Date
Open to apply: 23/08/2019
Close to apply: 23/09/2019
Listing date: 07/10/2019
Share Capital
Market Cap: RM93.339 mil
Total Shares: 405.823 mil shares (IPO 20.291 mil, Company Insider/Miti/Private Placement 84.005 mil)
Business
Manufacturer of bakery product like breads, buns, rolls, and cakes.
Product brand: Top Baker, Dailys, SDS
Fundamental
Market: Ace Market
Price: RM0.23 (eps: RM0.019)
P/E & ROE: PE12.1, ROE13.19%
Cash & fixed deposit after IPO: RM0.0344 per shares
NA after IPO: RM0.15
Total debt to current asset after IPO: 2.22 (Debt: 78.572 mil, Non-Current Asset: 102.818 mil, Current asset: 35.278 mil)
Dividend policy: No formal dividend policy.
Financial Ratio
Trade receivable: 60 days
Trade Payable: 71 days
Inventory turnover: 14 days
Past Financial Proformance (Revenue, EPS)
2019: RM187.129 mil (eps: 0.019)
2018: RM174.201 mil (eps: 0.014)
2017: RM139.333 mil (eps: 0.015)
2016: RM98.982 mil (eps: 0.009)
Net Profit Margin
2019: 4.2%
2018: 3.4%
2017: 4.5%
2016: 4.1%
After IPO Sharesholding
Tan Kim Seng: 24.4%
Tan Kim Chai: 24.4%
Teou Chau Hoyk: 4.6%
Tan Yon Haw: 5.3%
Tan Yong Thye: 5.3%
Tan Yong Ping: 4.6%
Tan Yong Herng: 4.6%
Tan Kee Jin: 0.3%
SDS Tan Properties: 1.1%
Director & Key Managemen Remuneration for FYE2019 (from gross profit 2018)
Tan Kim Seng: RM288k
Tan Kim Chai: RM252k
Tan Yon Haw: RM252k
Tan Kee Jin: RM252k
Lim Pang Kiam: RM55k
Phang Sze Fui: RM43k
Azahar bin Baharudin: RM43k
Dato' Albert Ding: RM43k
Total director & key management remuneration from gross profit: 2.15%
Use of fund
Capital Expenditure: 25%
Repayment Debt: 29.2%
Working Capital: 32.5%
Lisitng Expenses: 13.3%
Competitors (Gross Profit margin)
SDSG: 31.9%
Fuji: 29.2%
Italian Baker: 34%
Roti Sedap: 4%
Adventist: 19.9%
Gardenia: 29.8%
Industry Analysis (Forecast)
2018-2023: 5.5%-6.3% per year
Conclusions
Good thing is:
1. PE12 & ROE13.19%
2. Revenue is continue to growing past 4 years, however we notice the growth rate is slow down.
3. Director fees is still acceptable at 2.15% from gross profit.
4. Is a food industry.
The bad things:
1. Listing in Ace market.
2. Debt is high compare to the current assets. Not a healthy signal.
3. PAT margin is too low.
4. No formal dividend policy.
5. Revenue is not grow for past 4years.
6. Use 29.2% of IPO fund to pay debt.
7. Industry test market size grow 5%-6% per year is almost no grow after factor in inflation.
Conclusions
The pricing is fair. However the futures or potential of growing is unable to forecast.
The food industry is booming around the world, buble tea, fast food, restaurant (e.g. MCD shares price grow 25% since early 2019).
There is too many competitor in the same industry. Not a good bet for investment.
IPO Price: RM0.23
Good time: RM0.30 (PE16)
Bad time: RM0.17 (PE8)