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Date
Open to apply: 21/06/2019
Close to apply: 08/07/2019
Listing date: 17/07/2019
Share Capital
Market Cap: RM195 mil
Total Shares: 1.221 bil shares (IPO 61.074 mil, Company Insider/Miti/Private Placement 305.37 mil)
Business
Manufacturing automation business machinery & distribution of hardware & software.
Geo
Msia: 78.2%
S'pore: 12.5%
Philippines: 6.8%
Others: 2.5%
Fundamental
Market: Ace Market
Price: RM0.16 (eps: RM0.0092, Prospecture is using 0.0115 which is before add in additional enlargement shares is not acceptable)
P/E & ROE: PE17.39, ROE19.5%
Cash & fixed deposit after IPO: RM0.0072 per shares
NA after IPO: RM0.05
Total debt to current asset after IPO: 0.44 (Debt: 13.716 mil, Non-Current Asset: 40.434 mil, Current asset: 30.896 mil)
Dividend policy: No formal dividend policy.
Financial Ratio
Trade receivable: 76 days
Trade Payable: 53 days
Inventory turnover: 48 days
Past Financial Proformance (Revenue, EPS)
2018: RM67.591 mil (eps: 0.0092)
2017: RM60.381 mil (eps: 0.0067)
2016: RM43.127 mil (eps: 0.0039)
2015: RM44.124 mil (eps: 0.0033)
Net Profit Margin
2018: 17.0%
2017: 14.2%
2016: 10.9%
2015: 9.3%
After IPO Sharesholding
OUE (Tee Sook Sing): 27%
Chan Kok San: 20.3%
Chin Chung Lek: 7.4%
Chan Sai Kong: 4.8%
Director & Key Managemen Remuneration for FYE2019 (from gross profit 2018)
Dato' Azman Bin Mahmood: RM64k
Tee Sook Sing: RM424k
Chan Kok San: RM385k
Chin Chung Lek: RM181k
Professor Dr. Ruzairi bin Abdul Rahim: RM51k
Chia Gek Liang: RM64k
Law Lee Yan: RM51k
Total director & key management remuneration from gross profit:5.49%
Use of fund
Process & Product Development: 10.7%
Pay Debt: 34.5%
New D&D centre: 17.4%
Capital expenditure: 13.3%
Working capital: 15.1%
Lising expenses: 9%
Competitor (PE & ROE)
AT: Loss making.
Genetec: PE9.12 ROE7.41
Greatec: PE12.47
MMSV: PE19.26 ROE11.23
PIE: PE13.5 ROE8.54
Penta: PE19.71 ROE18.46
Vitrox: PE30.23 ROE24.88
Industry Analysis (CAGR 2015-2018, base year 2018)
CAGR: 34.99%
Conclusions
Good thing is:
1. ROE19.5 is healthy.
2. Revenue is growing over 4 years.
3. Net profit margin is over 15%
4. The industry of their business is growing with CAGR 34.99% since 2015.
5. Competitor able to trade with higher PE.
The bad things:
1. No fixed Dividend policy
2. Listing in Ace market.
3. Director fees is over 3% from gross profit.
4. Use 34.5% IPO fund to pay debt.
5. Expensive then country PE16.5, the company is PE17.39 (in prospecture book is PE13.91, using ESP 0.0115 which is before add in additional enlargement shares is not acceptable).
Conclusions
Overall is a average IPO. Able to see the growth & need of the automation to replace human labor in business processing.
However investor need to aware that total add in enleargement shares is 1221.48 mil shares, but PE arriving by prospectus book is using 997.18mil shares.
IPO Price: RM0.16
Good time: RM0.175 (PE19)
Bad time: RM0.095 (PE13)