RichTech Digital Berhad is preparing for its initial public offering (IPO) on the ACE Market of Bursa Malaysia Securities Berhad, scheduled for February 17, 2025. Below is a comprehensive evaluation of the IPO:
IPO Details:
Purpose of IPO: The company aims to raise RM13.67 million through the issuance of 54.66 million new ordinary shares at an IPO price of RM0.25 per share. The proceeds are allocated as follows:
Marketing, Promotional, and Collaboration Activities: RM4.5 million (approximately 32.9% of the proceeds) to expand the user base of its digital applications, SRS App and SRS Portal.
Acquisition of New Office: RM3 million (21.9%) to consolidate its headquarters and branch office under one roof, with an estimated built-up area of up to 6,000 square feet.
Working Capital: RM2.17 million (15.9%) to support daily operational expenses.
Enhancement of SRS Platform: RM2 million (14.6%) for system upgrades and new feature integrations.
Repayment of Bank Borrowings: RM1 million (7.3%) to reduce financial leverage.
Estimated Listing Expenses: RM1 million (7.3%).
This allocation indicates a focus on growth and expansion, particularly in marketing and infrastructure development.
Oversubscription Rate: The IPO was oversubscribed by 245.42 times, reflecting strong investor confidence. Specifically, the Bumiputera portion was oversubscribed by 208.57 times, while the public portion saw an oversubscription of 282.28 times.
IPO Placement Amount and Outstanding Shares:
Total Shares Issued: 54,663,000 new ordinary shares.
Offer for Sale: 25,307,000 existing shares by way of private placement to selected investors.
IPO Price: RM0.25 per share.
Market Capitalization at Listing: Approximately RM50.61 million.
Given the significant oversubscription rate and the company’s strategic focus on growth, the IPO is anticipated to perform well on its first day of listing.
Principal Adviser, Sponsor, Underwriter, and Placement Agent: KAF Investment Bank Berhad.
The involvement of KAF Investment Bank Berhad, a reputable financial institution, is likely to positively influence the IPO’s performance on its debut.
Company Overview:
Business Model and Industry: RichTech Digital Berhad specializes in the distribution of electronic reloads and the provision of bill payment services through its proprietary SRS platform. The platform offers services such as mobile airtime reloads, utility bill payments, and game credit top-ups. The electronic payment industry in Malaysia is experiencing growth, driven by increasing digital adoption.
In the financial year ended December 31, 2024, the company reported a profit after tax of RM5.37 million, a 27% increase from the previous year, on revenue of RM7.80 million. This indicates a strong financial performance with significant growth.
RichTech operates a wide-reaching merchant network across Malaysia and has developed a diverse range of in-store digital solutions, positioning itself as a key player in the electronic reload and bill payment sector.
The company is led by Managing Director Lee Teik Keong. Further details about the management team’s experience and track record are not provided in the available sources.
Potential risks include reliance on the continued growth of digital payment adoption, competition from other electronic payment providers, and the need to keep pace with technological advancements. Additionally, any regulatory changes affecting the electronic payment industry could impact the company’s operations.
TA Research has evaluated RichTech Digital Berhad, noting that at an IPO price of RM0.25 per share, the company is priced at a trailing Price-to-Earnings (P/E) ratio of 9.4x based on FY2023 core earnings per share. They have assigned a fair value of RM0.45 per share, implying a potential upside of 80%.
Mercury Securities: This firm has set a fair value of RM0.35 per share for RichTech, based on a P/E ratio of 10.8x FY2025 earnings per share. This valuation represents a 70% discount compared to domestic peers, considering RichTech’s smaller market capitalization and niche focus.
Several companies are planning IPOs around the same period as RichTech Digital Berhad:
Colform Berhad: Scheduled to debut on the ACE Market of Bursa Malaysia on February 10, 2025. The IPO was oversubscribed by 41.82 times.
MMC Port Holdings: Planning an IPO in Malaysia, targeting over RM6 billion. The company has appointed CIMB and Maybank as lead arrangers.
Aquawalk Group: The operator of Aquaria KLCC intends to list on the ACE Market of Bursa Malaysia in 2025.
The strong interest in recent IPOs, as evidenced by significant oversubscription rates, suggests a favorable market environment. This positive sentiment may benefit RichTech Digital Berhad’s IPO performance.
Latest IPO Allotment Result:
The IPO received an overwhelming response, with an oversubscription rate of 245.42 times. Specifically, the Bumiputera portion was oversubscribed by 208.57 times, while the public portion saw an oversubscription of 282.28 times. Notices of allotment are scheduled to be posted to successful applicants on February 13, 2025.
The prospectus for RichTech Digital Berhad’s IPO can be downloaded from Bursa Malaysia’s website. Additionally, it may be available on the company’s official website or through the issuing house managing the IPO.
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