Eindec Corporation Limited ("Eindec" or the "Company") is offering 35.8m Placement Shares at $0.21 each for a listing on Catalist. The offer will end on 13 Jan 2016 at 12pm and there is no public tranche and i will not spend too much time researching into this Company. The market cap is S$22.6m based on the IPO price.
The Company is a regional clean air environmental and technological solutions group with diversified product lines across different market segments. The Company has an operating history since 1984 with 2 manufacturing facilities in Singapore and Malaysia.
Diversified Product Ranges
The diversified product range is listed below
While the prospectus looks promising, the financial statements somewhat painted a different picture. The sales stagnated over the last 3 years with declining profitability. Even the 1H results continued to show declining net profit. Without considering other factors and based purely on the financial results alone, i would have given this Company a miss.
Based on the IPO price of 21 cents, the Company is listing at a historical PER of around 21 divide by 1.27 = 16x. This is pretty expensive and over-valued in the light of declining EPS in 1H 2015. In 2014, the 1H results is actually better than 2H, so even where i gave it the benefit of doubling 1H 2015 EPS, the valuation is very high at 21 divided by 0.66 = 32x.
Future Business Plans
The Company started to market its own brand of purifiers in China. Given the poor air quality in China, it is a strategy that might have some potential but it is too early to tell.
What i like about the Company
- Audited by KPMG, a big 4 auditor
- Not withstanding the slowing Chinese economy, there could be some potential for China upside given the new parentage.
Some of my concerns
- Stagnant revenue and declining profitability
- Small cap company
- Ghost of the past in the poorly managed Kyodo Allied. How did it even get re-listed again!!
If there is a public tranche, i would have given it a zero chilli ratings. Given the bloodshed in the markets since Jan 2016, you can get bigger and better managed companies at half the valuation. Use your time to look for something better in the market instead. ^_^