As I was preparing to write about Credit Bureau Asia IPO, I found out that many bloggers have already done the legwork.
Hence, I shall pivot towards a different angle by… standing on the shoulders of giants and sharing the key findings from their research with you.
In addition, I will add on some details of the IPO (like the IPO Prospectus link) and my final thoughts too.
Credit Bureau Asia IPO Details
Product Highlights + Prospectus link
Stock Analysis from Investment Bloggers
Once again, i want to give credit to all the investment bloggers below. All i do is to grab snippets of valuable key findings to compile them together (edited slightly) for a more concise reading.
So here goes:
- 3 Chilli rating due to recurring cash flow, limited competition and dominant player in Singapore
- 1st mover advantage with strong potential growth in Cambodia and Myanmar
- Attractive dividend yield of 3% good for current low i/r environment
- Mr. Kevin Koo is the Founder, Chairman and CEO with over 25 years of experience in the credit information industry.
- Cornerstone Investors are:
- Aberdeen Standard Investment (Asia) Limited
- Affin Hwang Asset Management Berhad
- EastSpring Investments (Singapore) Limited
- Tokyo Shoko Research, Limited
- Strong Institutional Demand
- Good growth prospects with upcoming digital banking licenses + commencement of the Credit Bureau Act in Singapore
- After the IPO, Kevin Koo will own 67.3% of the company’s total share capital.
- Net profit margin before tax in FY2019 is about 46%. For HY2020, it’s more than 50%.
- Regulatory license to operate in Singapore is always subject to government approval
Out Of the S$23.6 million raised from IPO:
- 26% will go towards organic growth initiatives,
- 44% going towards strategic investments, regional expansion and acquisition
- Defensive business model – Economic downturn means banks, financial institutions, and businesses are likely to conduct more stringent risk assessments
- Penetration growth looks to soar in the next few years for Cambodia and Myanmar
- Lofty 30x Price to Earnings (PER)
- Half Year Implied PE: 28.9
- Disposal of loss-making Malaysia unit acts as a reminder that not all is rosy
- Won tender of operating the Moneylenders Credit Bureau – CBA to further expand its reach in the FI Data Business against rival Experian
- Decent 14% sales growth across 2 years
- Expect <10% revenue growth moving forward; 20x P/E would be ideal.
Conclusion: My thoughts on Credit Bureau Asia
Credit Bureau Asia has been generous to pay handsome dividends in the past few years prior to IPO. Given that the bulk of sales come predominantly from Singapore, Myanmar and Cambodia will have a long way to catch up to make a meaningful impact.
Hence, Credit Bureau Asia will likely be a dividend growth play for me – 3% dividend yield with 95% dividend payout. If net profits can grow at a reasonable 15% per annum, it will double in the next 5 years and dividend investors will be sitting on perhaps 6% dividend yield in time to come.