KUALA LUMPUR (June 1): Synergy House Bhd, a cross-border e-commerce seller and exporter of ready-to-assemble home furniture, ended its first day on the ACE Market of Bursa Malaysia at 35 sen, down 18% from its initial public offering price (IPO) of 43 sen.
The stock traded between 35 sen and 40.5 sen, but never reached its IPO price, marking a dismal debut for the company on Thursday (June 1).
The third most actively traded stock on the local bourse for the day, it saw 82.38 million shares done.
Ahead of its listing, Apex Securities gave the counter a fair value of 50 sen, based on 10 times the price-earnings ratio (PER) for Synergy House’s forecast earnings per share (EPS) of five sen for the financial year ending Dec 31, 2024 (FY2024) — in line with its peers' PER in the range of eight times to 11 times.
TA Securities gave Synergy House a target price of 45 sen, priced at a trailing PER of 13.4 times FY2022 core EPS. TA Securities valued the company at 10 times FY2024 EPS.
“While the listing of Synergy House enables the group to have funds for some of its current immediate expansion plans, the listing will also enable the group to tap into the equity capital market for future fundraising, while also providing the financial flexibility to pursue growth opportunities as and when they arise, as the group expects demand for home furniture to continue growing,” said Synergy House chairman Mok Juan Chek in a statement on Thursday.
“We intend to expand the market reach of our B2C (business-to-consumer) sales, as we see home furniture continuing to grow. Our B2C sales have grown substantially over the past years on the back of e-commerce, at first in Malaysia and now in the US. We have also recently expanded our B2C sales in the UK and Canada," said Synergy House executive director Teh Yee Luen.
The IPO was fully subscribed by 14.02 times by the Malaysian public, after the group received a total of 12,347 applications for 375.42 million shares.
Synergy House raised RM34.4 million in proceeds from the IPO, of which RM10 million has been earmarked for the purchase of inventories, RM1.5 million for the purchase of a racking system and forklifts for its e-commerce fulfilment centres in Johor, and RM10 million for the repayment of borrowings.
Meanwhile, RM1 million will be used towards e-commerce advertising and promotions, RM7.7 million for working capital, and the remaining RM4.2 million for listing expenses.
Synergy House posted a net profit of RM2.62 million for the first quarter ended March 31, 2023, on a revenue of RM51.58 million. EPS stood at 0.62 sen.
Based on the company’s prospectus, Synergy House posted a net profit of RM16.62 million for FY2022, higher than the RM14.39 million in FY2021, RM12.11 million in FY2020, and RM10.9 million in FY2019.
Revenue-wise, the company achieve a top line of RM194.09 million for FY2022, up from RM184.29 million in FY2021, RM122.89 million in FY2020, and RM111.43 million in FY2019.
In FY2022, the company’s largest geographical market was the UK, with a revenue contribution of 42.4%, followed by the US (39.01%), the United Arab Emirates (11.62%), and others (1.63%). From FY2020 to FY2021, the share of revenue from the US leaped to RM63.92 million from RM8.96 million.
Kenanga Investment Bank Bhd was the principal adviser, sponsor, underwriter, and placement agent for the IPO exercise.