%
Yong Kim Fui: 6.02%
Li Jianjun: 4.93%
Director Remuneration (from gross profit 2017)
Law Seeh Key: 600k
Yong Kim Fui: 423k
Clifton Heath Fernandez: 42k
Shireen Chia Yin Ting: 36k
Mohamad Rizatuddin: 36k
Total director remuneration from gross profit: 10.18%
Use of fund
Business Expansion: 10%
Development of new digital security solution: 33.5%
Pay debt: 11.4%
Working capital: 30.4%
Listing expenses: 14.7%
Conclusion
Good thing is:
1. Software protection industry is a sunrise industry.
2. Revenue not depend solely from Malaysia. Have the abilities to received order in Asean countries include S'pore (revenue 2017, 17.7%).
3. Net profit margin 2017 13.59%, ROE19.84%, PE10, & debt 0.25. All these is healthy & good number.
4. SOBA 2016 award.
The bad things:
1. Director fee is expensive (10.18% from gross profit).
2. Trade receivable is quite long period (however of the nature of the business need maintainence for after sell service).
3. Vaxuco project completed Oct 2017, RM19.1 revenue. The company expecxt to decrease in revenue for 2018 revenue.
4. Starting 5 May 2018 the company had finish tax exemption benefit on MSC status (after 10 years business), income will need to add 24% tax.
5. Listing is in ACE market.
Conclusions
Overall is average IPO. The company have strong growth, but the coming future the company having 24% tax & reduce of the Vaxuco revenue will slow down the company revenue growth.
IPO Price: RM0.25
Good time: RM0.325 (PE13)
Bad time: RM0.175 (PE7)