IPO Rating ( 2.25 star out of 5.0)Copyright@http://lchipo.blogspot.com/
Date
Open to apply: 13/12/2018
Close to apply: 24/12/2018
Listing date: 08/01/2019
Share Capital
Market Cap: RM225.900 mil
Shares Issue to sell: 200 mil shares (IPO 140mil, private placement 60mil)
Enlarged Issued Shares: 753 mil shares
Business
Building construction, management services for hostel & related facilities, Cooling system, property development.
Fundamental
Market: Ace Market
Price: RM0.30 (eps: RM0.061)
P/E & ROE: PE4.54, ROE 11.45% (estimated by FPE18 earning)
Cash & fixed deposit after IPO: RM0.1425 per shares
NA after IPO: RM0.53
Total debt to current asset after IPO: 0.55 (Debt: 505.499 mil, Non-Current Asset: 192.787 mil, Current asset: 717.309 mil)
Dividend policy: suggest up to 30% on Net profit.
Financial Ratio
Trade receivable: 64 days
Trade Payable: 84 days
Order Book Revenue by Completion Date
2018: RM 11.88 mil
2019: RM 38.06 mil
2020: RM272.60 mil
2021: RM360.32 mil
Past Financial Proformance (Revenue, EPS)
FPE 2018: RM121.646 mil (6mths eps: 0.0231)
2017: RM212.511 mil (eps: 0.0661)
2016: RM227.854 mil (eps: 0.0978)
2015: RM206.344 mil (eps: 0.0502)
2014: RM324.028 mil (eps: 0.0738)
Net Profit Margin
FPE 2018: 14.29% (6mths)
2017: 23.42%
2016: 32.32%
2015: 18.31%
2014: 17.15%
After IPO Sharesholding
Hj Wan Azman: 66.65%
Dato' Sri Subahan: 6.78%
Ir. Dr. Muhamad Fuad: 0.07%
Siti Naaishah: 0.07%
Chng Boon Huat: 0.07%
Director Remuneration for FYE2019 (from gross profit 2017)
Hj Wan Azman: RM1.640 mil
Dato' Sri Subahan: RM0.840 mil
Ir. Dr. Muhamad Fuad: RM0.131 mil
Siti Naaishah: RM0.120 mil
Chng Boon Huat: RM0.125 mil
Total director remuneration from gross profit: 3.6%
Use of fund
AFF Mixed Development: 33.3%
Capital expenditure on product: 15.5%
Working capital: 39.3%
Listing expenses: 11.9%
Conclusion
Good thing is:
1. IPO price RM0.30 below net asset RM0.55 (NA after deduct for trade receivable RM615.99 that billed monthly basic until 2034 & 2037, NA is RM0.39)
2. Have clear dividend policy.
3. Pricing IPO at low (PE4.54) match back to the slow market situation for property & construction.
4. 2020 & 2021 revenue will grow better.
5. Director fees range at acceptable level compare the company gross profit.
6. 88.1% IPO fund use for business expansion.
The bad things:
1. Contrusction business & property development industry estimated will not growing for coming 2 years.
2. Estimated 2018 & 2019 revenue will drop based on estimation using existing order book.
3. ROE% only 11.45
4. Previous revenue difficult to use as forecast for futures performance under new government.
5. Listing status is Ace market (however the industrial rebound it will have opportunities to go main market based on current revenue)
Conclusions
1. Is a above average IPO. Overall able to see the honesty of the IPO. The IPO price pricing at fair level compare to the company business situation.
2. PE4.54 is based on 2017 revenue. If based on forecast revenue on 2018 PE should be PE6.49
3. The timing is not encourage the company to get a good price (current property & construction industry), however with the potential revenue estimated hope to sell it able to transfer into main market after 3 years. Invest in this company need to be patient & hold for more than 3 years to see good return.
4. Rating should be 3.25 out of 5 start. However consider on the overall property & construction situation, I have no choice to rate at 2.25.
IPO Price: RM0.30
Good time: RM0.42 (PE9)
Bad time: RM0.23 (PE5)