IPO Series - Northeast Group Berhad - The Next UWC / SFP Tech ? Precision Engineering Components Manufacturer

Info of IPO
Enlarged no. of shares upon listing: 740 million
IPO price: RM0.50
Market capitalization: RM370 million
Estimated funds to raise from Public Issue:  RM84.49 million
PE ratio = 20.15x (based on FY2023)

Business Model

Figure 2: Business model of Northeast Group Berhad
Source: Northeast Group Berhad IPO prospectus

Precision Components

Figure 3: Application of precision engineering components
Source: Northeast Group Berhad IPO prospectus

Utilisation of Proceeds

Figure 4: Utilisation of proceeds of Northeast Group Berhad
Source: Northeast Group Berhad IPO prospectus

Dividend Policy
-The group does not have a dividend policy

Major Customers and Major Suppliers

Figure 5: Major customers and suppliers of Northeast Group Berhad in FPE2024
Source: Northeast Group Berhad IPO prospectus

Financial Summary

Fiure 6: Profit & Loss statement of Northeast Group Berhad

Figure 7: Financial position of Northeast Group Berhad

Financial overview, industry market, and personal opinion
-The group has recorded its highest PAT and PAT margin in FY2022, with RM38.07 million and 26.34% respectively. However, the group’s revenue is closely tied to the price movement of commodities, including aluminum and copper.
-The group business is similar to certain famous precision engineering components companies like UWC Berhad, SFP Tech, Coraza, etc., which outperformed during the listing day. The major revenue by currency is USD from FY2021 to FPE2024, which has potentially affected the group’s revenue due to the change in FOREX value.
-Global semiconductor demand is still in the recovery stage, and the recent hot topics like AI and data centers might boost the sentiment of these related companies.

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