IPO Series - Transport IT Solution Provider

GO HUB CAPITAL BERHAD 0311

Timetable of IPO
Opening of application: 12/6/2024
Closing of application: 20/6/2024
Balloting of application: 24/6/2024
Tentative listing date: 3/7/2024

Info of IPO
Enlarged no. of shares upon listing: 400M
IPO price: RM0.35
Market capitalization: RM140M
Estimated funds to raise from Public Issue: ≈ RM37.51M
PE ratio = 19.75x (based on FY2023)

Business Overview
Principle activities:

1) Provision of enterprise IT services (transportation IT solutions)

2) Maintenance and support services (terminal management services)
Industry involves: Transportation (Rail and bus) and other IT solution
Location of business: Malaysia and the Philippines (<2%)

Utilization of Proceeds
Business expansion (includes expansion of the workforce, capital expenditure on equipment and tools, acquisition of Star Central Office Tower, D&D (Design & Development), set-up of new integrated center, and business development and marketing) - (RM24.715M or 65.88%)
Repayment of bank borrowings - (RM4M or 10.66%)
Working capital - (RM4.798M or 12.8%)
Estimated listing expenses - (RM4M or 10.66%)

Dividend Policy
The group doesn’t have any formal dividend policy.

Financial Summary
-Based on the selected industry players (10 companies exclude GO HUB) for bus, bus terminals, and rail, GO HUB CAPITAL has maintained a PAT margin of more than 10%, recorded 16.12% in FY2023 which was the highest.
-The gross profit of the group has increased from RM9.147M in FY2020 to RM22.463M in FY2023, producing a CAGR of 34.92%.
-The borrowings of the group reduced from the highest of RM13.52M in FY2021 to RM8.613M in FY2023, hence enhancing the current ratio from 1.47 to 1.98 times.
-The revenue contribution percentage from the bus in FY 2020, FY2021, FY 2022, and FY2023 were 36.78%, 4.41%, 38.31%, and 27.06% respectively while the revenue contribution percentage from the rail in FY 2020, FY2021, FY 2022, and FY2023 were 62.82%, 7.88%, 58.30%, and 71.37%.

Personal Opinion
-Based on historical IPOs, IT solution companies have drawn positive attention from investors.
-The PAT was showing an increasing trend (based on FY2020) with a CAGR of 46.38%.
-The construction of mega infrastructures is believed to contribute more revenue to the group in the future.
-The increment of revenue contribution from rail may be seen as a trend of people preferring to take the rail rather than the bus based on records.

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