IPO Series - Underground Utilities Engineering Solution Provider

UUE HOLDINGS BERHAD 0301

Timetable of IPO
Opening of application: 28/5/2024
Closing of application: 18/6/2024
Balloting of application: 21/6/2024
Tentative listing date: 2/7/2024

Info of IPO
Enlarged no. of shares upon listing: 608.292M
IPO price: RM0.24
Market capitalization: ≈RM146M
Estimated funds to raise from Public Issue: ≈ RM30M
PE ratio = 10.34x (based on FY2023)

Business Overview
Principle activities:

1) Underground utilities engineering solutions

2) Manufacturing and trading of HDPE pipe
Industry involves: Electricity, Telco
Location of business: Malaysia and Singapore

Utilization of Proceeds
Purchase of machinery and equipment (RM15.75M or 52.6%)
General working capital (RM10.893M or 36.3%)
Estimated listing expenses (RM3.333M or 11.1%)

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

Financial Summary
-As of FY2023, the company was holding an amount of RM204.2million of contract from its customers, where Komasi Engineering contributed RM78.5million, Sutera Utama contributed RM91.5million, Wee Guan Group contributed RM33.1million, and others contributed RM33.1million.
-The group has maintained a net profit margin of above 10%, where FY2022 recorded the highest, 19.5% respectively.
-From FY2023, the group has shown RM12.08 million of net cash generated from operating activities, which has a CAGR of 9.12%.
-From the report of TNB and Sarawak Energy Berhad, the power infrastructure utilities market in Malaysia, based on the capital expenditure incurred for recurring electricity generation, transmission, and distribution, increased from RM5.7billion in 2016 to RM11.1billion in 2023. It shows a CAGR of 9.8%.

Personal Opinion
-The power & utilities sector is believed to benefit from the recently announced master plans, etc.
-The company is a solution provider for the HDD (Horizontal directional drilling) method of laying pipes and also employs the open cut and micro trenching excavation methods.
- The company manufactures and trades HDPE pipes, primarily to support our underground utilities engineering projects.
-The equity value is higher than the liabilities, which may be considered as a health sign of the company.
-The company revenue is showing an increasing trend, if the trend continues and benefits from the demand for power & utilities, it may further lower the PE ratio.

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By: Jshen Ng