TechStore Berhad, an enterprise IT services provider specializing in security and automation solutions, is set to list on the ACE Market of Bursa Malaysia on February 18, 2025. The company’s IPO has garnered significant attention, with an oversubscription rate of 96.66 times.
IPO Details
TechStore aims to raise RM25 million through the issuance of 125 million new shares at 20 sen each. The funds are intended for business expansion, including enhancing R&D capabilities and regional market penetration.
The IPO received an overwhelming response, with the public portion oversubscribed by 106.48 times and the Bumiputera portion by 86.83 times.
IPO Placement and Outstanding Shares
IPO Placement: The offering comprises 125 million new shares and 25 million existing shares, collectively representing a 30% stake in the company.
Outstanding Shares: Post-IPO, TechStore will have an enlarged share capital of 500 million shares, resulting in a market capitalization of RM100 million at the IPO price.
Advisors and Underwriters
Investment Banker, Underwriter, and Sponsor: M & A Securities Sdn Bhd serves as the Adviser, Sponsor, Sole Underwriter, and Placement Agent for TechStore’s IPO.
The involvement of a reputable firm like M & A Securities is a positive indicator for the IPO’s success.
Company Overview
Business Model and Industry: TechStore specializes in designing and implementing enterprise IT security and automation solutions across various sectors, including transportation, hospitality, utilities, IT security, and logistics.
Financial Health: At the IPO price, the company is valued at 12 times its trailing earnings, suggesting a solid financial foundation.
Market and Economic Factors: The IT services industry is experiencing growth, driven by increasing demand for security and automation solutions.
The IPO application opened on January 22, 2025, and closed on February 4, 2025, with the listing scheduled for February 18, 2025.
Malacca Securities: The firm has assigned a fair value of RM0.36 per share for TechStore, representing an 80% premium over the IPO price of RM0.20. This valuation is based on a projected P/E ratio of 15x, pegged to the forecasted FY2025 earnings per share (EPS) of 2.43 sen. The optimistic outlook is supported by TechStore’s revenue growth from RM29.4 million in FY2021 to RM62.2 million in FY2023, achieving a compound annual growth rate (CAGR) of 45.5%. The firm also projects a 3-year earnings CAGR of 20.6%, with core net profit expected to reach RM9.8 million, RM12.1 million, and RM13.5 million over the next three years.
The IPO was oversubscribed by 96.66 times, indicating strong investor demand and suggesting a positive performance on the first day of trading.
Peer Comparison
To evaluate TechStore Berhad’s valuation, we compare its financial metrics with those of its industry peers. The table below presents key metrics, including Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, and other relevant figures:
| Company |
P/E Ratio |
P/B Ratio |
Revenue (FY2023) |
Net Profit (FY2023) |
Return on Equity (ROE) |
Debt-to-Equity Ratio |
Dividend Yield |
| TechStore Berhad |
12x |
1.82x |
RM62.2 million |
RM7.7 million |
13.94% |
0.78 |
N/A |
| Datasonic Group Berhad |
24.6x |
N/A |
N/A |
N/A |
25% |
N/A |
N/A |
| Infomina Berhad |
23.7x |
N/A |
N/A |
N/A |
14.7% |
N/A |
N/A |
| Iris Corporation Berhad |
N/A |
N/A |
N/A |
N/A |
8.7% |
N/A |
N/A |
Note: N/A indicates data not available from the provided sources.
Analysis:
P/E Ratio: TechStore’s P/E ratio of 12x is lower than that of its peers, suggesting a more attractive valuation.
P/B Ratio: With a P/B ratio of 1.82x, TechStore appears reasonably valued in terms of its net asset value.
Return on Equity (ROE): TechStore’s ROE of 13.94% indicates efficient utilization of equity, though it trails behind Datasonic’s 25%.
Debt-to-Equity Ratio: A ratio of 0.78 suggests TechStore maintains a balanced capital structure.
Dividend Yield: Specific dividend information for TechStore and its peers is not available.
Overall, TechStore’s financial metrics position it competitively within its industry, offering a potentially attractive investment opportunity.
Considering the robust oversubscription, favorable analyst valuations, and positive market conditions, TechStore’s IPO appears to be a promising investment opportunity. It is projected that the stock may trade between RM0.36 to RM0.40 on the first day, reflecting a strong performance above the IPO price.
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