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Aztech World Ltd

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Aztech World Ltd (“Aztech” or the “Group”) is providing 68.12m shares at $1.28 every for its IPO the place 3.5m shares might be for the general public with the remaining being positioned out. The general public supply will shut on 10 March at midday and start buying and selling on 12 March 2021. The market cap based mostly on the IPO worth might be $990.4m.

Historical past of Aztech World Ltd

For brand spanking new buyers who want a historical past lesson, Aztech was listed in 2006 however privatised in Feb 2017 and on the level of privatisation, it was valued at $20.4 million. See outdated article here

The  offeror mentioned the delisting would offer firm administration larger flexibility to handle the prevailing companies of the group whereas exploring alternatives with out the attendant prices, regulatory restrictions and compliance points related to its listed standing on the SGX. It added that Aztech has no current want for entry to Singapore’s capital markets and is unlikely to faucet these markets to finance its operations within the foreseeable future. It has not carried out any train to boost money funding on the SGX prior to now 5 years.

The general public providing of 68.12m and eight.88m cornerstone by the seller and that quantities to 77m x $1.28 = $98.56m going on to the pockets of the promoting vendor. (I have not even included the over-allotment possibility). Distinction that in opposition to the $20.4m valuation when it was privatised, the seller made some huge cash simply by delisting and relisting it. I have not even talked about the roasted duck that was paid by the shareholders again then. Have the duck and eat it? Shareholders who voted in opposition to the privatisation are most likely feeling aggrieved, to not point out those who were previously burnt by it and he did not even trouble to attend the privatisation shareholders’ meeting.

So why is the market so forgiving and welcoming Aztech again with open arms after a brief 4 years?  Let’s check out what occurred from 2018 to 2020 and you will discover the lacking duckie too.  

My solely takeaway is that the market has a brief reminiscence.  Whereas I’ve not invested in Aztech beforehand, the entire episode simply leaves a foul style. You’ll be able to say all you need in regards to the rationale for delisting however you may’t deny the truth that many retail buyers had been left excessive and dry by the identical founder – Michael Mun. It isn’t as if a brand new proprietor took over and saved the corporate. This is identical one who led Aztech from day one, broaden to non-core F&B enterprise and to the doldrums. After he privatised the corporate, he bought the non-core companies away, expanded into IoT and now has the audacity to ask the market to imagine in him as soon as extra.  

The query is whether or not he may have executed the identical with out de-listing the Firm but when he has executed so, the end result for him personally would have been very completely different as he owns a smaller % of the Firm previous to de-listing.

As a mark of respect for buyers who had been beforehand burnt – the protection beneath might be factual (i.e. from the prospectus) and minimal.   

About Aztech World Ltd

Aztech is a key expertise enabler for the related world of tomorrow, with a deal with offering one-stop design and manufacturing providers. Its key merchandise are IoT Units, Information-communication and LED lighting merchandise.

To place it merely, it’s an OEM to model house owners. See image beneath.

Key Funding Highlights

Key Monetary Highlights

The Firm managed to enhance EBITDA margin from 5.2% to fifteen% from FY2017 to FY2019.

Based on the prospectus, the Firm is itemizing at a PER of 17x based mostly on FY 2019 outcomes., inline with different OEM producers listed on SGX.  

Enterprise methods and future plans

The Firm is elevating $198.4m, of which $50m might be used to broaden its manufacturing services, $50m for enlargement and M&A and $58.6m for working capital.

Cornerstone Buyers and Over-allotment possibility

Aztech managed to garner assist from a gaggle of top of the range cornerstone buyers who agreed to amass 163,880,000 shares. They embrace Affin Hwang, AIA, Eastspring, EPF (provident fund of Malaysia), FIL, Hong Leong, HSBC, ICH, JPM , Tokio Marine and the checklist goes on. 

As well as, there may be an over-allotment choice to over-allot as much as 13.6m shares to assist stablise market if wanted. I’m actually shocked on the blue chip checklist of buyers. 

You’ll be able to see that the shares are held tightly by Michale Mun and never broadly distributed, not even to his spouse, sons or the administration crew.

Dividends

Aztech intends to pay 30% of its web revenue after tax for FY2021 and FY2022

Administration Crew

Michael Mun is the CEO (aged 71) and he has most likely groomed his son Jeremy Mun (aged 45) to take over him. Jeremy is at the moment the COO and Govt Director. One other son Ivan Mun (aged 39) is a Vice President in Gross sales & Advertising. 

Peer Valuation

At 17x PER historic, Aztech is priced closed to Enterprise Manufacturing whereas lots of its friends (together with my favourite UMS) is buying and selling at 12-15x.

Mr. IPO’s chilli rankings   

I’m not positive why Aztech deserves a score after what they’d executed prior to now. It isn’t as if the Firm goes for a steal. At 17x PER, you should purchase Enterprise Manufacturing in case you actually like OEM publicity. 

Alas, the Vendor goes to be have an enormous pay day regardless of screwing up buyers prior to now (pardon my french), and with a lot of respected institutional buyers backing him some extra! 

Having mentioned that, I perceive the location tranche was fairly sizzling however the ebook constructing was executed  earlier than the current promote down on NASDAQ.  

Will it’s completely different this time? You be the choose however I’m going to provide him a zero chilli.

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