Initial Public Offering (IPO): July 2021

Saturday, July 3, 2021

Haily Group Berhad

Open to apply: 30/06/2021
Close to apply: 07/07/2021
Balloting: 12/07/2021
Listing date: 21/07/2021

Share Capital
Market Cap: RM61.929 mil
Total Shares: 178.32 mil shares

Industry CAGR volume unit (Malaysia 2016-2020)
Residential : -1.5%
Commercial properties: -3.9%
Industrial properties: -4.0%

Competitors compare (Net profit margin%)
Haily: 6.3%
Kerjaya Prospek: 11.2%
AME Elite: 18.0%
GDB: 6.8%
others: -39.9% to 6.7%

Business
Construction is primarily involved in the building construction of residential and non-residential buildings.
Residential Buildings: 87.23%
Non-residential Buildings: 11.41%
Others: 1.36%

Fundamental
1.Market: Ace Market
2.Price: RM0.68
3.P/E: 11.6 (EPS: 0.0586)
4.ROE(Pro Forma III): 14.88%
5.ROE: 20.09%(2020), 20.18%(2019), 20.53%(2018), 33.04%（2017）
6.Cash & fixed deposit after IPO: 0.257
7.NA after IPO: RM0.39
8.Total debt to current asset after IPO: 0.56 (Debt: 84.821mil, Non-Current Asset: 6.052mil, Current asset: 148.959mil)
9.Dividend policy: 30% profit after tax dividend policy.

Past Financial Performance (Revenue, Earning Per shares, PAT%)
2020: RM166.132 mil (Eps: 0.0586),PAT%: 5.86%
2019: RM157.918 mil (Eps: 0.0497),PAT%: 4.97%
2018: RM173.787 mil (Eps: 0.0474),PAT%: 4.74%
2017: RM121.832 mil (Eps: 0.0704),PAT%: 7.04%

Order Book
2023: RM5.67mil
2022: RM124.23mil
2021: RM330.14mil

After IPO Sharesholding
See Tin Hai: 73.15% (indirect)
Directors & Key Management Remuneration for FYE2021 (from gross profit 2020)
Total director remuneration: RM2.144 mil
key management remuneration: RM0.4 mil- 0.5mil
total (max): RM2.644 mil or 9.62%

Use of fund
Purchase of construction machinery, equipment, software, office equipment: 20.59%
Working capital: 29.41%
Repayment of bank borrowing: 34.31%
Listing expenses: 15.69%

Highlight
1. 2021 have RM330.14mil order book to be recognised.
***doesn't other special item to be highlight.

Good thing is:
1. PE11.6 is not consider too high.
2. ROE still above 10%
3. Revenue increase from 2017 to 2020

The bad things:
1. PAT% is below 10%
2. Use 34.31% IPO fund to pay debt.
3. Properties industry not going to high expand in 1-2 years.

Conclusions (Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision)
Is a average IPO. Properties industry facing negative growth rate from 2016-2020, estimated should be continue to negative this year on lockdown continue. For 3years business growth prospect & risk score please refer to below chart.

*Valuation is only personal opinion & view. Perception & forecast will change if any new quarter result release. Reader take their own risk & should do own homework to follow up every quarter result to adjust forecast of fundamental value of the company.

Thursday, July 1, 2021

CTOS Digital Berhad

Open to apply: 30/06/2021

Close to apply: 06/07/2021
Balloting: 08/07/2021
Listing date: 19/07/2021

Share Capital
Market Cap: RM411.896 mil
Total Shares: 2,200 mil shares

Industry (Net Profit %)
M'sia 2016-2020 CAGR: 12.9%
M'sia 2016-2025E CAGR: 12.7%
ASEAN 2016-2020 CAGR: 12.8%
ASEAN 2016-2025E CAGR: 11.4%

Competitors compare (EBITDA%)
CTOS: 36.9%
Experian: 24%
CBM: 13.9%

Business
Credit bureaux in the ASEAN region
Malaysia: 94.8%
International B2B: 5.2%

Fundamental
1.Market: Main Market
2.Price: RM1.10
*Institutional price to be determined
*If final price less then RM1.10, balance will be refund.
3.P/E: PE61.8 (EPS: 0.0178)
4.ROE(Pro Forma III): 13.18%
5.ROE: 32.81%(2020), 49.41%(2019), 49.40%(2018),
6.Cash & fixed deposit after IPO: 0.0264
7.NA after IPO: RM0.13
8.Total debt to current asset after IPO: 0.507 (Debt: 41.469mil, Non-Current Asset: 247.716mil, Current asset: 81.829mil)
9.Dividend policy: 60% profit after tax dividend policy.

Past Financial Performance (Revenue, Earning Per shares, PAT%)
2020: RM141.496 mil (Eps: 0.0178),PAT%: 27.9%
2019: RM129.141 mil (Eps: 0.0177),PAT%: 30.2%
2018: RM110.465 mil (Eps: 0.0135),PAT%: 26.8%

After IPO Sharesholding
Creador II: 40% (indirect)
Chung Tze Keong:4.5%
Chung Tze Wen: 4.5%

Directors & Key Management Remuneration for FYE2021 (from gross profit 2020)
Total director remuneration: RM1.909mil
key management remuneration: RM3.25mil- 3.5mil
total (max): RM5.409 mil or 4.45 %

Use of fund
Repayment bank borrowing: 70.5%
Acquisition to be identified: 26.7%
Listing expenses: 2.8%

Highlight
1. Competitive advantage: limited number of player able to offer the full suite of digital solutions in Malaysia.
2. Market share in 2020 (Malaysia): 71.2%
3. Expand to Philippines (2020 acquired 51% CIBI)
4. Expand to Thailand (2020 acquired 20% BOL)

Good thing is:
1. High growth, high margin, Consistent ROE business.
2. Less competitors.
3. Revenue continue on growing.
4. Expand to other ASEAN countries.
5. Director & key management remuneration at acceptable category.

The bad things:
1. High PE, at PE61.8
2. 70.5% IPO fund for repayment bank borrowing.

Conclusions (Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision)
Is a charging premium PE IPO, with PE61.8. If CTOS successful cases able to duplicate into other ASEAN countries, it will worth this price (if fail to duplicate their successful cases, investor need hold long period for return of capital).
Futures 3 year estimation for business expansion & risk sorce, please refer to below chart.