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Wednesday, August 29, 2012

PASUKHAS - an IPO Overview

Investors are always on the hunt for a quick capital gain opportunity, especially in new listing counters. Today, we are taking a look at Pasukhas, a Mechanical and Engineering company en route to a listing  on ACE market of Bursa Malaysia on August 29. The Group had been in the industry for 27 years and had successfully completed over 500 projects across Malaysia, Indonesia, Sri Lanka, Jamaica and the Gulf Cooperation council countries.

Pasukhas Group's listing exercise involves a total public issue of 90 million shares at 12c per share (raising a total of RM10.8 million) of which 55 million is by way of private placement to identified investors (which had been successfully taken up), 10 million to the public and the balance 25 million to eligible directors and employees. The public portion of 10 million shares had been oversubscribed 74.04 times, which indicates a very high market interest and demand. 

For its last financial year ended December 31 2011, the Group's revenue fell to RM25.82 million from RM40.48 million in 2010 and RM46.41 million in 2009. Similarly, the Group's net profit declined to RM1.23 million from RM3.89 million in 2010 and RM4.29 million in 2009. For the financial period ended 31st March 2012 (1st Quarter result), the Group posted a revenue of RM5.2 million and a net profit of RM0.77 million.

Pasukhas's performance could certainly be better. From the comparative financials for the 3 years, it clearly indicates a trending down in revenue and profitability. Saying so, the decrease in revenue could be due to factors/constraints such as undeployed projects on hand (justified by the RM68 million order book), lack of funds in capitalizing opportunities / market expansion and others. In such case, the listing of Pasukhas and having access to additional market funds will do much good for the business in the future. The Group targets to bid for some RM100 million worth of jobs oversea next year. Its has a healthy order book of RM68 million which can last the group for at least 18 months. Amid the weaker results, investors with a longer-term growth horizon could see it as a buying opportunity.

Upon listing at IPO price of 12c, Pasukhas will have a market capitalization of RM35.4 million. With such huge public portion oversubscription and the successful placement of the other balance of shares, I do not foresee any downside risk to the IPO price. Instead, I predict that the upside drive will be huge in the 1st half session of trading, possibly driving the stock upwards towards 18c (a potential 50% upside on IPO price). With strong market forces and support momentum in the next couple of trading days, the stock could even see a high of 30c.

For those who managed to get a piece of the 10 million public shares, they should be looking forward to some big ang pows and for the unsuccessful, there's always an opportunity to punt the market when it opens. It will definitely stay as one of the top ten counters for next few trading days. The stock name will be traded under PASUKGB.

This article is not an encouragement or call to buy or sell any securities. Personally, I did not subscribe to the IPO shares (with much regret now) but MAY be doing some small punting when it opens (depending on the price).