Grand Venture Technology Limited IPO

The first IPO for 2019. Hope It's a good start for the new year.

---

Grand Venture Technology Limited is offering 42.918mil shares for its IPO on Catalist at $0.275 per share. These comprise a public tranche of 800,000 shares and a placement tranche of 42,118,000 shares. The IPO will close on 11th Jan 2019 at 12 pm and starts trading on 23rd Jan 2019. The market cap for this IPO is $64.4mil.

Company Overview

Established in Singapore in 2012, Grand Venture Technology (“GVT”) is a trusted manufacturing solutions and services provider for the semiconductor, analytical life sciences, electronics and other industries. Backed by a highly experienced management team, GVT delivers engineering, assembly, testing and product life cycle management solutions. GVT operates out of its facilities in Singapore, Malaysia (Penang) and the PRC (Suzhou) to serve a portfolio of customers that are some of the largest OEMs in these industries.

What's their business

GVT provide manufacturing solutions and services provider for the semiconductor, analytical life sciences, electronics and other industries.

CVT Business

How do GVT fare in the business

Financial Hightlights

Key Profit and Loss

The loss in FY2015 is due to low production volume as GVT is fulfilling the audit and accreditation process to be an approved vendor and to clear first articles inspections of certain new customers and products. FY2016 GVT ramp up their production causing the gross profit to increase.

GVT is listing at PE ration of around 11.2 PE and $0.078 NAV which is quite expensive compare market cap to equity.

What is good about GVT

• Good range of products from small high-precision components to large structural components.
• 10-year agreement with SICO Technology GmbH and Sico Asia Quartz Pte Ltd to build up quartz and ceramic machining capabilities which not much competitions in the market with the knowledge.
• Track record in optimizing operations, implementing strategic plans and creating shareholder value
• Losses in FY 2015, other than that YoY is making profit and new components are in production for better margin.

What is not so good about GVT

• Small pool of major customers and they accounted for an aggregate of 78.7%, 92.3%, 89.7% and 94.8% FY2015, FY2016, FY2017 and HY2018 respectively.
• Raw material prices for aluminium and stainless steel fluctuate and will have a significate impact on P&L.

Conclusion

At an expensive listing price, I feel that It's not worth to invest and the risk of raw materials supply and pricing. The profit margin might not be as current and might see a big drop compare to current profit margin.