PUBLIC INVESTMENT BANK · 10/10/2016 · Quantum, MinXray, Newmed, General Electric and Elma. 100% BCM Alliance (1) (2) Best Contact (3) Maymedic (4) 4 Important disclaimer is provided

PUBLIC INVESTMENT BANK

PublicInvest Research IPO Note Monday, October 10, 2016 KDN PP17686/03/2013(032117)

BCM ALLIANCE BERHAD Fair Value: RM0.26

1 Important disclaimer is provided at the end of this report.| PUBLIC INVESTMENT BANK Page 1 of 13

DESCRIPTION

Is principally involved in the distribution of equipment specialising in the commercial laundry equipment and medical devices industries in Malaysia Fair Value RM0.26 IPO price RM0.19 Expected Return 34.8% Closing Application Date Retail 10 October 2016 Institutional 10 October 2016 Indicative Listing Date 24 October 2016

Market Ace Sector Trading/Services Bursa Code 0187 Bloomberg Ticker BCM MK Shariah-Compliant Yes IPO DETAIL Shares(m)

Public Issue 84.3 Offer For Sale 42.1 UTILISATION OF PROCEEDS RM (m)

Set up 11 new Speed Queen self-service 2.6 launderette outlets Purchase of brand new commercial equipment 7.7 and medical devices Working capital 3.2 Listing expenses 2.5

Total 16.0 KEY STOCK DATA

Market Capitalisation (RMm) No. of Shares (m)

80.0 421.3

MAJOR SHAREHOLDERS (Post-IPO)*

%

Koh Lap Hing Liaw Chong Lin Lim Jit Wei

12.6 11.9 11.2

Research Team T 603 2268 3000 F 603 2268 3014 E [email protected]

Health(y) Growth Prospects

BCM Alliance, a distributor of laundry equipment and medical devices with more than ten years’ history, is slated for listing on the ACE Market at the end the month. The group is raising RM16.0m from the issuance of 84.3m new shares. Our earnings estimates are largely underpinned by i) stable demand of medical devices, supported by increasing number of hospitals, ii) strong market position in commercial laundry equipment with international brands. Our fair value for BCM Alliance is RM0.26, based on a 12.0x PE multiple to its estimated FY17F EPS of 2.13sen.

Background. BCM Alliance is a distributor of commercial laundry

equipment and medical devices in Peninsular Malaysia. It supplies vended and on-premise laundry equipment which is used for large volume washing and heavy-duty usage to self-service launderettes, hospitals, hotels and others. Apart from this, it also provides medical imaging equipment such as CT scanner, MRI systems and disinfection, sterilization and surgical room equipment. At present, it has been appointed as exclusive distributors for STERIS, Albert Browne, Hitachi, Medifa, and Ziehm Imaging.

Future plans. As part of its marketing strategy, the group is

allocating RM2.6m of its IPO proceeds to set up eleven 24-hour Speed Queen self-service launderette outlets in the next 24 months. The group also plans to further expand its product range through the acquisition of more distributorship arrangements from existing or new distributors. Besides, the group is targeting to expand into the South East Asian region, particularly in Indonesia and Indochina through partnerships. In addition, the group also intends to strengthen its market position domestically, with an allocation of RM1.71m from its IPO proceeds to this end.

Health(y) growth prospects. Under the Eleventh Malaysia Plan

(11MP), the Government plans to construct an additional six new hospitals in Kemaman, Bentong, Pendang, Pasir Gudang and Maran. In addition, three existing government hospitals are undergoing some upgrading works, which could provide replacement opportunities for BCM. At the same time, KPJ Healthcare, one of its major customers, is targeting to establish 9 new hospitals in the next four years. Hence, we are positive on its orderbook replenishment for the medical devices segment.

Key risks for BCM include i) dependency on its major customers,

ii) Absence of long term sales contracts, iii) Unfavourable foreign currency fluctuations, iv) dependency on international brand manufacturers.

KEY FINANCIAL SUMMARY

FYE Dec (RM m) 2014A 2015A 2016F 2017F 2018F CAGR

Revenue 51.0 64.3 65.2 74.2 84.1 18.9%

Gross Profit 17.7 19.0 22.2 24.5 27.3 23.0%

Pre-tax Profit 7.7 8.1 6.8 11.8 13.5 40.3%

Net Profit 5.6 6.1 5.1 9.0 10.3 38.6%

EPS (Sen) 1.3 1.5 1.2 2.1 2.4 38.6%

P/E (x) 14.2 13.1 15.5 8.9 7.8

DPS (Sen) - -

- -

- - -

Div Yield (%) - -

- - - -

Source: Company, PublicInvest Research estimates


PUBLIC INVESTMENT BANK BERHAD

Distributor of international brands of commercial laundry equipment and medical devices

Vended commercial laundry equipment On-premise commercial laundry equipment

Medical imaging equipment Disinfection, sterilisation and surgical room equipment Experienced set of key management personnel

Company Background

BCM Alliance (BCM) was incorporated on 13 March 2015 as a distributor of international brands of commercial laundry equipment and medical devices in Malaysia. a) Supplying, installing, testing and commissioning of the following

commercial laundry equipment:

i. Vended commercial laundry equipment i.e. refers to

commercial laundry equipment designed with payment systems. It supplies to self-service launderettes, multi-family complexes and/or hotels and resorts; and

ii. On-premise commercial laundry equipment i.e. refers to

commercial laundry equipment designed without payment systems. This equipment are generally used for laundry purpose in business premises and supplied to hospitality and healthcare sectors e.g. hotels and resorts, hospitals and clinics and nursing homes.

b) Supplying, installing, testing and commissioning of the following

medical devices:

i. Medical imaging equipment i.e. refers to equipment used for

the production of visual presentations of body parts, tissues, organs for use in clinical diagnosis; and

ii. Disinfection, sterilisation and surgical room equipment i.e. refers to equipment used in infection control procedures.

Experienced management. BCM has an experienced set of key

management personnel in the commercial laundry equipment and medical devices industries in Malaysia:

Figure 1: BCM Alliance Key Management Team

Name Designation Biography

Koh Lap Hing

Non-Independent Executive Deputy Chairman

He has more than 40 years of experience in the commercial laundry equipment and medical devices industries, including his tenure at Syarikat Sunto Trading since 1978.

Liaw Chong Ling

Managing Director (Business unit head of Best Contact)

He has more than 30 years of experience in the medical devices business segment through his previous working experience in Smitech (M) Sdn Bhd and Hitachi Medical Sytems (S) Pte Ltd.

Lim Jit Wei

Executive Director (Business unit head of CS Laundry)

He has more than 25 years of experience in the commercial laundry equipment through his working tenure at I.E. Candid Sdn Bhd.

Chung Eng Lam

Executive Director (Business unit head of Maymedic)

He co-founded Maymedic. He has more than 30 years of experience in disinfection, sterilisation and surgical room products through his working experience at various hospitals.

Hew Chun Sun

Executive Director (Group Head of Finance, Administrative and HR)

He co-founded CS Laundry in 1998. He has more than 20 years of experience in the commercial laundry equipment and medical devices.

Source: Company Prospectus



Commercial Laundry: Distributes washers, dryers, tumble dryers, continuous batch washers, dry cleaning machines, feeders, flatwork ironers and presses, which are marketed under various international brands. Distributes 10 brands of commercial laundry equipment in Malaysia, namely Speed Queen, Huebsch, Lapauw, Maxi, Forenta, Renzacci, Jensen, Senking, Domus and Sea Lion Medical devices: MRI System, CT Scanner, digital radiography system, X-Ray system, various types of sterilisers, medical printing system and washers/disinfectors to the healthcare and medical devices business segment. Currently distributes 12 brands in Malaysia - STERIS, Albert Browne, Hitachi, Medifa, Ziehm Imaging, Trilux Medical, CareStream, Quantum, MinXray, Newmed, General Electric and Elma

Figure 2: Company Structure

Note: (1) Investment holding company (2) Supply, installation, testing and commission of commercial laundry equipment (3) Supply, installation, testing and commission of medical devices (4) Supply, installation, testing and commission of medical devices Source: Company Prospectus

Origins. Current Non-Independent Executive Deputy Chairman, Koh Lap

Hing founded Syarikat Sunto Trading in 1978, together with three partners, namely Wong Fai Nam, Chee Wooi Chi and the late Hew Foh @ Hew Foh Yew (the father of Hew Chun Shun) to provide general maintenance, repair and installation services for various type of electrical equipment, including commercial laundry equipment and medical devices across Peninsular Malaysia. CS Laundry was established on 10 September 1996 by Koh Lap Hing and

Abdul Halim bin Jamaludin to seek business opportunities in the provision of laundry cleaning services. In December 1998, CS Laundry had a change in shareholding structure that saw the entry of current Executive Directors Chung Eng Lam, Hew Chun Sun and Lim Jit Wei as shareholders alongside Koh Lap Hing and Yap Soon Guan. The company was spearheaded and led by Lim Jit Wei, who had more 10 years of experience of sales and technical experiences at I.E. Candid Sdn Bhd, which was principally involved in the trading and installation of industrial kitchen and laundry equipment. BCM distributes a comprehensive range of commercial laundry equipment including washers, dryers, tumble dryers, continuous batch washers, dry cleaning machines, feeders, flatwork ironers and presses, which are marketed under various international brands. Currently, it distributes 10 brands of commercial laundry equipment in Malaysia, namely Speed Queen, Huebsch, Lapauw, Maxi, Forenta, Renzacci, Jensen, Senking, Domus and Sea Lion. It established its first Speed Queen self-service launderette in Taman United, Kuala Lumpur in 2015. Best Contact was incorporated on 30

March 1994 by Koh Lap Hing and

Chung Eng Lam, together with their business partners, Yap Soon Guan and Hew Foh @ Hew Foh Yew, under the name of Rusalda Cekap Sdn Bhd. It was initially involved in the business of supplying electronic control systems to electronic manufacturers e.g. laser gauge and remote electronic controller for various type of machinery. The company underwent a business rationalisation in 2004 and changed its business focus into the distribution of medical imaging equipment, which began with the Hitachi brand. Maymedic was established on 13 April 2006, venturing into the distribution

of disinfection, sterilisation and surgical room equipment to further expand the range in its medical devices segment. BCM mainly distribute ranges of medical devices e.g MRI System, CT Scanner, digital radiography system, X-Ray system, various types of sterilisers, medical printing system and washers/disinfectors to the healthcare and medical devices business segment. Currently, the group distributes 12 brands of medical devices in Malaysia, namely STERIS, Albert Browne, Hitachi, Medifa, Ziehm Imaging, Trilux Medical, CareStream, Quantum, MinXray, Newmed, General Electric and Elma.

100%

BCM Alliance (1)

CS Laundry (2)

Best Contact (3)

Maymedic (4)

100% 100%



Best Contact and Maymedic are licensed as authorised representative, importer and distributor of medical devices by Medical Device Authority (MDA)

Figure 3: Corporate Milestones

Year Achievement

1978 Formation of Syarikat Sunto Trading

1994 Best Contact was established to supply electronic control

systems to electronic manufacturers

1996 CS Laundry formed to seek new business opportunities in

the provision of laundry cleaning services

1998

CS Laundry underwent a change in shareholding structure, spearheaded and led by Lim Jit Wei and ventured into business related to the distribution of commercial laundry equipment

2001 Obtained distributorship from Alliance Laundry

2002 Obtained distributorship from Jensen Asia Pte Ltd

2004

Best Contact underwent a rationalisation of its business to change its focus into distribution of medical devices

Obtained distribution rights for Hitachi brand of medical imaging equipment

2006

Incorporated Maymedic Obtained distribution rights for the STERIS brand of

disinfection and sterilisation equipment as well as surgical room equipment

2007 Obtained distribution rights for the CareStream brand of

medical imaging equipment

2010 Distributed vended commercial laundry equipment Obtained distribution rights for the Ziehm Imaging brand of

medical imaging equipment

2011 Obtained distribution rights for the Newmed brand of

disinfection and sterilisation equipment

2012

Obtained non-exclusive authorised distributorship to distribute Domus brand of commercial laundry equipment

Obtained non-exclusive rights as an agent to distribute Sea Lion brand of commercial laundry equipment

2013 Obtained non-exclusive authorised distributorship from

Alliance Laundry to distribute Speed Queen brand of commercial laundry equipment

2014

Obtained distribution rights for the Quantum brand of medical imaging equipment

Obtained exclusive authorised distributorship for the Medifa brand of surgical room equipment

Obtained non-exclusive authorised distribution rights for the Trilux Medical brand of surgical room equipment

Obtained non-exclusive authorised distributorship rights for the MinXray brand of medical imaging equipment

2015

Best Contact and Maymedic are licensed as authorised representative, importer and distributor of medical devices by Medical Device Authority (MDA)

CS Laundry is authorised by Alliance Laundry to use Speed Queen brand for setting up Speed Queen self-service launderette

Established the first self-service launderette in Taman United, Kuala Lumpur

2016 Obtained distribution for the Elma brand of ultrasonic and

steam jet technology cleaners Successfully registered 15 medical devices with the MDA




CS Laundry has been appointed as the non-exclusive distributor in Malaysia for few international brands of commercial laundry equipment and related parts

Has the exclusive distributorships in Malaysia for five brands of medical devices, namely STERIS, Albert Browne, Hitachi, Medifa, and Ziehm Imaging, ensuring that all retailers’ purchases of these branded medical devices in Malaysia are made through them

Business Overview

Business segments. BCM’s business segment is divided into commercial

laundry equipment and medical devices:

(a) Commercial laundry equipment is used for large volume washing

and heavy-duty usage in businesses and institutions that provide commercial laundry services. This segment can be categorised under two main product categories, namely; (i) vended commercial laundry equipment, and (ii) on-premise commercial laundry equipment. The product has an estimated life span of up to 12 years with regular-interval maintenance.

(b) Medical devices segment involves two product categories, namely;

(i) medical imaging equipment, and (ii) disinfection, sterilisation and surgical room equipment. The medical devices have an estimated lifespan of between 5 to 10 years with regular-interval maintenance.

Figure 4: Business Segments and Principal Activities

Note:

i. The distribution activities include value-added services ranging from designing and planning layout for self-service launderettes and on-premise laundries, recommending the appropriate type of commercial laundry equipment, to after-sales services such as training as well as repair and maintenance works; and

ii. The distribution activities include value-added services ranging from product

recommendations, operation workflow design, obtaining relevant approvals from authorities for use of medical devices, to after-sales services such as training, repair and maintenance works


Distributor of well-established and well-known brand manufacturers of

commercial laundry equipment and medical devices:

(a) Commercial laundry equipment. CS Laundry has been appointed as the non-exclusive distributor in Malaysia for few international brands of commercial laundry equipment and related parts, such as Lapauw, Maxi, Forenta, Renzacci, Senking, Jensen and others. At the same time, CS Laundry is also Malaysia’s sole authorized distributor for Alliance Laundry, an international manufacturer and distributor of commercial laundry equipment, in particularly brands such as Speed Queen and Heubsch.

(b) Medical devices. The group has the exclusive distributorships in

Malaysia for five brands of medical devices, namely STERIS, Albert Browne, Hitachi, Medifa, and Ziehm Imaging, ensuring that all retailers’ purchases of these branded medical devices in Malaysia are made through them. Currently, it also has been appointed as non-exclusive distributor of medical devices for another 7 brands, namely Trilux Medical, CareStream, Quantum, MinXray, Newmed, General Electric and Elma.

BCM Alliance

Commercial Laundry Equipment Medical Devices

Supply (i), Installation, Testing and

Commissioning

Vended

commercial

laundry

equipment

On-premise

commercial

laundry

equipment

Supply (ii), Installation, Testing and

Commissioning

Medical

imaging

equipment

Disinfection,

sterilization and

surgical room

equipment



Has relationships ranging from 7 to 15 years with the major international brand manufacturers. About 75% of the total costs are denominated in USD and EUR. Orders not particularly repetitive except for demand of spare parts (from scheduled maintenance), accessories and consumables

Figure 5: Distributors for respective brands

Source: Company Main suppliers. BCM makes purchases from their approved list of

manufacturers to distribute a range of commercial laundry equipment and medical devices in Malaysia. It has relationships ranging from 7 to 15 years with the major international brand manufacturers. About 75% of the total costs are denominated in USD and EUR. Figure 6: Main Suppliers

Brand Manufacturers

Segments Country of Origin

Length of relationship

(years)

Purchase Value (%)

FY14 FY15

Alliance Laundry

Commercial laundry

equipment USA 15 46.3% 54.2%

Hitachi Medical Systems (S) Pte Ltd 1

Medical imaging

equipment Japan 12 10.1% 5.6%

Carestream Health Malaysia Sdn Bhd 2

Medical imaging

equipment USA 7 7.4% 13.5%

STERIS Corporation

Disinfection, sterilisation and surgical equipment

USA 10 7.0% 7.8%

Note: 1. Hitachi Medical Systems (S) Pte Ltd was incorporated in 1994 to take over the activities as

a representative office of Hitachi Medical Corporation and to market the Hitachi brand of medical equipment in Asia. The company is represented by its distributors in South East

Asia, Middle East and South Asian Association for Regional Cooperation

2. Carestream Health Malaysia Sdn Bhd is the representative office and subsidiary of Carestream Health Inc. It is responsible for importing its range of medical devices as well as providing training, marketing and related services for its channel partners in the Malaysian region


Main customers. The fluctuation in revenue contribution from commercial

laundry equipment business varies depending on number of new self-service launderette outlets set up by new operators, expansion of the number of launderette outlets by existing chain of launderette operators/franchisor and replacement of washers and dryers at its customers’ laundry outlets. Meanwhile, orders in the medical devices segment are not particularly repetitive as the medical devices have an estimated lifespan between 5 to 10 years. The demand would depend on the requirements of its customers in the healthcare industries which have different usage levels. However, demand for spare parts (from scheduled maintenance), accessories and consumables are repetitive and constant in nature.



Setting-up 11 Speed Queen self-service launderette outlets in Johor, Penang, Melaka, Negeri Sembilan, Terengganu and Kelantan, as well as the Klang Valley

Further enhance product range for laundry equipment and medical devices by acquiring more distributorship from its existing or new distributor Eyeing expansion into the South East Asian region, particularly in Indonesia and Indochina by partnering with local companies in each country

Figure 7: Main Customers

Major Customers

Segments Country of Origin

Length of relationship

(years)

Sales Value (%)

FY14 FY15

City Coin Laundry Sdn Bhd

Commercial laundry

equipment Malaysia 3 25.9% 16.5%

KPJ Healthcare Group

Medical imaging

equipment Malaysia 10 8.8% 5.3%


Orderbook. Majority of the sales are made based on purchase orders.

However, BCM does not enter into long term contract with their customers for the sale of commercial laundry equipment, medical imaging equipment and sterilisation, disinfection and surgical room equipment. Figure 8: Current outstanding order book @ 30 August 2016

Business Segments Order Book (in RM m)

Delivery Due Date

Commercial laundry equipment 4.85 3QFY16

Medical imaging equipment 3.79 4QFY16

5.23 Between July and October FY16

Disinfection, sterilisation and surgical room equipment

2.39 4QFY16

Total 16.26


Future Plans

Set up Speed Queen self-service launderette outlets. As part of its

marketing strategy, the group is allocating RM2.6m from its IPO proceeds to set up eleven 24-hours Speed Queen self-service launderette outlets in the next 24 months. These new outlets are planned to be established in the states of Johor, Penang, Melaka, Negeri Sembilan, Terengganu and Kelantan, as well as the Klang Valley. The ideal location is a major township with population of at least 5% of the total state population. Currently, the group is still in the midst of identifying suitable locations. Average cost per outlet is estimated to be up to RM230,000, excluding the rental cost. We are assuming the group establishes one outlet every two months, and have been made to understand that each outlet will take about 2 years on average to break-even. Hence, we do not expect major earnings contribution in the interims. Expand product portfolio. To keep up with fast-changing technology, the

group intends to further enhance its product range for laundry equipment and medical devices by acquiring more distributorship from its existing or new supplier. The group intends to include other laundry related equipment such as wet cleaning machines, sanitation and hygiene cabinet which is able to remove odours and bacteria from garments. Geographical expansion. The group is allocating RM1.71m from its IPO

proceeds to strengthen its market position in the domestic market through several promotional, advertising and marketing activities. At the same time, the group is eyeing expansion into the South East Asian region, particularly in Indonesia and Indochina by partnering with local companies in each country, enabling it to penetrate into a new market without incurring high capital investment.



About 60% of revenue is derived from the commercial laundry equipment segment. Revenue contribution of this segment recorded tremendous growth of >100% over the last three years FY16’s earnings to be weighed down by the one-off listing expenses, amounting to RM2.5m though partly mitigated by its current outstanding orderbook of RM16.3m (as of August 2016), all to be delivered in 2016

Financials About 60% of BCM’s revenue is derived from the commercial laundry equipment segment. Revenue contribution of this segment recorded tremendous growth of >100% over the last three years, mainly attributed to the sales growth of vended commercial laundry equipment. Bearing fruits from the group’s marketing efforts on self-laundry services in Malaysia, sales volume of vended laundry equipment has increased from 362 units in FY13 to 1,970 units in FY15.

Figure 9: Sales Volume of Vended Commercial Laundry Equipment


Figure 10: Revenue Breakdown As of March 2016


We expect FY16’s earnings to be weighed down by the one-off listing expenses, amounting to RM2.5m though partly mitigated by its current outstanding orderbook of RM16.3m (as of August 2016), all to be delivered in 2016. In April 2016 to August 2016, the group submitted several contract tenders totaling about RM77.0m for distribution of medical devices. With more upcoming new government and private hospitals in the next few years, we anticipate the group being able to replenish its orderbook for the medical devices segment.

362

1,454

1,970

0

500

1,000

1,500

2,000

2,500

2013 2014 2015

Vended commercial

laundry 64.6%

On-premise commercial

laundry 0.2%

Medical imaging

equipment 27.9%

Sterilisation, disinfection and surgical

room equipment

7.3%



Increasing number of hospitals, in both the public and private sectors BCM is in compliance with the requirements of the Medical Device Authority (MDA) Act

Figure 11: Revenue and Net Profit Trend

Source: Company Prospectus, PublicInvest Research

Industry Overview Increasing number of hospitals. Under the Eleventh Malaysia Plan

(11MP), the Government plans to construct an additional six new hospitals in Kemaman, Bentong, Pendang, Pasir Gudang and Maran. In addition, three existing government hospitals are undergoing some upgrading works, which could provide replacement opportunities for BCM. At the same time, KPJ Healthcare, one of its major customers, is targeting to establish 9 new hospitals in the next four years. Hence, we are positive on its orderbook replenishment for the medical devices segment.

Figure 12: Market Size of Medical Devices Industry in Malaysia


In compliance with MDA Act and Regulations. BCM is in compliance with

the requirements of the Medical Device Authority (MDA) Act and its relevant regulations made in relation to the registration and distribution of medical devices. MDA is a statutory body under the Ministry of Health Malaysia (MOH). The MDA Act includes;

(i) Mandatory licensing of an establishment to place medical devices in

the Malaysian market. To date, Best Contact and Maymedic have successfully obtained the Establishment Licence, which will be effective until 15 February 2018 and 11 August 2018 respectively; and

(ii) Registration of medical devices. All medical products need to be

registered before it can be imported, exported or placed in the market. To date, BCM has submitted 110 online applications to register the medical devices which are currently distributed and classified as medical devices under the MDA Act. Currently, 15 applications have successfully been approved by the MDA. The remaining are still in the midst of processing by the MDA.

0%

2%

4%

6%

8%

10%

12%

14%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

2012 2013 2014 2015 2016F 2017F 2018F

Revenue Net profit Net profit margin (%)

9.3 10.2

11.3 12.6

13.9

15.6

17.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2014 2015 2016F 2017F 2018F 2019F 2020F



Fair value of RM0.26 We see our valuation as fair considering its medium term growth prospects, with its PEG ratio at 0.6x based on an average 3-year estimated earnings growth

Figure 13: Market Share Within Commercial Laundry Equipment Industry


Valuation and Recommendation

Pegging a 12x PE multiple to BCM Alliance’s FY17F EPS of 2.13sen, we derive a fair value of RM0.26 which implies an upside of 36.2% from its IPO price of RM0.19. We see our valuation as fair considering its medium term growth prospects, with its PEG ratio at 0.6x based on an average 3-year estimated earnings growth. Earnings going forward will be underpinned by i) stable demand of medical devices which supported by increasing number of hospitals, ii) strong market position in commercial laundry equipment with international brands.

SWOT Analysis

Figure 14: SWOT

Strengths Weaknesses

Experienced management with 38 years in commercial laundry equipment and medical devices industry.

Exclusive distributor for international brands.

High dependency on its major customers

Absence of long term sales contracts

Opportunities Threats

Increasing number of hospital in domestic market

Fluctuation of foreign currency exchange rates

Source: PublicInvest Research

CS Laundry 20%

Others 80%



Market capitalization upon listing will be RM80,037,538 based on its IPO price of RM0.19 per share

IPO Details BCM Alliance Berhad is seeking to list on Bursa Malaysia’s ACE Market with an enlarged and paid-up share capital of 421,250,200 shares at a 5sen par value each. The IPO is for a total of 126,375,000 shares, comprising a public issue of 84,250,000 new shares and an offer for sale of 42,125,000 existing shares. Its market capitalization upon listing will be RM80,037,538 based on its IPO price of RM0.19 per share. Public issue of 84,250,000 new shares representing approximately 20.0% of its enlarged issued and paid-up share capital will comprise the following:

i. A total of 22,000,000 new shares, representing approximately 5.2% of its enlarged issued and paid-up share capital are available to the Malaysian Public.

ii. A total of 9,000,000 new shares, representing approximately 2.1% of its enlarged issued and paid-up share capital are allocated to its eligible directors and employees.

iii. A total of 53,250,000 new shares, representing approximately 12.7% of its enlarged issued and paid-up share capital are allocated for placement to selected investors.

The IPO allocation and post-IPO share capital of BCM Alliance are shown in the following tables.

Figure 15: IPO Allocation

Categories No. of shares % of enlarged share capital upon listing

Institutional offering:

Selected investors 95,375,000 22.6

Retail offering:

Public 22,000,000 5.2

Eligible directors and employees 9,000,000 2.1

Sub-total 31,000,000 7.3

Total 126,375,000 29.9

Source: Company Prospectus, PublicInvest Research * inclusive of 42,125,000 offer shares for placements

Figure 16: Utilisation of Proceeds

Details of utilisation RM m % Timeframe for

Utilisation Upon Listing

Setting up chain of 11 new Speed Queen self-service launderette outlets

2.6 16.2 Within 24 months

Purchase of brand new commercial laundry

7.7 48.1 Within 24 months

Working capital 3.2 20.1 Within 12 months

Estimated listing expenses 2.5 15.6 Within 1 month

Total 16.0 100 Source: Company Prospectus, PublicInvest Research *based on RM0.19 for 84,250,000 new shares issued



KEY FINANCIAL DATA INCOME STATEMENT DATA

FYE Dec (RM m) 2014A 2015A 2016F 2017F 2018F

Revenue 51.0 64.3 65.2 74.2 84.1

Gross Profit 17.7 19.0 22.2 24.5 27.3

Operating Profit 8.0 8.3 6.8 11.1 12.6

Finance Costs -0.3 -0.3 -0.1 0.7 0.9

Pre-tax Profit 7.7 8.1 6.8 11.8 13.5

Income Tax -2.1 -1.9 -1.6 -2.8 -3.2

Effective Tax Rate (%) 27% 24% 24% 24% 24%

Minorities - - - - -

Net Profit 5.6 6.1 5.1 9.0 10.3

Growth

Revenue 44% 26% 1% 14% 13%

Gross Profit 82% 8% 16% 10% 12%

Net Profit 180% 9% -16% 75% 14%


BALANCE SHEET DATA

FYE Dec (RM m) 2014A 2015A 2016F 2017F 2018F

Property, Plant & Equipment 5.3 7.6 7.2 8.0 8.3

Cash and Cash Equivalents 7.0 6.7 27.8 34.7 43.2

Trade and Other Receivables 9.6 7.2 7.3 8.3 9.4

Other Assets 11.1 14.0 13.4 15.1 17.0

Total Assets 33.0 35.5 55.7 66.1 77.9

Trade and Other Payables 14.0 11.9 11.5 13.2 15.0

Borrowings 3.4 4.1 3.6 3.3 3.0

Deferred tax 0.2 0.2 0.2 0.2 0.2

Other Liabilities 1.8 1.8 1.8 1.8 1.8

Total Liabilities 19.4 17.9 17.0 18.4 19.9

Shareholders’ Equity 13.6 17.5 38.7 47.7 58.0

Total Equity and Liabilities 33.0 35.5 55.7 66.1 77.9


FYE Dec 2014A 2015A 2016F 2017F 2018F

Book Value Per Share 0.0 0.0 0.1 0.1 0.1

NTA Per Share 0.0 0.0 0.1 0.1 0.1

EPS (Sen) 1.3 1.5 1.2 2.1 2.4

DPS (Sen) - - - - -

Payout Ratio - - - - -

ROA 17% 17% 9% 14% 13%

ROE 41% 35% 13% 19% 18%


PER SHARE DATA & RATIOS



RATING CLASSIFICATION STOCKS

OUTPERFORM The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12months.

NEUTRAL The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.

UNDERPERFORM The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.

TRADING BUY The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.

TRADING SELL The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.

NOT RATED The stock is not within regular research coverage.

SECTOR

OVERWEIGHT The sector is expected to outperform a relevant benchmark over the next 12 months.

NEUTRAL The sector is expected to perform in line with a relevant benchmark over the next 12 months.

UNDERWEIGHT The sector is expected to underperform a relevant benchmark over the next 12 months.

DISCLAIMER

This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents. This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document. PIVB, Public Bank Berhad, our affiliates and related companies, directors, officers, connected persons/employees, associates or agents may own or have positions in the securities of the company(ies) covered in this document or any securities related thereto and may from time to time add or dispose of, or may be materially interested in, any such securities. Further PIVB, Public Bank Berhad, our affiliates and related companies, associates or agents do and/or seek to do business with the company(ies) covered in this document and may from time to time act as market maker or have assumed an underwriting commitment in the securities of such company(ies), may sell them or buy them from customers on a principal basis, may have or intend to accommodate credit facilities or other banking services and may also perform or seek to perform investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment advisory or other services from any entity mentioned in this document. The analyst(s) and associate analyst(s) principally responsible for the preparation of this document may participate in the solicitation of businesses described aforesaid and would receive compensation based upon various factors, including the quality of research, investor client feedback, stock pickings and performance of his/her recommendation and competitive factors. Hence, the addressee or any persons reviewing this document should be aware of the foregoing, amongst others, may give rise to real or potential conflicts of interest. Published and printed by: PUBLIC INVESTMENT BANK BERHAD (20027-W) 9

th Floor, Bangunan Public Bank

6, Jalan Sultan Sulaiman 50000 Kuala Lumpur T 603 2268 3000 F 603 2268 3014 Dealing Line 603 2268 3129

Documents

PUBLIC INVESTMENT BANK · 10/10/2016 · Quantum, MinXray, Newmed, General Electric and Elma. 100% BCM Alliance (1) (2) Best Contact (3) Maymedic (4) 4 Important disclaimer is provided