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Saturday, 1 November 2014

MS Holdings Limited

MS Holdings Limited ("MSH" or the "Company") is offering 27m shares (comprising 20m new shares and 7m vendor shares) at $0.25 each for a listing on Catalist. The listing will end on 5 Nov 2014 and will start trading on 7 Nov 2014 at 9am. There is no public tranche.

The Company is a crane rental company based in Singapore and rent out its cranes on a daily or short term basis. The Company has a fleet of 25 mobile cranes and 5 lorry cranes.


This is a pretty straight forward business so i am not going to provide much analysis. The key concern i have will be whether there is an oversupply situation in Singapore and whether the construction boom is going to end soon. Below is a pictorial view of what the Company has to say regarding their prospects.

Selected Financial Information


Based on the enlarged share capital and unaudited pro-forma FY2014 EPS of Singapore 3.5 cents, the Company is listing at a Price Earnings Ratio of 7.1x

The post IPO NAV is around 24.4 cents, which is close to the IPO price of 25 cents.

The market cap is around $25.5m.

Peers valuation

Tat Hong is a giant with a market cap of $500m compared to MS Holdings' market cap of $25m. The key ratios for Tat Hong is enclosed below for your information. While Tat Hong has a higher PE ratio, it is actually trading at 0.8x book value, which is "better value" than MS Holdings.

Another peer that is smaller than Tat Hong will be Sin Heng Heavy Machinery. Sin Heng is trading at around 10x PE and 0.8x Price to Book.

Assuming a 8-9x PE for MS Holdings, the implied fair value range will be between 28c to 32c.
Assuming a 0.8x to 0.9x PB for MS Holdings, the implied fair value range will drop to between 20c to 22c

What i like about the Company
  • Stable business with good margins
  • Fair valuation
My Key Concerns
  • Company is highly leveraged. The assets are acquired using finance leases and bank borrowings
  • The business is not really scalable unless they move out of Singapore
  • The construction industry is cyclical and the boom is probably tapering off in Singapore
  • Low barrier to entry
  • Yap Family business. 

Since there is no public tranche, the chilli ratings don't really matter any more. For the records's sake, I will give it a zero chilli rating....zzz....zzz...investors who like to have exposure to this particular segment of the construction industry may consider Tat Hong who may be able to survive a downturn better than MS Holding.

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