UG Healthcare

[greengiraffe]

Malaysia-based latex glove maker launches IPO at 21.5 cents apiece
Published on Nov 28, 2014 6:26 PM


By Dennis Chan

SINGAPORE - Malaysia-based UG Healthcare Corp launched its initial public offering (IPO) for a Catalist listing at 21.5 cents apiece.

The company, which manufactures and distributes natural latex and nitrile examination gloves, is offering 28.8 million shares to raise about $4.2 million in net proceeds.

The sum raised will be deployed to

* expand production capacity;

[weijian]

Malaysia-based latex glove maker launches IPO at 21.5 cents apiece
Published on Nov 28, 2014 6:26 PM


By Dennis Chan

SINGAPORE - Malaysia-based UG Healthcare Corp launched its initial public offering (IPO) for a Catalist listing at 21.5 cents apiece.

The company, which manufactures and distributes natural latex and nitrile examination gloves, is offering 28.8 million shares to raise about $4.2 million in net proceeds.

The sum raised will be deployed to

* expand production capacity;

Listing costs are 28.8mil*21.5cts - 4.2mil = 2mil. That is ~33% of gross proceeds and 40% of net proceeds!

[CityFarmer]

The fact sheet and IPO preliminary prospectus are available via the company web site below

http://ughealthcarecorporation.listedcompany.com/

The Edge article on the IPO below.

Malaysian glovemaker UG Healthcare to sell 28.8 million shares at 21.5 cents each in Singapore IPO

SINGAPORE (Nov 29): UG Healthcare Corporation, an established Malaysia-based manufacturer and distributor of examination gloves, is launching an IPO on the SGX.

UG Healthcare manufactures and distributes natural latex and nitrile examination gloves under its own brands including its “Unigloves” brand name as well as third party labels where it is engaged as original equipment manufacturer.

The group also distributes ancillary products such as surgical, vinyl and cleanroom gloves, face masks and other medical disposables.

While its gloves are used predominantly in the healthcare industry, they are also used across a diverse range of industries such as laboratories, food handlers, automotive, beauty and cleanroom.

The company said it lodged its IPO offer document with the bourse operator yesterday (Nov 28).

In the IPO, 28.8 million shares are being offered for subscription by way of offer and placement at the invitation price of 21.5 cents per share.

The invitation comprises 1.8 million shares by way of offer to the public in Singapore and 27 million shares by way of placement to retail and institutional investors in Singapore.

UG Healthcare plans to use the net proceeds of $4.22 million for the expansion of the group’s production capacity, sales and distribution network, and R&D efforts of new products.
...
http://www.theedgemarkets.com/my/article...gapore-ipo

[CityFarmer]

A glance on the IPO prospectus,

- Historical PER base on FY2014 result is around 7
- Price / Net OCF is around 6

It seems a quality IPO, that worth a further look.

[hh488]

Isn't this IPO company activities comparable to Riverstone?

Riverstone IPO price was 26.8 ct in 2006; 1st day close was 31.4 ct.

Currently PE is 16 times at 96 cts. Comparable??

[Tiggerbee]

Why don't they list in Bursa if they can fetch higher valuation there?

[valuebuddies]

There are few things I would like to highlight on this IPO:

1. There are no cornerstone investors
2. Small cap tend to have liquidity problem
3. Hard to attract interests from funds due to its low market capitalisation
4. More than 60% of COGS from raw materials, which currently at historical 5-year low (source: http://www.indexmundi.com/commodities/?c...&months=60)

Obviously FY2011 results don't look good and probably the reason why it was excluded from the prospectus, the price of rubber fluctuate a massive 4 times over the last 5 years, from the high of nearly 290c/pound to current low of 70c/pound, a valid question to ask is what if the rubber price rebound? The Lees know it and so here comes the IPO at the right timing (p/s: probably they never expect the oil to continue to slump).

IMO, valuation wise is definitely not as cheap as many would thought, but it is definitely interesting to note that they have accumulated 26M of retained earnings with 4M equity over the last 25 years of operation, not counting on the dividends declared if any. My take, just hit and run ...

[valuebuddies]

Just to add, small public tranche, you probably get less than 10 lots if you press from ATM which is less than 2k in value, meaningful? Still contemplate whether to subscribe ...

[CityFarmer]

There are few things I would like to highlight on this IPO:

1. There are no cornerstone investors
2. Small cap tend to have liquidity problem
3. Hard to attract interests from funds due to its low market capitalisation
4. More than 60% of COGS from raw materials, which currently at historical 5-year low (source: http://www.indexmundi.com/commodities/?c...&months=60)

Obviously FY2011 results don't look good and probably the reason why it was excluded from the prospectus, the price of rubber fluctuate a massive 4 times over the last 5 years, from the high of nearly 290c/pound to current low of 70c/pound, a valid question to ask is what if the rubber price rebound? The Lees know it and so here comes the IPO at the right timing (p/s: probably they never expect the oil to continue to slump).

IMO, valuation wise is definitely not as cheap as many would thought, but it is definitely interesting to note that they have accumulated 26M of retained earnings with 4M equity over the last 25 years of operation, not counting on the dividends declared if any. My take, just hit and run ...

To add-on.

The company FY2014 revenue has 59% (latex gloves) and 35.3% (nitrile gloves). The focus has been shifted since FY2012, from 69.4% (latex glove) and 26.2% (nitrile glove). Nitrile raw material price has been pretty stable, unlike rubber price. The company might be able to accelerate the shift, after IPO and reducing the impact of rubble price.

The company business model is still distributors base, with more than half of the revenue from top 2 customers. The business model is pretty the same as Hartalega's. Hartalega's GPM and NPM are >30% and >20%, while the company GPM and NPM are <20% and <10% base on 3-years average. Competition is a real issue for the company.

The low valuation is there for a good reason, I guess.

(not interested in the IPO)

[valuebuddies]

Some key data extracted with CIMB/SGX:

Name / GPM / NPM / PE / PTB

Top Glove / NA / 8.014 / 15.671 / 2.16
Supermax / NA / 9.881 / 11.507 / 1.507
Kossan / NA / 10.793 / 20.445 / 3.551
Hartalega / NA / 17.554 / 22.185 / 4.727
Adventa / NA / 13.487 / 19.214 / 2.324
Intergrated / 6.439 / 1.636 / NA / 7.343
Careplus / 15.013 / 6.354 / 80.292 / 2.238

UG seems not so bad