IPO

Monday, January 3, 2022

Senheng New Retail Berhad

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***Important***Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision
Open to apply: 29/12/2021
Close to apply: 10/01/2022
Balloting: 12/01/2022
Listing date: 25/01/2022
Share Capital
Market Cap: RM427.856 mil
Total Shares: 1.50 bil shares
 
Industry Competitor (revenue)
E&E retail sales CAGR 3.99%
Senheng: RM1.294 bil
Elitetrax: RM0.663 bil (Harvey Norman)
Courts: RM0.407 bil
Singer: RM0.241 bil
Homepro: RM0.155 bil
Onking: RM96.01 mil
***unable to compare PAT or PE due to limited info. 

Business (2021)
Retailer of consumer electrical and electronic products.

Revenue by Geo (2021)
Msia: 100%

Fundamental
1.Market: Main Market
2.Price: RM1.07
3.P/E: 28.84 (EPS: 0.0371)
4.ROE(Pro Forma III): 10.36% (forecast using 6mth FPE2021)
5.ROE: 33.47%(FYE2020), 40.34%(FYE2019), 71.39%(FYE2018)
6.NA after IPO: RM0.30
7.Total debt to current asset after IPO: 0.75 (Debt: 455.252 mil, Non-Current Asset: 301.038 mil, Current asset: 604.206 mil)
8.Dividend policy: PAT 30% dividend policy. 
 
Past Financial Performance (Revenue, Earning Per shares, PAT%)
2021 (6mths): RM673.911 mil (Eps:0.0155),PAT: 3.5%
2020: RM1.294 bil (Eps:0.0371),PAT: 4.3%
2019: RM1.144 bil (Eps:0.0330),PAT: 4.3%
2018: RM1.172 bil (Eps:0.0407),PAT: 5.2%
***above EPS calculate use diluted EPS 1.50 bil shares (enlarged shares unit).
***Prospecture book EPS page 224 using diluted EPS 1.25bil shares (above EPS did not follow prospecture book EPS).
 
After IPO Sharesholding
SQ Capital: 57.97%
Lim Kim Heng: 58.01% (indirect)
Lim Kim Chieng: 58.01% (indirect)
Lim Kim Yew: 57.97% (indirect)

Directors & Key Management Remuneration for FYE2021 (from gross profit 2020)
Total director remuneration: RM3.417mil
key management remuneration: RM3.25mil - 3.65mil
total (max): RM7.067 mil or 2.6%  
 
Use of fund
Upgrade & expand chain of retail stores: 60%
Repayment of bank borrowing: 17.2%
Develop new brand distribution: 8.22%
Expand & upgrade warehouse & logistics newtwork: 7.48%
Boost Digital infrastructure: 3.63%
Listing expenses: 3.47%

Highlight
1. To open new store
   A. Grand Senheng Elite: 11 store
   B. Grand Senheng: 37 store
   C. Grand senQ: 8 store
   D. senQ: 7 store

Good thing is:
1. Expend for new stores. 
2. Director & key management remuneration acceptable. 

The bad things:
1. Unable to maintain stable ROE. 
2. PE is 28. 
3. Revenu did not grow much for past 3 years. 
4. Profit after tax (PAT) margin is less than 5%. 
5. Use 17.2% IPO fund for repayment of borrowing. 

Conclusions (Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision)
Overall is an expensive IPO with PE28 plus PAT below 5%. Although the company planed to expand more store to increase revenue, but is already price in into PE28. 

*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.