Jimmy 104189426 OP student2um : The target is 0.95.

Jimmy 104189426 OP : [Overview of VETECE IPO]
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IPO Price: RM 0.25
Market Capitalization: RM 98 million
Listing P/E: 14.93x
Application Deadline: 14 Aug 2024
Listed date: 28 Aug 2024
IPO Market: ACE
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#公司业务
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VETECE is mainly engaged in enterprise IT solutions, including providing implementation services, maintenance, support and professional services, and resale of hardware and software, and also has several well-known partners, such as Oracle and WSO2. Its main customers are from the telecommunications, finance, and technology industries in the Asia-Pacific region, such as TELEKOM, TERADATA, China Construction Bank, etc., but the main revenue still comes from local sources, with Malaysian customers contributing 96.4% (FY23) of total revenue.
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#IPO Details
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In this IPO, VETECE will sell 137 million shares, equivalent to 35% of the total share capital. Of these, 5% will be publicly subscribed to the public through a lottery, 2.5% will be subscribed to company insiders, and the remaining 27.5% will be subscribed to special individuals through private placement. It is worth mentioning that VETECE is exempt from MITI, so there is no need to abide by the indigenous fixation system.
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After the listing, VETECE's total share capital will reach 392 million shares, while the boss Mr. Tee will continue to hold 61.32% of the shares (previously 95.10%), and together with the other two directors, they will also hold a total of 64.78% of the shares, and these shares are also restricted by Moratorium. They cannot only be sold or transferred within six months after listing, even if they want to be sold 6 months later.
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#资金用途
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1.RM 24.5 million (27%) to renew and pay hardware and software license fees
2.RM 3.8 million (15%) to build the Software Solutions Center of Excellence (COE)
3.RM 3.3 million (13%) to expand operations in Singapore
4.RM 2.2 million (9%) launches new core products and services
5.RM 4 million (16%) payments on loans
6.RM 4.7 million (19%) pays listing fees
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#未来发展计划
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1. Entering the AI market
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VETECE will launch AI-driven data processing and analysis solutions that use artificial intelligence to improve the efficiency, decision-making, and innovation capabilities of customers in various industries.
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2. Strengthen enterprise application integration and data engineering and analysis solutions
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The company will explore new enterprise application integration and data engineering and analysis solutions with existing and new technology partners, and in addition to renewing hardware and software licenses from existing partners, they will also purchase licenses from new partners.
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3. Software Solutions Center of Excellence (COE)
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Simply put, it's about forming a specific team to be able to provide software solutions to overseas customers remotely in Malaysia. With COE companies, they can better expand their business to overseas markets.
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4. Expanding operations in Singapore
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VETECE plans to strengthen its Singapore business by recruiting talent and opening a Singapore office.
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#竞争优势
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1. Strong profitability
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Although VETECE's revenue performance is far below that of its peers (including RAMSSOL, Informina & MICROLN, the profit margin is far ahead. It can be seen that VETECE's revenue grew from RM 20 million in 2021 to RM 23 million in 2023, with a compound annual growth rate (CAGR) of 7.4%. Although this increase was not particularly impressive, the increase in profit margin was very impressive. Their FY21 Net profit for the year was only RM 3.1 million, but FY23 doubled to RM 6.5 million, mainly due to their profit margin rising from 15.7% to 28.4%.
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2. PE is lower than peers
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When VETECE was listed, PE was only about 15 times higher. This PE was lower than RAMSSOL and Informina's two peers, while MICROLN cannot be compared because of losses.
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#美中不足
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1. Too reliant on a single customer
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TELEKOM is currently VETECE's largest customer, and has contributed up to 45.60% of revenue in FY2023, so any changes in TELEKOM will greatly affect the company, but they have established a deep partnership since 2007.
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2. There may be strong selling pressure
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Just like the one mentioned, VETECE is exempt from MITI, so there is no need to comply with the indigenous fixed bond system. This seems a good thing, but they sell up to 27.5% through private placement, and this may cause a lot of selling pressure.
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