Advancer Global has done well since its listing on the Catalist board on 11 July 2016 , vindicating the views of Mr IPO's which were published on his blog before the listing.
| ♦ What I like about the Company |
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Some of my concerns
♦ The auditors, Mazars LLP, is a non "big 4" audit firm
♦ The supply of FDWs is always subject to changing laws, regulations and policies in both Singapore and the countries which the foreign labour originate
Scalability outside Singapore
Peer valuation
It is definitely not easy to find a comparable since Nation has one of the biggest market share locally in FDWs. The next closest peer in the security space is Secura Limited (see my post here). The Secura Group is currently trading at 18.8x PER. Assuming a more conservative EPS of 2.28 cents and using a fair value range of 10-12x PE, it will imply a fair value of 23 cents to 28 cents. Assuming EPS increases to 2.772 Singapore cents, the fair value range will be 28 cents to 33 cents.
Conclusion
I quite like Advancer for the following reasons:
♦ Attractive entry valuation of 8x PE
♦ Dividend yield of more than 5%
♦ Stable recurring income
♦ Strong alignment of interest between management and investors
SAC Capital was most recently involved in another successful IPO, Acromec, which i rated 2 Chilli. Acromec has since tripled in share price. ^_^
I understand the placement was very well received and attracted institutional money. I also like to support IPO companies that have a public tranche even thoiugh the tranche of 2m is very small. Investors who want to try their luck at ATM will have to bid at least 50,000 to 100,000 shares to make it worth the effort.
Based on the above reasons, i am going to give Advancer a 3 chilli rating. I believe the IPO should be well received and will enjoy a nice pop on debut. Do note that Mr. IPO is vested.
Mr. IPO is a Chartered Financial Analyst and a Chartered Accountant. He currently works as an investment professional.
