This is for record purposes only. Sorry for the late report as there is no public tranche and i am not vested
Axcelasia Inc ("Axcel" or the "Company") is offering 47.52m placement shares at $0.25 each where 35.52m will be new shares and the balance vendor shares. The IPO closed on 25 Nov 2015 and will start trading on 27 Nov 2015. The market cap is around $40m based on IPO price.
The Company and its subsidiaries provide integrated professional services to government-linked entities and corporations in tax advisory, business consultancy, enterprise management system and business support.
According to the prospectus, the Company has the following key strengths:
- Good track record
- Integrated service provider
- Flat management structure
- Experienced and dedicated management team
The Company intends to expand in Malaysia and ASEAN region, enhances its range of professional services and support infrastructure.
This is a "human business" where revenue hits RM 8.3m in FY2014 with a profit before tax of RM 1.59m. The revenue and income spiked up to RM16.6m and RM6.05m for the 6 months ending HY2015
Based on the exchange rate of 0.33, the adjusted EPS for HY2015 is around 3.77 x 2 x 0.33 = Singapore 2.49 cents. That translate into a listing PER of around 10x but frankly i am not privy to 2H results and will be cautious on such projections.
What I like about the Company
- Asset light business but having right management is critical as it is an advisory business
- Shareholders are tightly held by 3 key individuals, which means interest is aligned.
- Operating cash flow positive company
Some of my concerns
- Weak RM currency will be a drag on reported earnings in SGD
- Unpredictable earnings. A big question about my full year forecast as fees may not be stable
- A small cap company listing at rich historical valuation to its NAV
A similar listed company is Zico Holdings Inc, lised in Nov 2014. It is still above its IPO price but trading at ridiculous valuation.
Mr IPO ratings
I will give it a one chilli rating given its relatively small market cap and "unexciting" business proposal but given the low number of shares and the quality of institutional investors, the Company may see its share price well controlled!
The list of placement investors seemed quite well received! Good luck to those who bought the shares.