Mun Siong Engineering Limited ("Company") is offering 107m New Shares at $0.20 each where 2m shares will be for public and the remaining 105m shares via placement. The Company is an integrated mechanical engineering and electrical and instrumentation service provider for the Process Industries and its major customers are the petroleum majors, petrochemical companies and multi-national EPC contractors.
Revenue increased from $26.2m in FY2007 to $67.7m in FY2009 and net profit before tax rose from $1.7m to $9.8m in the same period. Q1 2010 show a revenue of $14m and net profit of $2.1m. The offer will close on 20 Oct at 12pm and will commence trading on 22 Oct. The EPS based on post-invitation shares for FY2009 is 1.94 cents and that translate into a historical PER of 10.3x. The NAV per share (taking into account the IPO proceeds) will be around 8.38 cents. The market cap is around $83.34m at the issue price.
The comparable bigger EPC sompanies like PEC and Rotary are trading at less than 10x forward PEs. In this regard, for this small cap company, it is really priced on the higher side that is trying to list amidst positive IPO sentiments. The only good thing is that the company is raising funds by issuing purely new shares for growth and no pre-ipo vendors trying to flip and make a quick buck. Unfortunately there are better EPC companies trading a cheaper valuation and other than the low price per share of $0.20, i don't see many compelling reasons to invest in this company for the long term.