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What Investors Need To Know About the Business of Acromec Ltd, The Newest Stock In Singapore

Acromec Ltd (SGX: 43F) is the newest stock in Singapore’s stock market. Its listing happened just a few days ago when its shares started trading for the first time at 9am on Monday on the Catalist board.

Here are some interesting and important things about the company’s business for investors to keep in mind:

  1. The company has a current stock price of S$0.32, which is an amazing 45% gain from its listing price of S$0.22.
  2. Acromec calls itself “an established specialist engineering services provider in the field of controlled environments.” If that sounds like a real handful, then read on as I breakdown its business.
  3. Acromec is basically a contractor with a focus on the design, engineering, and construction of buildings and facilities for its clients. But instead of building, say, residential or commercial towers, the company concentrates on building specialized facilities such as laboratories, cleanrooms, and medical and sterile facilities.
  4. Although the construction business described in Point 3 is not recurring in nature, Acromec does have some recurring revenue due to its small but growing maintenance business. Acromec would provide maintenance and repair work for facilities and the equipment within it; this service is also provided to facilities that are not built by the company.
  5. Some of Acromec’s customers include: (a) Major hospitals in Singapore sch as Singapore General Hospital, National University Hospital, and Changi General Hospital, (b) research outfits such as A*Star and the National University of Singapore, and (c) commercial entities such as Procter & Gamble.
  6. Acromec is still very much a Singapore-focused company at this stage. But, the company has ambitions to expand overseas. In its listing prospectus, the firm stated that it sees ASEAN as a region it wants to move into, especially within the healthcare and electronic sectors. Management has identified countries such as Indonesia, Malaysia, Myanmar, and Vietnam as possible growth markets for Acromec.
  7. Acromec’s current share price of S$0.32 is roughly 11 times its earnings for its fiscal year ended 30 September 2015 (after adjusting for an enlarged share count after the IPO). The company also stated that it intends to pay out at least 20% of its profit as a dividend in its next two fiscal years (years ended 30 September 2016 and 30 September 2017).

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.