#2: Geographical Markets

UWC Bhd’s primary market is in Malaysia where it contributed 58.6% of its total revenues in 2018. Its remaining 41.4% of revenues were contributed by exports to Singapore, the United States, France, China and the United Kingdom.

Source: Page 96 of UWC Bhd’s IPO

#3: Financial Track Record

For the last 3 years, UWC Bhd has achieved growth in group revenues, up from RM 76.3 million in 2016 to RM 136.5 million in 2018. It is because the company has received higher orders from its main customers.

As such, it has contributed to an increase in adjusted profit after tax (PAT) from RM 8.5 million in 2016 to a total of RM 23.2 million in 2018.

Figures in RM ‘000 unless stated otherwise

Source: Page 11 and 141 of UWC Bhd’s IPO

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#4: Balance Sheet Strength

As of 31 January 2019, UWC Bhd has total borrowings of RM 49.15 million and RM 101.51 million in shareholders’ equity. Thus, it has a gearing ratio of 48.4%.

In addition, it has current assets of RM 86.26 million and current liabilities of a total of RM 40.62 million. Thus, it has a current ratio of 2.12.

Calculated from Data Sourced from UWC Bhd’s IPO

#5: IPO Proceeds

Source: Page 22 of UWC Bhd’s IPO

UWC Bhd intends to raise RM 57.40 million in gross proceeds. Out of which, the company plans to use it in the following:

1. Purchase of CNC Machines: RM 27.42 million

Presently, UWC Bhd has 166 units of CNC Machines. It intends to acquire a total of 29 units of CNC Machines, lifting its number of CNC Machines to 195 and will increase its fabrication and machining capacity by 18.6%.

Source: Page 23 of UWC Bhd’s IPO

2. Purchase of Industrial Robotic Arms & Material Handling System: RM 4.70 million

UWC Bhd plans to acquire 18 industrial robotic arms and one material handling system to further automate its manufacturing processes, which in turn, reduces its dependency on human labour and production costs. This allows UWC Bhd to enjoy approximately RM 0.9 million in cost savings a year as a result of reduced labour costs in the immediate future.

3. Repayment of Bank Borrowings: RM 18.00 million

UWC Bhd has obtained term loans from Public Bank Bhd and Hong Leong Bank Bhd at interest rates of 4.52% and 4.85% per annum respectively. By repaying a total of RM 18.00 million in term loans, UWC Bhd expects to enjoy interest cost savings of RM 0.8 million per annum.

4. Working Capital: RM 2.87 million

UWC Bhd budgets RM 2.87 million in working capital, reserve for the purchase of raw materials such as sheet metals, metal blocks, parts and components.

5. Listing Expenses: RM 4.42 million

#6: Management

The following is a list of major shareholders of UWC Bhd upon listing:

Source: Page 32 of UWC Bhd’s IPO

Both Dato’ Ng and Lau are major shareholders of UWC Bhd through their direct shareholdings in UWC Bhd and majority interests in UWC Capital.

Dato’ Ng is appointed as UWC Bhd’s Executive Director & Group CEO. Lau sits in the board as Executive Director & Group COO. Ng Chee Liang, son of Dato’ Ng is the Head of Corporate Affairs and Communication. Ng Sze Yan, who is the niece of Dato’ Ng is UWC Bhd’s Head of Operations.

#7: Major Risk

UWC Bhd is subjected to concentration risk as it derived 80.4% of its revenue in 2018 from 5 key customers. Hence, its future financial results are dependent on them. They include:

Source: Page 106 of UWC Bhd’s IPO

#8: Valuation

At current offer of RM 0.82 per share, UWC Bhd’s IPO shares are offered at P/E Ratio of 13.02 and P/B Ratio of 2.96 (based on net assets of 27.7 sen).

The company intends to adopt a dividend policy of a minimum of 20% of profit after tax (PAT). In 2018, it made 6.3 sen in adjusted EPS. Thus, it would pay out a minimum of 1.26 sen in dividends per share (DPS), offering a dividend yield of 1.54% per annum.