IPO Review - MAP Technology (Part 1)

Prospectus Fundamental Analysis

You can get a copy of the Prospectus here.

(1) Issue Price: $0.32

Issue Size: 76.5M New Shares comprising only 3M Public tranche (representing only 3.9%) - I suspect this is going to be heavily subscribed again.

(2) Business: 3 Principal activities:

(a) EMS Solutions (66% of FY06 Revenue)
- Main product: Data storage devices (such as EHDDs)
- Main operations: Thailand

(b) Precision Stamping Products (25% of FY06 Revenue)
- Main product: VCM plates of HDDs
- Main operations: ROC

(c) Die-cut Components (9% of FY06 Revenue)
- Main product: Acoustic Damper
- Main operations: S'pore

(3) Historical EPS: 2.4 US cents = ~3.6 Sing cents (Therefore 15X EPS gives S$0.54)

P/E Ratio: 8.7 X

(4) Use of Net Proceeds (S$21.1M)

(a) 38.9% - Expand EMS solution operations

(b) 35.5% - Expand business through M&As, JVs, etc. (Vague)

(c) 25.6% - General Working Capital

(5) Capitalisation & Indebtedness

Actual Cash + FD = US$6M

Actual Total shareholder's equity = US$26.6M

Both more than offsets Actual Total Debt of US$2.7M

(6) Dilution
Directors and Substantial shareholders holding stock at only ~S$0.13
Min Aik Tech holds 50.7% of total shareholdings

(7) Main Customers
(a) Western Digital - EMS Solutions
(b) Min Aik Tech - Precision Stamping Products (They are also substantial shareholders - check IPT/Conflict of Interest)

(8) COGS
Raw material costs constitute 82.2%; Raw materials maintained for only 7-14 days because of JIT system; Prices not subjected to seasonlity.

(9) Gross Profit Margin
Decreased from 29.6% in FY04 to 13.1% for FY06, mainly due to EMS Solutuions which typically command lower margins

(10) Inventory Management
Inventory Turnover = 25 days only due to JIT system (for FY06); No write off