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Good morning.
Today, we feature a note on i-Stone Group Berhad (i-Stone) in our FundTech Radar – 2nd July 2019. i-Stone is set to list on the ACE market of Bursa Malaysia on 17th July 2019 with the indicative issue price of RM0.16 per share. i-Stone is principally engaged in design, manufacturing & modification of specialized/customized automation machines. In FYE18, i-Stone only captured a market share of 1.97% in Malaysia. Moreover, i-Stone is also engaged in provision of complementary products & services, such as distribution of manufacturing automation hardware & software.
For the manufacturing automation and complementary products & services business segment, its principal market is Malaysia, where it generated 68.6% and 9.6% of its total revenue for FYE18 respectively.
Fundamental Stance
· A healthy 3-year (FYE16-18) revenue and core PATAMI CAGR of 15.3% and 34.6% respectively.
· FYE18 core PATAMI margin rose to 16.7% (vs. 13.6% in FYE17).
· Raw materials and direct labour constituted about 60.6% and 19.5% of its cost of sales in FYE18 respectively.
· Net gearing rose to 0.39x in FYE18 from 0.05x in FYE17. Based on i-Stone’s prospectus, i-Stone intends to utilize RM13.5m or 34.5% of its IPO proceeds to partially repay term loan.
· The expiry of the pioneer status on 4th December 2018 will directly affect i-Stone’s overall profitability levels from FYE2019 onwards.
· With the utilization of 13% of its IPO proceeds for purchase of additional automated machineries & software, its annual production capacity could potentially increase by 20%.
· Currently trading at a CY18 P/E of 13.8x, which is 18.2% discount to its domestic peers average P/E.
Technical Front
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The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
2 July 2019
Disclaimers: This distribution is by CIMB Investment Bank Berhad (“CIMB”) in Malaysia only. The views are our own as of this date and subject to change. No further distribution is allowed without our prior written consent. CIMB, its related corporations, affiliates and business partners make no recommendation, offer or invitation to transact in any securities, futures contracts or other instruments. Please make your independent evaluation, consider your own investment objectives and financial situation and consult your own professional advisers before participating in any transaction.
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