5 Things Investors Should Know About Advancer Global’s IPO

One new company that will be appearing in Singapore’s stock market soon is Advancer Global Limited.

Here are four things investors may want to know about the company’s initial public offering (IPO).

1. Offer details

Advancer Global will be selling 43 million new shares of itself in the IPO at S$0.22 apiece. Of the 43 million shares, 37 million will be for private placements to select investors (think wealthy individuals or institutional investors), 4 million will be for investors who are connected to the company (insiders, customers, suppliers etc.), and the remaining 2 million will be available for the general public.

Advancer Global is looking to raise S$9.46 million in gross proceeds from the IPO. Of that sum, 20.3% will go toward expenses related to the listing. Meanwhile, 67.7%  of the S$9.46 million has been earmarked for the company’s expansion. A small sum of 3.17% of the gross proceeds has been set aside for branding and marketing while the remaining 8.88% will be used as working capital.

The offer will close at 12 noon today and shares of Advancer Global will begin trading on the Catalist board at 9am on 11 July. At its listing price of S$0.22 per share, Advancer Global will have a market capitalisation of S$38.1 million at the IPO.

2. Business highlights

According to Advancer Global’s prospectus, it is an “established and diverse integrated services provider offering workforce solutions and services in Singapore.” It has three main business segments:

  • Employment Services: This segment provides services such as the sourcing, employment, and training of foreign domestic workers to households. It also helps with the sourcing and employment needs of corporations and organisations when it comes to foreign workers.
  • Cleaning and Stewarding: Advancer Global provides integrated cleaning and stewarding solutions for hotels, hospitals, commercial buildings, and residential properties through this segment.
  • Security Services: This segment is where the company provides security solutions (including security guards) for buildings as well as security escort services.

Advancer Global groups the Cleaning and Stewarding and Security Services segments together and calls it its Facilities Management Businesses. The Facilities Management Businesses have over 400 corporate customers right now.

3. Future growth plans

Advancer Global is looking to grow its business mainly through the following:

  • Expanding the Facilities Management Businesses: The company believes that the growing number of residential, retail, and commercial buildings in Singapore will lead to higher demand for its Facilities Management Businesses. Advancer Global is also looking to add new capabilties such as pest control and property management services either organically or via acquisitions, partnerships, or joint-ventures.
  • Expanding the Employment Services Business: Advancer Global has plans to expand this business organically in Singapore. Entry into foreign markets is also a consideration, but the company will do so through acquisitions, joint ventures, and/or strategic alliances.
  • Increasing branding and marketing activities: The company intends to strengthen the market position of its Employment Services Business by “increasing awareness and recognition” of its NATION brand.

4. Financials

The IPO prospectus for Advancer Global has its financials for 2013, 2014, and 2015. Here are how some of its business figures have grown:

Advancer Global table
Source: Advancer Global IPO prospectus

As you can see, the company’s revenue, profit, and cash flow from operations have all grown from 2013 to 2015. Meanwhile, the firm’s balance sheet has had minimal borrowings over the past three years when compared to the amount of cash there is.

5. Dividend policy and valuation

At Advancer Global’s listing price of S$0.22 per share, the firm’s valued at 8.7 times its earnings of 2.52 Singapore cents in 2015 after taking into account the new shares to be issued for the IPO. To give this figure some context, the SDPR STI ETF (SGX: ES3) – an exchange-traded fund which tracks the fundamentals of Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI) – has a price-to-earnings ratio of 11.9 at the moment.

Advancer Global currently does not have a fixed dividend policy. But, it intends to distribute at least 50% of its net profit in 2016, 2017, and 2018 as dividends.

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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 contributor James Yeo does not own shares in any company mentioned.