Following jewellery retail chian owner Soo Kee Group Ltd’s (SGX: 42G) initial public offering (IPO) last month, the next jewellery business in line to get listed is TLV Holdings Limited. Here’s what you need to know about TLV Holdings’ IPO. 1. The business TLV Holdings is a holding company and would likely not be a household name among Singaporeans. But, a part of its operating business – the jewellery retail chain TAKA Jewellery – is likely to ring some bells among the local crowd. Currently, TLV Holdings has two main business segments, namely Retail and Pawnbroking and Wholesale and Exhibition. As part of its…
Here’s what you need to know about TLV Holdings’ IPO.
1. The business
TLV Holdings is a holding company and would likely not be a household name among Singaporeans. But, a part of its operating business – the jewellery retail chain TAKA Jewellery – is likely to ring some bells among the local crowd.
Currently, TLV Holdings has two main business segments, namely Retail and Pawnbroking and Wholesale and Exhibition.
As part of its business activities in the latter segment, TLV Holdings participates in international jewellery exhibitions where it sells jewellery on a wholesale basis.
The Wholesale and Exhibition segment is currently TLV Holdings’ most important segment, accounting for 50.4% and 70.7% of the company’s total revenue and pre-tax profit, respectively, in FY2015 (fiscal year ended 31 March 2015).
TLV Holdings’ Retail and Pawnbroking business houses the company’s TAKA Jewellery and Lovis Diamonds jewellery retail chains.
There are 19 retail outlets under the company at the moment based on those two chains. This segment had really expanded between FY2014 and FY2015 and you can see this in the table below:
Source: TLV Holdings’ IPO prospectus
2. The IPO
TLV Holdings will be offering 76.459 million shares of itself in the IPO at S$0.22 apiece. Of those IPO shares, 70.777 million will be newly-created shares while the remaining (5.682 million) while come from an existing shareholder of the company.
Gross proceeds of S$15.6 million could be raised by TLV Holdings from the IPO.
The company has the intention to utilise 46.3% of that sum as working capital. 19.3% of the gross proceeds has been earmarked for the expansion of TLV Holdings’ retail business while a further 19.3% is allocated for use in growing the exhibitions business. The remaining sums are for expenses related to the IPO.
TLV Holdings’ shares will begin trading on the Catalist exchange at 9am on 17 September 2015. At its listing price of S$0.22 per share, TLV Holdings will have a market capitalisation of S$124.4 million after the IPO.
3. Future growth plans
The company intends to grow both its retail and exhibition business through enlarging its retail network and broadening its product range.
Moreover, TLV Holdings is also looking at moving into other complementary businesses through more partnerships globally.
Using its numbers from FY2015 and its listing price of S$0.22, TLV Holdings is being valued at 11.6 times it historical earnings and 1.3 times its book value.
A price-to-earnings (PE) ratio of 11.6 may not seem high – that’s especially so when considering that the SPDR STI ETF (SGX: ES3), an exchange-traded fund tracking Singapore’s market barometer the Straits Times Index (SGX: ^STI), has a PEratio of around 11.5 at the moment.
But, it’s worth noting that the number is still significantly higher than the PE of 7.6 that Soo Kee Group is currently trading at.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own shares in any of the companies mentioned above.