GS Holdings Limited is offering 24m Placement Shares at $0.25 each for a listing on Catalist. The IPO will close on 14 Jan at 12pm with a market cap of around $31m. There is no public tranche.

The Company provides centralised cleaning for the F&B Industry. This picture shows how the operations of the Company looks like.

GS flow1.16

It is probably quite unique in Singapore due to high manpower costs and our government is trying to reduce reliance on foreign labour on these jobs by automating the cleaning process.

The Company seems to have covered Singapore quite extensively (see map above) as it is one of the first movers in this space with a ~40% market share.

» Financial Highlights

According to the prospectus, the Company has secured $18.2m worth of order book as of 15 Dec 2015 with $14.2m expected to be recognised in 2016.

The NAV per share post IPO is around 5.3 cents versus the IPO price of 25 cents. The order "revenue to be recognised" of around $14m seemed to be a marked improvement from its 1H 2015 results. The Company will likely gain economies of scale if they are able to secure more orders.

» What I like about the Company

Secured order book of $18m assuming customers recontract at current rates

First mover with ~40% market share in Singapore

Increasing focus by government to enhance productivity in this area

Diversified customer base

» Some of my concerns

Singapore-centric with limited market potential

Company has been loss-making from Day 1 and has yet to turn around fully.

» My Ratings

Since there is no public tranche, I am not going to spend too much time on this. Not terribly excited by the industry prospects as well and will give it a zero rating due to from coaching perspective.

Happy IPOing.

The article was originally published on and is republished with permission.

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#1 BNNa 2016-01-14 09:11
Immediately post-IPO, GS' market cap will be $31 million. If you give it a PE of 6X, then the implied earnings for 2016 is $5 m. This looks like a v high expectation. As stated in the article above, the company expects $14.2 m revenue (at least) in 2016. Can it achieve $5 m net profit on $14.2 m revenue and an implied 35% net margin? It's exceedingly high for any business. Bear in mind that GS has been loss-making all these years, so would you expect it to now turn in a net profit margin of 35%?

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