IPO Rating (3.0 star out of 5.0)
Copyright@http://lchipo.blogspot.com/Date
Open to apply: 25/04/2019
Close to apply: 03/05/2019
Listing date: 16/05/2019
Share Capital
Market Cap: RM 4.015 bil (published prospecture book wrote 1.5bil is typo)
Shares Issue to sell: 937.5 mil shares (IPO 98 mil, private placement 839.5 mil)
Enlarged Issued Shares: 25.68%
Business
Feedmill 39.3%, Livestock & other poultry related product 61.0%
Geo
Msia: 28.8%
Indonesia: 31.7%
Singapore: 19.8%
Vietnam: 19.20%
Philippines: 0.5%
Fundamental
Market: Main Market
Price: RM1.10 (eps: RM0.0566)
P/E & ROE: PE20.8, ROE12.5%
Cash & fixed deposit after IPO: RM0.15 per shares
NA after IPO: RM0.42
Total debt to current asset after IPO: 1.30 (Debt: 2.985 bil, Non-Current Asset: 2.659 bil, Current asset: 2.304 bil)
Dividend policy: Target payout ratio 30% on Net profit.
Financial Ratio
Trade receivable: 37.2days
Trade Payable: 23.7days
Past Financial Proformance (Revenue, EPS)
FPE 2018: RM4.690 bil (10mths eps: 0.0513)
2017: RM5.501 bil (eps: 0.0566)
2016: RM5.257 bil (eps: 0.0537)
2015: RM4.714 bil (eps: 0.0323)
Net Profit Margin
FPE 2018: 4.7% (10 mths)
2017: 4.5%
2016: 5.1%
2015: 3.5%
After IPO Sharesholding
Emerging Glory: 52.8%
Director Remuneration for FYE2019 (from gross profit 2017)
Lau Chia Nguang: RM5.90 mil
Dato' Lau Eng Guang: RM4.86 mil
Tan Sri lau Tuang Nguang: RM5.04 mil
Lau Joo Hong: RM5.66 mil
Lau Joo Han: RM4.86 mil
Lau Joo Keat: RM4.90 mil
Other 8 director: RM0.902 mil
Total director remuneration from gross profit: 3.52%
Use of fund
Capital Expenditure: 75.5%
Working Capital: 12.0%
Lisitng Expenses: 12.5%
Competitor PE & ROE
QL:PE50.32, ROE11.48
Teoseng: PE11.86, ROE10.88
CP Food: PE n/a, ROE10.1
Japfa: Pe n/a, ROE0.2
Industry Analysis (Asean 2012-2018)
oultry Meat Consumption growth average per year: 5.2%
Animal Feed import average per year: 12.92%
Animal Feed production: 8.15%
Conclusion
Good thing is:
1. Produce necessity product (e.g. Egg)
2. Only depend on M'sia market 28.8%, other is export.
3. Trade receivable is less than 3 month.
4. Revenue is increase over 3 years.
5. 75.5% IPO fund use to expand business.
6. The needs of this industry is increasing because of population increasing.
The bad things:
1. Net profit margin very low (below 5%).
2. ROE is 12.5%, if 15% should be better.
3. NTA is RM0.42
4. Growth rate should not be very high because of net profit margin below 5%.
Conclusions
Overall is a slightly better IPO compare to normal IPO. Because of the needs of the industry, the demand will keep increasing. We should see a stable growth (but not big growth) in the company.
More suitable to investor that buy & keep as defensive portfolio.
IPO Price: RM1.10
Good time: RM1.28 (PE25)
Bad time: RM0.515 (PE10)