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27-06-2017, 10:24 PM
The business isn't quite clearly explained in the prospectus, but in short i think shopper360 is a Malaysian business, which buys advertising space from supermarkets and sells them to advertisers.
http://infopub.sgx.com/FileOpen/2b_Shopp...ileID=5392
1) Most of its advertisers ostensibly are the product owners of goods sold in supermarkets. Nestle is their biggest customer which contributed 21.2% of FY16 revenue. Other notable food and beverage customers include F&N (7.4%) and Fonterra (5.5%). The prospectus doesn't identify the significant customers for each of its 3 business segments, but I suspect revenue from the F&B customers are mainly for 'In-Store Advertising;' consisting of the traditional mediums of physical advertisement. The revenue for this segment has been stable; from RM29m in FY14 to RM32m in FY16.
2) The interesting part of shopper360's business is that it is increasingly selling advertising space to non-supermarket product owners like Samsung (12.5%; 0% in FY14) and Huawei (10.6%; 0.6% in FY14). I suspect the revenue from these electronic devices customers are for its 'field force management' segment, which hires people to promote/sell products. Revenue from this segment has grown from RM39m in FY14 to RM71m in FY16. In FY16, it has close to 1,200 temporary employees hired on a contract basis, presumably hired for this purposes. This compares to 251 employees, most presumably engaged in the 'In-Store Advertising' segment, in the entire group.
3) Before electronic devices customers became a big part of their revenue in FY14, its net profits was RM5.3m. Assuming that electronic devices customers decide that supermarkets are not an ideal location to sell and shopper360 loses this segment of its business, we can assume an RM5m profit from its long-time customers. I might be shortchanging the prospects of shopper360, but I have no insights on the marketing strategies on manufacturers of electronic devices.
3) Its FY16 profit of RM13.3m consist of a RM4.6m one-off gain on property disposal. What's new, right?
4) The founding family long sold a stake of the business to a PE unit which belongs to Felda. All 20m vendor shares are sold by Felda, which is now halving its stake but will still hold about 20% post placement.
5) The market capitalisation, post placement, is S$33m, which is about RM102m. If I were to assume a conservative stable profit of RM5m each year, this prices shopper360 at a p/e of about 20. If profits are assumed to be FY16's RM8.7m, then p/e is 11.7. Still not attractive enough. And finally, local investors will be exposed to RM exchange rates. From the looks of it, it is a big win for Felda and shopper360, but not so much for the IPO investors.
http://infopub.sgx.com/FileOpen/2b_Shopp...ileID=5392
1) Most of its advertisers ostensibly are the product owners of goods sold in supermarkets. Nestle is their biggest customer which contributed 21.2% of FY16 revenue. Other notable food and beverage customers include F&N (7.4%) and Fonterra (5.5%). The prospectus doesn't identify the significant customers for each of its 3 business segments, but I suspect revenue from the F&B customers are mainly for 'In-Store Advertising;' consisting of the traditional mediums of physical advertisement. The revenue for this segment has been stable; from RM29m in FY14 to RM32m in FY16.
2) The interesting part of shopper360's business is that it is increasingly selling advertising space to non-supermarket product owners like Samsung (12.5%; 0% in FY14) and Huawei (10.6%; 0.6% in FY14). I suspect the revenue from these electronic devices customers are for its 'field force management' segment, which hires people to promote/sell products. Revenue from this segment has grown from RM39m in FY14 to RM71m in FY16. In FY16, it has close to 1,200 temporary employees hired on a contract basis, presumably hired for this purposes. This compares to 251 employees, most presumably engaged in the 'In-Store Advertising' segment, in the entire group.
3) Before electronic devices customers became a big part of their revenue in FY14, its net profits was RM5.3m. Assuming that electronic devices customers decide that supermarkets are not an ideal location to sell and shopper360 loses this segment of its business, we can assume an RM5m profit from its long-time customers. I might be shortchanging the prospects of shopper360, but I have no insights on the marketing strategies on manufacturers of electronic devices.
3) Its FY16 profit of RM13.3m consist of a RM4.6m one-off gain on property disposal. What's new, right?
4) The founding family long sold a stake of the business to a PE unit which belongs to Felda. All 20m vendor shares are sold by Felda, which is now halving its stake but will still hold about 20% post placement.
5) The market capitalisation, post placement, is S$33m, which is about RM102m. If I were to assume a conservative stable profit of RM5m each year, this prices shopper360 at a p/e of about 20. If profits are assumed to be FY16's RM8.7m, then p/e is 11.7. Still not attractive enough. And finally, local investors will be exposed to RM exchange rates. From the looks of it, it is a big win for Felda and shopper360, but not so much for the IPO investors.
