public investment bank · 2016-03-11 · public investment bank publicinvest research ipo note...

PUBLIC INVESTMENT BANK

PublicInvest Research IPO Note Friday, March 11, 2016 KDN PP17686/03/2013(032117)

BISON CONSOLIDATED BERHAD Fair Value: RM1.15

1 Important disclaimer is provided at the end of this report.| PUBLIC INVESTMENT BANK of 14

DESCRIPTION

An investment holding company, operates a chain of press and convenience retail outlets under the trade names of myNEWS.com, newsplus, MAGBIT, THE FRONT PAGE, and WHSmith in Malaysia. Fair Value RM1.15 IPO Price RM1.10 Expected Return 4.3% Closing Application Date Retail 14 March 2016 Institutional 15 March 2016 Indicative Listing Date 29 March 2016 Market Main Sector Consumer Bursa Code 5275 Bloomberg Ticker BISON MK Shariah-compliant No IPO DETAILS Shares(m)

Offer for Sale 80.6 Public Issue 18.3 UTILISATION OF PROCEEDS RM (m) Capital expenditure 50.0 Working capital 32.2 Estimated listing expenses 6.5

Total 88.7

KEY STOCK DATA

Market Capitalisation (RM m) No. of Shares (m)

341.1 310.1

MAJOR SHAREHOLDERS

%

D&D Consolidates 68.8

Research Team T 603 2268 3000 F 603 2268 3014 [email protected]

Roaming Across Greater Plains Bison Consolidated is scheduled for listing on 29

th March 2016. It is expected to

raise approximately RM88.7m from new issuance of 80.6m shares. The Group is involved in the business of press and convenience retail chains in Malaysia under trade names of “myNEWS.com, “newsplus”, “MAGBIT”, and “THE FRONT PAGE”. It also operates “WHSmith” outlets within Malaysia’s international airports. We derive a fair value of RM1.15 based on 25x FY16F EPS, which implies an upside of 4.3% from its IPO price of RM1.10. Business overview. Presently the Group operates 255 outlets across

Malaysia. According to an independent assessment done by Smith Zander, Bison is the second largest retail convenience store industry player in Malaysia with a market share of 8.6% based on the number of outlets and 6.6% based on revenue in 2015. It is also the largest homegrown retail convenience store industry player in Malaysia. The company also has a 50%-joint venture in “WHSmith” with WH Smith Travel, an indirect wholly-owned subsidiary of WH Smith PLC (UK), one of UK’s leading retailers. To-date, it has 8 outlets in Malaysia, located in KLIA, klia2, Langkawi International Airport, Penang International Airport and Kota Kinabalu International Airport.

Future plans. The Group expects to (i) increase outlets by 115 units over the

next two years to boost its revenue, focusing on “myNEWS.com” as the main trade name, (ii) set up another distribution centre in the medium term to improve its warehouse efficiency and cost effectiveness, and (iii) expand outlets by franchising “myNEWS.com”.

Key risks. (i) Highly dependent on “myNEWS.com” brand value, (ii) reliance

on major tobacco suppliers, (iii) any disruption in logistics and distributions would affect operations, and (iv) exposure to pilferage and robbery.

Fair value of RM1.15 is based on 25x FY16F EPS of 4.7sen, which implies

an upside of 4.3% from its IPO price of RM1.10. Our FY16F earnings growth is supported by i) network store expansion of new outlets, and ii) better product sales mix such as fresh foods with higher margin.

KEY FINANCIAL SUMMARY

FYE Oct (RM m) 2013A 2014A 2015A 2016F CAGR

Revenue 158.0 182.4 217.5 257.3 17.7%

Gross Profit 52.6 60.4 74.4 86.2 17.9%

Pre-tax Profit 21.6 16.3 17.7 19.1 -4.1%

Net Profit 17.9 12.4 13.5 14.5 -6.7%

EPS (Sen) 5.8 4.0 4.4 4.7 -6.7%

P/E (x) 19.1 27.4 25.2 23.5

DPS (Sen) 2.2 1.6 0.2 1.4

Dividend Yield (%) 2.0 1.5 0.1 1.3

Source: Company, PublicInvestResearch estimates Pro Forma financial information from company prospectus


PUBLIC INVESTMENT BANK BERHAD

Company Background Bison Consolidated Berhad (Bison) was incorporated on 26

th March 2013 as a

private limited company under the name Prempac Sdn Bhd. On 25th

Sept 2014, the name changed to Bison Consolidated Sdn Bhd, before being converted into a public limited company on 16

th July 2015. Bison Consolidated Berhad (Bison) is

an investment holding company. It is involved in the business of press and convenience retail chain in Malaysia under:

(i) Main trade name of “myNEWS.com”, and (ii) other trade names of “newsplus”, “MAGBIT”, and “THE FRONT

PAGE”, and (iii) 50%-joint venture of “WHSmith” with WH Smith Travel, an indirect

wholly-owned subsidiary of WH Smith PLC (UK), one of UK’s leading retailers.

History. The business was established on 25

th Dec 1996 by Mr Dang Tai Luk and

his wife, Ling Chao. Their first newsstand outlet was under the trade name “MAGBIT”. Within a confined retail space, the outlet offers newspapers, magazines, confectionery, beverages and tobacco products. In 1997, the family launched the third outlet under the trade name “myNEWS.com”, which was the first “myNEWS.com” outlet. Subsequently, the company continued to expand under 4 trade names, namely “myNEWS.com”, “newsplus”, “MAGBIT” and “THE FRONT PAGE”. The concept of these outlets remains as a press and convenience retailer. To date, the company has 247 outlets nationwide. Bison DC. In 1998, the company established its headquarters (HQ) at Kepong

Industrial Park, Selangor, which also served as the distribution centre. In Feb 2013, the company started operating the central distribution centre (Bison DC) in Rawang Integrated Industrial Park, Selangor. It is an industrial building, with built-up area of 125,000 sq ft. Today, Bison DC controls, manages and monitors the Group’s retail and procurement activities through its upgraded warehouse management system (WMS), Manhattan Warehouse Management System. In-house POS system. In 1999, the company developed an in-house point-of-

sale (POS) system with functions including sales tracking, controlling and monitoring of store performance. Later, it was replaced with the present Bisonet System to cater to higher inventories, outlets and employees. The WMS is integrated with its Bisonet System, which allows the company to analyse sales data and trends in detail. WH Smith Malaysia. In 2012, the company entered into a 50%-joint venture with

WH Smith Travel to set up and operate “WHSmith” outlets within Malaysia’s international airports. To-date, it has 8 outlets in Malaysia across KLIA, klia2, Langkawi International Airport, Penang International Airport and Kota Kinabalu International Airport. Figure 1: Company Structure

Source: Company Prospectus, PublicInvest Research



Table 1: Bison’s subsidiaries & associate and principal activities

Name Principal activities

Bison Stores Retailer of print media and convenience items

Kukuh Retailer of print media and convenience items

Eemerge Retailer of print media and convenience items

Bison Foods Operator of a food and beverage restaurant

DKE Technology Commercialisation of a publications and magazine distribution and point-of-sale (POS) software as well as the provision of implementation, maintenance and technical services relating to the software

Nadi Media Provision of management services

WH Smith Malaysia

Retailer of print media and convenience items

Source: Company Prospectus

Table 2: Corporate Milestones

Year Achievement

1996 Opened 1st outlet under trade name “MAGBIT” located in 1 Utama

Shopping Complex

1997 Launched “myNEWS.com” trade name and first in-house developed contemporary press and convenience retail outlet

1999 Developed first in-house point-of-sale (POS) system

Opened 10th

outlet

2007 Opened 100th outlet

2011 Acquire DKE, a MSC Malaysia Status company, to further develop and build on Bisonet System

2012 Entered into an equal joint venture with WH Smith Travel to set up and operate “WHSmith” outlets within Malaysia’s international airports

Opened 150th outlet

2013 Commenced operations of Bison Distribution Centre (DC)

Launched “myNEWS.com on Wheels” mobile truck store




Business Overview The largest homegrown retail convenience store player in Malaysia.

Presently the Group operates 255 outlets across Malaysia. The outlets are mainly concentrated in Klang Valley (77.3%). Majority of the outlets are in shopping malls (c.39%), while the remaining are located in transportation hubs, hypermarkets, high streets and office buildings. All of the outlets are rented from third parties, with terms not exceeding 3 years. The total tenanted area of the outlets is c.176,000 sq ft, ranging from 60 sq ft to 2300 sq ft per outlet. With market share of 8.6% based on number of outlets and 6.6% based on revenue in 2015, Bison is the second largest retail convenience store industry player in Malaysia, and the largest homegrown retail convenience store industry player in Malaysia. Products and services. The Group’s income stream is derived mainly from retail

sales (over-the-counter sales at outlets), making up about 88.0% of total revenue. The remaining comes from Complementary Income and sales to related parties. The main focus of retail sales is to provide convenience and to cater for “on-the-go” and impulse purchases to all types of end-consumers (walk-in consumers). As at 10 Feb 2016, the Group carries a total of 5,561 stock-keeping units (SKUs). Bison categorizes its products and services into (i) tobacco products, (ii) food and beverages, (iii) print media, (iv) non-food products, and (v) consumer services e.g. reloads for mobile phones and ATM services.



Chart 1: Categories of products and services as at FY15

Source: Company Prospectus, PublicInvest Research

Target market. Bison focuses on consumers in urban and sub-urban areas, who

favour the convenience of contemporary retail outlets. Bison customizes product mix for each outlet based on consumers’ preferences in different locations such as locality, demographic and available retail space (Table 3). At present, 78.8% of its outlets are mainly located in Malaysia’s central region (Kuala Lumpur, Selangor and Negeri Sembilan), which are relatively urbanised. The retail points are mainly high foot-traffic retail locations e.g. shopping malls, hypermarkets, transportation hubs, office spaces, high streets locations, resorts and hospitals or medical centres. Major suppliers. Tobacco accounts for 35% of revenue, one of the largest

revenue contributors to the Group. Their key suppliers are New Foo Hing Sdn Bhd for British Tobacco (Malaysia) (BAT) products, Lein Hing Enterprise for Philip Morris International (PMI) products and CSS Tobacco Sdn Bhd for Japan Tobacco International (JTI) products. Bison’s purchases from each of the three suppliers account for 16.8%, 15.3% and 11.0% of its total purchases respectively. Bison has a long-standing relationship with these major suppliers, ranging from 4 to 18 years. Table 3: Outlets by Location and Product Mix

No Locations Product Mix

1 Shopping malls

Hypermarkets

Higher proportion of retail space dedicated for print media

Selected convenience products and consumer services

2 Hospitals or medical centres

High street (incl. highway locations)

Offices

Resorts

Higher proportion of retail space dedicated to convenience products and consumer services

Only carries a selected range of print media

3 Transportation hubs

Shopping malls where small floor spaces are tenanted

Offers only bestselling SKUs for optimal stocking and turnover

Minimal range of print media


Tobacco 35%

Food and beverage

37%

Print media 10% Non-food

5%

Consumer services

1%

Advertising and promotions

9%

Others 2%

Sales to related companies

1%

Other 12%



Future Plans Expanding outlets. The growth of Bison’s number of outlets is correlated with

revenue growth. Malaysia’s penetration rate, in terms of number of convenience store per millions persons, is significantly lower compared to more developed countries in the Asian region e.g. Singapore. Thus, the Group plans to have an increase of 115 outlets over the next two years to boost its revenue. The plan will be centered on “myNEWS.com” as the main trade name. The new outlets are expected to be in major urban areas such as Klang Valley, Johor Bahru and Penang. As at Feb 2016, Bison has opened approximately 247 outlets (excluding WH Smith), with 3-years CAGR of 17.8% between FY13 and FY15. Chart 2: No of outlets FY13-FY16F

* the outlets are excluding “WHSmith” and Bison Café Source: Company Prospectus, PublicInvest Research estimates

Additional distribution centre (DC). The company also plans to set up another

distribution centre in the medium term to improve its warehouse efficiency and cost effectiveness. This is in line with its growth expansion plan to have more outlets in other regions in Malaysia. Currently, Bison has only one DC located in Rawang, Selangor. The storage capacity of the DC is 122,601 sq ft, while the current capacity utilisation is c.70%. The company expects the new DC to be located outside Kuala Lumpur and Selangor e.g. southern region area, to allow Bison to have greater control over the quality and condition of convenience foods and products offered. In addition, the timing of product deliveries can also be better managed. Franchising “myNEWS.com”. We understand that Bison had submitted an

application to Ministry of Domestic Trade, Co-operatives and Consumerism of Malaysia (MDTCC) on 26

th March 2015 for the registration of a franchise to

expand its outlets by franchising the “myNEWS.com” brand name. This application is pending approval. We believe that if the application is approved, it will aid Bison towards sustainable growth in its efforts to increase number of outlets in the medium to long term.

Competitive Strengths and Opportunities Trade names owned with full autonomy. Having been in operation for 19 years,

Bison has developed its own homegrown trade name through “myNEWS.com” (223 outlets), as well as other trade names including “newsplus”, “MAGBIT” and “THE FRONT PAGE” (24 outlets). The homegrown business allows Bison to focus on growing its stores without being reliant on any other third party name and being subject to franchising or licensing relationship arrangements. This saves Bison from having to undergo tedious obligations such as regulatory fees and licensing renewals, restrictions as well as terms and conditions in expanding its business. Having full control over its trade names also allows flexibility and easier management of stores in terms of concept and overall operations, resulting in efficiency and timeliness in customization and responding to consumers’ demands and needs.

165

196

229 247

289

0

50

100

150

200

250

300

350

FY13 FY14 FY15 1QFY16 FY16F

No of outlets



Integrated IT, distribution and warehousing system. An efficient operation and

supply chain system is vital for retail convenience stores, especially as it seeks to expand its network of outlets. Bison had established its integrated IT system to manage its operations which consist of Bisonet System and WMS, which are interfaced to its accounting system. The usage of IT together with WMS and Bisonet System allows Bison to effectively manage stock movements and monitor store performance. For warehousing and distribution of supplies to its outlet network, Bison utilizes its own Bison DC, which is its central distribution centre and warehouse located in Rawang, Selangor. Bison DC is made up of 122,601sqf storage capacity, with in-house logistics team consisting of 13 owned delivery trucks and 85 employees. Having its own distribution and logistics team to manage supplies allows for greater control over merchandise and retail planning. In turn, Bison is able to better manage overall stock allocations in respect to sales trends across outlets and ensure consistency in quality of supplies. Growth of transportation hubs. Bison should benefit from growth in

transportation hubs and increase in ridership of public transportation in Malaysia, as consumers in the segment tend to be convenience-oriented as they commute or travel. The development of 31 stations for Klang Valley Mass Rapid Transit (MRT) and the extension of Light Rail Transit lines (LRT) by another 25 stations will provide additional suitable locations for retail convenience stores. In addition, development of transportation hubs outside of KL and Selangor, such as rapid transit system linking Johor Bahru and Singapore, as well as integrated public transportation and road system in Penang, will further support Bison’s growth within these regions. Increasing urbanization. Urbanization rate in Malaysia has increased by c.9%

from 62% in 2000 to 71% in 2010. In 2014, urbanization rate was reported to be 74%. A faster-paced lifestyle has led to changes in consumer preference for less time retrieving products from shelves and queuing for payment. Hence, increase in urbanization will continue to provide growth opportunities in the retail convenience stores segment. Chart 3: Urban population (% of total population)

Source: World Bank data, PublicInvest Research

Room for growth and margin improvement. Currently, myNEWS.com’s 223

outlets are heavily concentrated in the central region of Peninsular Malaysia, while northern, southern and East Malaysia is only mildly penetrated. This indicates the wider potential market for Bison, although the different demographics may require stores concept customization in order to appeal to consumers. On top of that, we understand that c.50 of its stores is currently in gestation period, which essentially implies ample room for margin improvement as these stores mature and become profitable. Also, Bison is currently in growth phase with 115 stores targeted to be opened within two years. As Bison continues to add stores on board and reaches a certain optimal size, Bison will eventually be in a stronger position to benefit from economies of scale, thus allowing for reduction in average costs per outlet and securing more attractive profit margins, although we only expect to see the improvements in medium to long term.

50%

62%

67% 68% 69% 70% 71% 72% 73% 73% 74%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

1990 2000 2006 2007 2008 2009 2010 2011 2012 2013 2014



Industry Outlook

Lower retail convenience store penetration rate in Malaysia. Malaysia

recorded a convenience store penetration rate of 135.1 per millions people in 2014, which is relatively lower compared to more developed countries in the Asian region e.g. Singapore, Hong Kong, Japan, South Korea and Taiwan. Chart 4: Convenience store penetration rate for 2014

Source: Smith Zander, Company Prospectus Bison’s market size in Malaysia is estimated to be 6.6% in the retail convenience

store market in 2015, based on its revenue of RM217.5m in FYE 31 Oct 2015 as compared to Malaysia’s retail convenience store market size of RM3.3bn in 2015. Based on total number of retail convenience stores in Malaysia, Bison has a market share of 8.6% for its 238 number of stores as at 31 Dec 2015 out of an estimated 2,776 total number of retail convenience stores in Malaysia in 2015. Chart 5: Estimated Market Size for Bison in 2015

Source: Smith Zander, Company Prospectus

89.2

135.1 145.2 162.2

190.4

406.9 419.5

0

50

100

150

200

250

300

350

400

450

Ind

on

es

ia

Ma

laysia

Th

ailan

d

Sin

ga

po

re

Ho

ng

Ko

ng

Jap

an

Ta

iwan

Nu

mb

er

of

co

nv

en

ien

ce s

tore

/ m

illi

on

p

ers

on

s



SWOT Analysis Table 4: SWOT Analysis

Strengths Weaknesses

Trade names owned with full

autonomy

Integrated IT system and distribution system managing operations

Products and services mix focusing on convenience

Highly dependent on the value of

“myNEWS.com” brand

Reliance on efficient personnel (service-oriented nature)

Dependency on major suppliers

Opportunities Threats

Increasing number of transportation hubs and growth in public transport ridership in Malaysia

Growth of commercial developments

Government-driven initiatives

Competition from both retail convenience stores and other retail format stores

Changes in tenancy arrangements and rental costs may affect operations

Exposure to shoplifting, theft, pilferage and robbery

Source: PublicInvest Research

Key Risks Highly dependent on “myNEWS.com” brand value. 223 out of 247 outlets

operate under the “myNEWS.com” name as at 1QFY16. As the name gains more traction and recognition among consumers, maintaining the brand value is essential in ensuring steady inflow of existing and new customers. Currently, “myNEWS.com” outlets are known for its neatness, service quality and ample range of print media and retail items, with customer convenience being the main focus. We believe that customer recognition and loyalty is a key factor to attract and retain Bison’s customers, thus any unfavourable shopping experience or unexpected circumstances may tarnish “myNEWS.com” brand value. This may affect customers’ continuous support for its outlets. Failure to match customer demands and preferences may also result in similar outcome. Reliance on major tobacco suppliers. Bison relies heavily on 3 tobacco

suppliers, whereby its purchase from each accounts for more than 10% of Bison’s total purchases. Despite the long-term relationship Bison has established with these suppliers, it should be noted that any changes or disruption to the supplies will adversely affect Bison in respect to shortages, additional costs, time and resources in seeking alternative supply sources. Hence, as tobacco sales account for a large chunk of revenue, any disruption to supplies will in turn affect outlets’ performance. Logistics and distribution issues. Since Bison DC manages and distributes

c.87% of Bison’s SKU received from suppliers to Bison’s network of outlets, any significant disruption or issues faced by Bison DC, especially due to natural disasters would inevitably affect Bison’s inventory within the warehouse and distribution of supplies.



Inefficiency of personnel affecting business. As a service-oriented business,

competency and efficiency of front-line workers do play a role in retaining customers. Pleasant and quick shopping experience is often sought after by customers entering a convenience retail store, as time is often a main factor. Hence, inefficient or unfriendly workers which may lead to issues such as long queues and checkout time may impact customers negatively. Exposure towards pilferage and robbery. As retail business, sales transactions

at the outlets consist of a significant proportion of cash receipts. To reduce risks, Bison has installed alarm systems, security cameras and safes at all outlets. On top of that, other efforts including establishment of internal control team and implementation of various monitoring and tracking systems were also put in place.

Financials More than 80% of its revenue is contributed by retail sales. Its retail sales

recorded a CAGR of 16.8% in the past 3 years. This was mainly led by increase in number of outlets and better product mix. However, lower revenue contribution from print media and cessation of Western Union money transfer service (WU Service) in FY14 dragged down the revenue increment in food and beverages and non-food. Bison was forced to cease providing WU Service in their outlets in April 2014, which it had been operating as a sub-agent of a financial institution since FY13. This was mainly due to the financial institution discontinuing its WU Service. As a result, 12 of its outlets were affected and revenue of consumer services declined by 10.4% in FY14. To-date, the group has secured and offers WU Service in 3 outlets as a direct agent.

Chart 6: Revenue and Net Profit for FY13-FY16F

Source: Company Prospectus Net profit margin declined from 11.3% in FY13 to 6.2% in FY15, mainly dragged

by i) lower sales contribution from its new outlets (37 new outlets in FY14, 41 new outlets in FY15), ii) higher sales contribution from tobacco with thin gross margin, iii) higher operating expenses, iv) lower commissions from money remittance services in FY14. Table 5: Financial Ratios FY13-FY16F

FYE Apr 2013 2014 2015 2016F

Gross margin 33.3% 33.1% 34.2% 33.5%

EBITDA margin 15.4% 10.8% 10.1% 9.2%

Net margin 11.3% 6.8% 6.2% 5.6%

Return on Equity 56% 29% 24% 9%

Return on Assets 27% 15% 14% 7% Source: Company, PublicInvest Research estimates

158.0

182.4

217.5

257.3

17.9 12.4 13.5 14.5

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

50

100

150

200

250

300

FY13 FY14 FY15 FY16F

Revenue Net profit Net profit margin (%)



Average retail sales per outlet recorded a slight drop of CAGR of 0.5% over the

last three years. This was mainly dragged by declining print media sales and lower sales contribution from its new outlets. However, same-store sales for its 138 existing outlets posted a CAGR of 1.4%.

Chart 7: Average Sales Per Outlet for FY13-FY15


Dividend. The Group does not have any formal dividend policy plan. However, it

has declared a dividend payout ratio of 37.5%, 40.2% and 3.7% in FY13 to FY15. Given its low capex requirement and stronger net cash position after the listing, we believe there is a strong likelihood that payout ratio would improve from FY15. We estimate a dividend payout ratio of 30%, which translates to a DPS of 4.4sen for FY16F or an average dividend yield of c.1.3%. Forecast. Based on its expansion plan, we assume 62 stores opening in FY16,

including the 20 new stores opened in 1QFY16. Our earnings estimates has taken into account (i) improvement in existing store’s traffic flow, and (ii) higher operating expenses arising from new stores opening. We project a slight drop in average sales per outlet due to a 2-year gestation period for new outlets.

Valuations Pegging Bison’s FY16F EPS of 4.7sen to a 25x PE multiple, we derive a fair value of RM1.15 which implies an upside of 4.3% from its IPO price of RM1.10. As compared to its listed peer, 7-Eleven is trading at 30.7x (trailing 12 months). We are giving a 20% discount to Bison, considering that 7-Eleven is about 8x bigger than Bison, in terms of number of outlets. 7-Eleven has about 1,994 stores across Malaysia as of December 2015 (Bison: 255 outlets).

816.2 782.6 808.2

0

100

200

300

400

500

600

700

800

900

1,000

FY13 FY14 FY15

RM'000

Existing outlets New outlets Closed outlets Total



IPO Details Bison is seeking a listing with an enlarged issued and paid-up share capital of 310,070,000 shares with RM0.20 par value on Bursa Malaysia’s Main Market. Pursuant to IPO listing, the company’s market capitalization is RM341.1m based on its IPO price of RM1.10. The IPO allocation, post-IPO share capital of Bison and utilisation of IPO proceeds are shown in the following tables.

Table 6: IPO Allocation

Categories No. of shares % of enlarged

share capital

Institutional offering:

- Malaysian institutional and selected

investors

- Bumiputera institutional and selected

investors

31,306,500

31,010,000

10.1

10.0

Total 62,316,500 20.1

Retail offering

- *Public (Bumiputera)

- *Public (Non-Bumiputera)

- Eligible persons (e.g. employees)

7,751,750

7,751,750

2,800,000

2.5

2.5

0.9

Total 18,303,500 5.9

80,620,000 26.0

Source: Company Prospectus, * via balloting

Table 7: Post-IPO Share Capital

No. of shares

Authorised 2,500,000,000

Issued and fully paid-up as at 10 Feb 2016 229,450,000

To be issued pursuant to the IPO 80,620,000

Enlarged share capital upon listing 310,070,000


Table 8: Utilisation of IPO proceeds*

Details of utilisation RM m %

Capital expenditure 50.00 56.4

Working capital 32.23 36.3

Estimated listing expenses 6.45 7.3

Total 88.68 100.0

Source: Company Prospectus, PublicInvest Research, *based on RM1.10 for 80,620,000 new shares issued



Figure 2: “myNEWS.com” outlet at 1 Utama Shopping Mall

Source: Google Figure 3: “WHSmith” outlet at klia2

Source: Google



KEY FINANCIAL DATA

INCOME STATEMENT DATA

FYE Oct (RM m) 2013A 2014A 2015A 2016F

Revenue 158.0 182.4 217.5 257.3

Gross Profit 52.6 60.4 74.4 86.2

Operating Profit 15.7 16.0 17.1 16.6

Finance Costs -0.6 -0.6 -0.6 -0.5

Pre-tax Profit 21.6 16.3 17.7 19.1

Income Tax -3.8 -3.9 -4.2 -4.6

Effective Tax Rate (%) 17% 24% 24% 24%

Minorities - - - -

Net Profit 17.9 12.4 13.5 14.5

Growth (%)

Revenue - 15% 19% 18%

Gross Profit - 15% 23% 16%

Net Profit - -30% 9% 7%

Source: Company Prospectus, PublicInvest Research estimates

BALANCE SHEET DATA

FYE Oct (RM m) 2013A 2014A 2015A 2016F

Property, Plant & Equipment 28.7 42.7 46.7 52.2

Cash and Cash Equivalents 8.8 7.8 6.1 46.2

Trade and Other Receivables 10.8 12.6 21.2 24.9

Other Assets 17.6 18.8 25.5 81.9

Total Assets 65.9 81.9 99.4 205.3

Payables 20.7 25.2 31.0 39.5

Borrowings 8.8 10.3 9.5 8.3

Deferred tax 1.1 2.0 2.1 2.1

Other Liabilities 3.4 1.9 1.3 1.1

Total Liabilities 34.0 39.5 43.9 51.0

Shareholders’ Equity 31.9 42.5 55.5 154.3

Total Equity and Liabilities 65.9 81.9 99.4 205.3


PER SHARE DATA & RATIOS

FYE Oct 2013A 2014A 2015A 2016F

Book Value Per Share 0.1 0.1 0.2 0.5

NTA Per Share 0.1 0.1 0.2 0.5

EPS (Sen) 5.8 4.0 4.4 4.7

DPS (Sen) 2.16 1.61 0.16 1.40

Payout Ratio 38% 40% 4% 30%

ROA 27% 15% 14% 7%

ROE 56% 29% 24% 9%




RATING CLASSIFICATION STOCKS

OUTPERFORM The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12months.

NEUTRAL The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.

UNDERPERFORM The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.

TRADING BUY The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.

TRADING SELL The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.

NOT RATED The stock is not within regular research coverage.

SECTOR

OVERWEIGHT The sector is expected to outperform a relevant benchmark over the next 12 months.

NEUTRAL The sector is expected to perform in line with a relevant benchmark over the next 12 months.

UNDERWEIGHT The sector is expected to underperform a relevant benchmark over the next 12 months.

DISCLAIMER

This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents. This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document. PIVB, Public Bank Berhad, our affiliates and related companies, directors, officers, connected persons/employees, associates or agents may own or have positions in the securities of the company(ies) covered in this document or any securities related thereto and may from time to time add or dispose of, or may be materially interested in, any such securities. Further PIVB, Public Bank Berhad, our affiliates and related companies, associates or agents do and/or seek to do business with the company(ies) covered in this document and may from time to time act as market maker or have assumed an underwriting commitment in the securities of such company(ies), may sell them or buy them from customers on a principal basis, may have or intend to accommodate credit facilities or other banking services and may also perform or seek to perform investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment advisory or other services from any entity mentioned in this document. The analyst(s) and associate analyst(s) principally responsible for the preparation of this document may participate in the solicitation of businesses described aforesaid and would receive compensation based upon various factors, including the quality of research, investor client feedback, stock pickings and performance of his/her recommendation and competitive factors. Hence, the addressee or any persons reviewing this document should be aware of the foregoing, amongst others, may give rise to real or potential conflicts of interest. Published and printed by: PUBLIC INVESTMENT BANK BERHAD (20027-W) 9

th Floor, Bangunan Public Bank

6, Jalan Sultan Sulaiman 50000 Kuala Lumpur T 603 2268 3000 F 603 2268 3014 Dealing Line 603 2268 3129

public investment bank · 2016-03-11 · public investment bank publicinvest research ipo note...

Documents