4 Things Investors Should Know About the Initial Public Offering Of AGV Group

From the start of July to today, Singapore’s stock market has seen a total of six new initial public offerings (IPOs).

The latest of them all is AGV Group (SGX: 1A4), whose shares are expected to start trading tomorrow at 9 am on the Catalist board. AGV is one of the leading providers of hot dip galvanizing services for steel and iron items in Singapore.

Here are four things you need to know about the company.

Its industry and business

AGV is one of the five major hot dip galvanizing service providers in Singapore. According to the company, it is an industry with rather high barriers to entry, mainly due to the requirements for high capital expenditure and industry knowledge on how to setup and operate hot dip galvanizing plants.

The company has over 900 clients from a wide range of industries such as utilities, construction, telecommunications, transport, petrochemical, aerospace & defence, and more.

Its performance

AGV started operations only in 2012. For the first-half of 2016, the company achieved revenue of S$9.8 million with a profit of S$0.5 million. In 2015, the company recorded sales of S$18.8 million and a net profit of S$2.2 million.

Its prospects

According to the company’s IPO prospectus, it sees an increase in public construction demand in the future. The total value of public construction projects is expected to fall between S$27 billion and S$34 billion this year, between S$26 billion and S$35 billion in 2017 and 2018, and S$26 billion and S$37 billion in 2019 and 2020.

Moreover, the company thinks that it can benefit from public transportation projects such as the high-speed rail project that will connect Singapore and Malaysia.

The company is also trying to grow its business in Malaysia as there are many on-going projects in Johor that are related to the oil & gas and logistics industries.

The placement

The IPO will involve 26.92 million shares of AGV. But, only 21.82 million shares will be new issues; the remaining 5.1 million will be sold by some of the company’s existing investors.

Moreover, the general public has no chance to subscribe for any shares – the entire tranche of 26.92 million shares are for private placement deals, with each share sold at a price of S$0.22. AGV is expected to have a market capitalization of S$27.71 million after the placement is done.

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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 does not own shares in any company mentioned.