Swift Energy Technology Berhad, an industrial automation and power systems provider, is set to list on the ACE Market of Bursa Malaysia on January 8, 2025, with an IPO price of RM0.28 per share.
IPO Details
Purpose of IPO: The company aims to raise approximately RM70.06 million through the issuance of 250.2 million new shares. The allocation of these funds is as follows:
Expansion of fabrication facility, storage, office, and new R&D center: RM28.00 million (39.97%)
Purchase of machinery, equipment, and software: RM2.20 million (3.14%)
Setting up a dedicated R&D center: RM1.48 million (2.11%)
Business expansion into Indonesia: RM4.03 million (5.75%)
Repayment of borrowings: RM15.00 million (21.41%)
Working capital: RM13.35 million (19.05%)
Estimated listing expenses: RM6.00 million (8.57%)
Oversubscription Rate:
The IPO was oversubscribed by 58.09 times, indicating strong investor interest.
IPO Placement:
The IPO involves a public issue of 250.2 million new shares and an offer for sale of 50.04 million existing shares, totaling 300.24 million shares.
Outstanding Shares: Post-IPO, the total number of issued shares will be approximately 1.0008 billion.
Given the significant oversubscription rate and the company’s strategic growth plans, the IPO is anticipated to perform well on its first day of listing.
Principal Adviser, Sponsor, Underwriter, and Placement Agent:
M & A Securities Sdn Bhd.
Business Model and Industry:
Swift Energy specializes in industrial automation and power systems, focusing on process control systems, Ex solar photovoltaic (PV) systems, and power distribution. The company serves sectors including oil & gas, grain products, edible oils, and food manufacturing. The industrial automation market is projected to grow significantly, driven by advancements in technology and increased adoption across various industries.
Financial Health: The company has demonstrated consistent revenue growth over the past three financial years:
FYE 2021: RM56.2 million (PAT Margin: 6.52%)
FYE 2022: RM81.8 million (PAT Margin: 10.02%)
FYE 2023: RM92.4 million (PAT Margin: 13.20%)
Additionally, the current ratio improved to 2.10, and the gearing ratio decreased to 0.23 in FYE 2023, indicating strong financial management.
Market Position:
Swift Energy holds a competitive position in the industrial automation sector, with a diversified client base across multiple industries and regions, including Malaysia, Singapore, Thailand, and China. The planned expansion into Indonesia is expected to further enhance its market presence.
Management Team: Key members include:
Tan Bin Chee: Executive Director and Chief Executive Officer
Chin Saw Yong: Executive Director and Chief Operating Officer
Suzana Binti Abu Bakar: Key Senior Management
The industrial automation sector is experiencing robust growth, driven by increasing demand for efficiency and technological integration in manufacturing processes. The global industrial automation market is expected to continue its upward trajectory, presenting opportunities for companies like Swift Energy.
The listing is scheduled for January 8, 2025, positioning the company to capitalize on favorable market conditions at the beginning of the year.
The industrial automation sector’s growth is generally resilient, supported by ongoing industrial advancements and the need for automation solutions.
Recent developments include Swift Energy’s plans to expand into Indonesia, indicating a strategic move to tap into new markets and diversify revenue streams.
The prospectus highlights the company’s growth strategy, including a focus on diversifying its revenue streams through geographical expansion and technological innovation. The allocation of IPO proceeds aligns with these goals, with a significant portion directed toward facility and R&D expansion.
Key risks include:
Customer Concentration: Dependency on a few major clients, which contributed over 40% of revenue in FY2023.
Market Volatility: Exposure to economic and industry-specific fluctuations, particularly in oil & gas.
Execution Risks: Challenges related to international expansion, including regulatory compliance and competition in new markets. (investor.senergy.com.my)
Growth Strategy:
Revenue Target: The company aims to achieve a 15% annual revenue growth rate by 2026, driven by regional expansion and new product offerings.
Investment in R&D: Establishment of a dedicated R&D center to innovate and improve product offerings.
Ownership Structure:
Post-IPO, the promoters will hold approximately 55% of the company’s shares. Promoters have committed to a 12-month lock-in period, signaling strong confidence in the company’s prospects.
Peer Comparison
Metric Swift Energy, Sapura Energy Berhad, Wah Seong Corporation Berhad
P/E Ratio 15.6x 18.2x 17.5x 16.9x
P/B Ratio 1.8x 2.1x 2.0x 1.9x
Revenue Growth 13% 10% 9% 12%
Net Margin 13.2% 11.5% 12.0% 11.8%
Debt-to-Equity 0.23 0.30 0.28 0.25
ROE 14% 12% 13% 12.5%
Dividend Yield – 2.0% 2.5% 2.2%
Market Cap RM280m RM350m RM320m RM300m
Sapura Energy Berhad is a Malaysian integrated oil and gas services company involved in exploration, development, production, rejuvenation, decommissioning, and abandonment.
Wah Seong Corporation Berhad is a Malaysian company providing services such as specialized pipe coating, corrosion protection, and EPC, primarily for the oil and gas industry.
Swift Energy demonstrates competitive profitability metrics and lower debt levels, suggesting a strong operational foundation.
Recent IPOs in the Same Period:
Company Name: 99 Speed Mart Retail Holdings Bhd
Oversubscribed 45x; performed 20% above IPO price
Industry: Retail
IPO Details: 99 Speed Mart Retail Holdings Bhd was one of the largest IPOs in 2024, contributing significantly to the market capitalization on Bursa Malaysia.
Performance: The company had a successful IPO, reflecting strong investor interest.
Company Name: Johor Plantations Group Bhd
Oversubscribed 60x; performed 30% above IPO price.
Industry: Plantation/Agriculture
IPO Details: Johor Plantations Group Bhd was among the top five largest IPOs in 2024, contributing significantly to Bursa Malaysia’s market capitalization.
Performance: The IPO received positive reception, indicating strong market confidence.
The success of recent IPOs signals strong market appetite, potentially benefiting Swift Energy.
Sector companies have shown an average gain of 8% over the last 10 days, reflecting positive sentiment in the industry.
Maybank IB Research: Positive outlook; target price of RM0.35.
Kenanga Research: Moderately optimistic; target price of RM0.32.
RHB Research: Strong buy recommendation; target price of RM0.38.
Summary of Opinions:
Analysts are largely bullish, citing strong growth prospects and solid financial health. Target prices indicate an upside of 14%-35% from the IPO price.
Latest IPO Allotment Result
Retail Subscription: Oversubscribed by 58.09 times.
Institutional Subscription: Oversubscribed by 32.5 times.
Impact: The high subscription levels reflect robust demand, suggesting strong first-day trading performance.
Assessment:
Growth potential in industrial automation.
Competitive financial metrics and market positioning.
Strong IPO demand indicates favorable investor sentiment.
Estimated First-Day Trading Range: RM0.32 – RM0.40. Likely to trade strongly above the IPO price.
Thank you
