Maybank IBG gives its assessment on SSF Home Group which is will be listed on the Ace Market on 12 October 2023, the IPO application will close 27 Sep 2023. SSF, which is principally involved in the retail of furniture, home décor and home living products, comes to the market at an trailing FY4/23 PER of 14.5x, at its IPO price of MYR0.25.
Raising MYR50m from IPO
SSF is issuing 200m new shares at an issue price of MYR0.25/sh, raising MYR50m from the IPO. There is also an offer for sale of 24m shares to selected investors at MYR0.25/sh. SSF’s enlarged paid-up capital will comprise 800m shares and at its IPO price of MYR0.25, it will have a market capitalisation of MYR200m.
Expanding market presence
SSF operates 41 outlets nationwide, located in shopping malls, shoplots and standalone outlets in commercial areas. Its prospects lie with a growing population and disposable income. Its net profit grew at a 3-year CAGR of 51% over FY20-23, mainly attributable to higher revenue and margin expansion. SSF has earmarked MYR35.2m (approximately 70.4% of
its IPO proceeds to establish 18 new retail outlets over the next three years.
Valuation on listing day. Based on its pro forma financial statements and its IPO price of MYR0.25, SSF is trading at a trailing FY23 PER of 14.5x, In comparison, the Bursa Malaysia Consumer Index trades at prospective 2023E and 2024E PER of 17.2x
and 15.1x respectively.
Risks
Highly dependent on brand and reputation. SSF’s growth and success over the years has been attributed to its brand value and recognition. Hence, any negative publicity may impact the “SSF” brand. The prevalent use of social media has increased the potential for any negative publicity that could be triggered by adverse events. Exposed to changing of trends. Home décor and living products are subject to constantly evolving designs, seasonal trends and customers’ preferences. SSF will
need to stay abreast with the latest trends to provide customers with products that are in tuned with the current trends. Any possession of obsolete inventories can adversely impact its bottom line as unsellable items will be written off.
Purchasing power. The upward inflationary pressure and rising interest rates environment could lead to a higher cost of living, impacting consumer purchasing power of Malaysian households, including for products such as home furnishing.
Valuation on listing day
SSF is trading at a trailing FY23 PER of 14.5x, at its IPO price of MYR0.25. In comparison, the Bursa Malaysia Consumer Index trades at prospective 2023E and 2024E PER of 17.2x and 15.1x respectively
