Tuesday, 24 June 2014

SMJ International Holdings Ltd



SMJ International Holdings Ltd ("SMJ" or the "Company") is placing out 20.24m shares at $0.28 each of which 14m are new shares and the balance are vendor shares. There is no public offer and the Company will list on 30 June 2014 on the Catalist. The market cap of the company is $21.84m based on the IPO price.

SMJ is a carpet specialist serving the commercial and institutional sectors in Asia and has a track record of more than 25 years.


If you want to know exactly what they do... the picture below will tell u. They lay carpets for your work place.


Financial Highlights


The charts shows a stagnating top and bottom line over the last 3 years. Nothing exciting or worth shouting about.



Based on the fully diluted EPS of 3.5 cents, the IPO is valued at 8x FY2013 PE. It is probably fairly valued.

The NTA of 19c will provide a psychology support should the price fall on its debut.

Use of Proceeds


You can see from the use of proceeds who is the biggest beneficiary from its IPO! It will be the service providers!

Shareholders


This is a family owned business with the family still owning 70% of the company post IPO and the two sisters are the CEO and deputy CEO.

Dividend Policy

The Company intends to distribute 30% of its profit after tax as dividends to its shareholders for FY2014 and FY2015. Assume EPS remains the same as FY2013, the back of the envelope yield at IPO price will be around 3.75%.

Mr IPO's views and Conclusion

Since there is no public tranche and that i am not vested, i will not spend too much time on it. This is a small cap company in a competitive environment. 
Put yourself in the shoes of the corporate renovating the office, do you really care if the carpet in your office is of the SMJ brand and do you even bother to contract SMJ directly or will you just leave it in the hands of the interior designer? From the interior designer perspective, you will just source for the cheapest available carpet of decent quality. Would you even bother if the carpet has "500 threadcount" and is of SMJ brand? In other words, i don't think SMJ has any "pricing" clout when it comes to supplying the carpet. It will have to fight it out with the cheapest supplier and the supplier can be from Indonesia, Malaysia or China.Maybe you might want to find out what brand of carpet your office is using tomorrow and see if you can spot the SMJ brand!

I will give it a 0 Chilli rating and will not apply even if there is a public tranche. The shares are probably better suited to be placed out to friends and family and i am sure HL Finance will do a good job in that regard.

Happy IPOing
  

17 comments:

Anonymous said...

SMJ has a wide range of carpet designs and colours at different price ranges to support different requirements. So if you are going for a budget range, they have that to. Its a one-stop carpet shop so to speak. They are known by interior designers or contractors in Singapore. In Asia, a lot of the offices are leased so every time someone moves office, they get new carpet.

For some of SMJ's large projects you can refer to their website: http://smjf.com.sg/project-reference

Anonymous said...

Initially SMJ looks like a boring IPO. It was a miracle they can sell at 8x for the IPO.

However, if you take a closer look, this might a good potential company geared for growth.

Having its own brand and good distribution network, there is plenty of room for growth if they introduce other products besides carpets.

So Mr IPO, you could be wrong this time :)

James said...

It's amazing that they're spending $1.2m in professional fees to raise $3.9m.

Seems like the company is feeling rich and wants to get listed for the fun of it.

Anonymous said...

Come on Singaporeans, support your home grown companies a bit lar.

There are similar good Singapore catalist companies with humble beginnings like SMJ but have grown to decent size and upgraded to Mainboard. I benefited from buying their stocks when they were still relative small in size ....

I am going to try SMJ also!

Ryan said...

The first comment posted above looks like a statement coming from the company's corporate comms office... :P

Mr. IPO said...

Probably from the professional communications company they paid....

Mr. IPO said...

Of course I may be wrong lah. :) I certainly hope they can grow bigger... After all that is what the catalist board is for...

David said...

Agree to support local brand. There are so few. A lot of local listed companies listed are sub-con or sub-sub-cons,few have a brand to create their own market.

Anonymous said...

Did you see the PE for IPS Securex??

Fidel Martin said...

Consent to help nearby brand. A great deal of nearby recorded organizations recorded are sub-con or sub-sub-cons,few have a brand to make their own particular business.

Iskandar Singapore Property

Ron said...

OSIM is it a local brand??

Kiasu said...

In times like this only going for dividend stocks.

Mr. IPO said...

Yes. Osim is local brand.

Anonymous said...

Hi mr ipo, are you doing a write-up on Fraser Hospitality Trust? :)

Mr. IPO said...

Yah. Trying to do it tomorrow. :)

Cheong-ah said...

Wah, you guys are right ... SMJ is up 23% since this morning.

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