GS Holdings launches IPO at 25 cents per share

[Shion]

GS Holdings launches IPO at 25 cents per share

http://www.theedgemarkets.com/sg/article/gs-holdings-launches-ipo-25-cents-share

SINGAPORE (Jan 7): GS Holdings, a centralised commercial dishwater washing company, has launched its initial public offering (IPO), seeking a listing on the Catalist board of the Singapore Exchange.

The placement of 24 million shares at 25 cents apiece is expected to raise total gross proceeds of $6 million and net proceeds of about $4.1 million.

GS says it plans to utilise the proceeds for the expansion of its dishware washing operations and general working requirements.

GS is expected to reflect a market capitalisation of about $31 million upon completion of the placement.

 

[tarui04]

waste time.

IPO 25
opening 21
day low 18
then spend the next few years between low 1x and 19c

AGM time tell you sorry bad mkt env.

 

[Shion]

waste time.

IPO 25
opening 21
day low 18
then spend the next few years between low 1x and 19c

AGM time tell you sorry bad mkt env.

Waste time for investors

Good for the directors

As long as they can accumulate the capital needed

 

[Asphodeli]

I think it is an interesting business, but by itself, isn't much to go on.

 

[tiny]

I stand one corner observe first. NAV not clear yet.

 

[lbs]

what is up with all the nay-saying?
sometimes the most boring business could be the most steadiest?

 

[SpeedingBullet]

what is up with all the nay-saying?
sometimes the most boring business could be the most steadiest?

Key word.

 

[subprimelive]

Which bank is the underwriter ? Local bank? Can apply thru local bank atm?

 

[Shiny Things]

Gross proceeds of $6 million and net proceeds of $4.1 million? Crikey that is an expensive underwriting fee - the going rate for IPOs is usually a flat 7% unless your last name is Zuckerberg.

The only people getting rich off this thing are the underwriters.

 

[bobbytkc]

A service like dishwasher should be quite steady business actually. But yeah, will wait and see.

 

[tiny]

Launched into market liao....

 

[winorlose]

what is up with all the nay-saying?
sometimes the most boring business could be the most steadiest?

haha..u look at Chew's egg 5SY

 

[Shion]

Kindly change the thread title to *Official* GS Holdings

 

[lolita_5]

looks like another defensive industry stock which will get overlooked by BBs, similar to 800 super

 

[gosukiong]

Hi all,

Hope to get some feedbacks on my thoughts of GS holdings. A quick PEST marcro analysis:

Political: Government grants (PIC, CDG), Tightening foreign labor regulations
Economy: Shortage of manpower for menial jobs
Social: Outsourcing, Eating out culture, Rising educational level
Technology: German centralized dish washing machines

The strongest moat of GS IMO is that restrictions on foreign workers is irreversible and man power shortages for F&B is permanent. In addition, as part of government's drive to raise productivity in F&B sector, they are doing everything to help the centralized dish washing succeed. (everyone knows how effective SG government can be when they want to do smth). The following are the 2 main policies that benefited GS the most:

1) Collaborative industry projects (CIP)
- Top down approach where government identifies problems in industries and partners with industry player to come out with a solution for wider adoption
- funds 70% of all related cost for first time adoption of centralized dish washing for 1 year
- Very enticing to potential customers because you get to keep all the brand new crockeries bought at 70% discount

2) Productivity and Innovation Credit (PIC)
- Bottom up approach where companies come up with their own proposal to increase productivity and funding is subjected to approval
- Includes items like dishwashers, automation equipment, IT, consultancies
- 60% of cost before Aug 2016, 40% of cost after
- Subsidizes customers buying dishwashers
- The awesome part is it also subsidizes the capital expenditure of GS holdings to buy the latest German Dish washing machine

I will stop my post here for now and people who are familiar with the industry please feel free to contribute to the discussion!

 

[spenchua]

Change in Work Process look and sound good. Selling Point, No worry on Washing Labor, Saving on Asset investment, Utilities and Space.

However, is it the way to go are yet to be confirm by the market base on the following;

1. User have to increase inventory by quite a fair bit base on Consumption Par instead of Operating Par.
eg running a Cafe: if you sell 150 Coffee a Day you would probably plan a Operating Par Stock of NO more than 70% est 100 cup. For using the system the user would have to purchase 300 cups as consumption par. Just example of 1 items. imagine the full set Soup Cup, Saucer, Dinner Plate, Fish Plate, Pasta Plate, Dessert Plate, Dessert Bowl, Bar Items...the list goes on. Try imagine a Busy Food Court.

2. Saving on the staff require for the function (Dishwashing). The TRUE on the ground... Restaurant Operator when presented with the Idea will ask, "Oh no need dishwasher, Great.... but who will then be throwing the kitchen waste? Who is going to wash the Toilet? Who would be cleaning the Restaurant? Who is going to help the Chef to Peel Onion, Potato, Cut Vegetables...the list goes on. (Now we see the importance of such a person, usually the lowest paid)

3. For the Company the return I think is not so great. Eg Charging user at $8-$12 a Tub, a small restaurant would use in a region of 6 to 10 tubs a day, giving you a sale income of $2000 to $2500 a Months. This would have include Vehicle, Transport and Driver Cost.

FYI, I am a End User... so how they can make big money remain to be seem.

 

[gosukiong]

To share my thoughts on the points that you have made:

1. The initial investment of 3 times the usual amount crockeries needed for operations is indeed a high barrier of entry for small F&B outlets (e.g. food stall). However, Spring Singapore had taken care of that with the CIP scheme which subsidizes 70% of all cost attributable to the adoption of centralized dishwashing on the first year. This is an awesome incentive for new customers to come and test the waters. You get 70% discount for washing and changing your old crockeries with no strings attached. Whether GS can retain their customers after year 1 that is another story, but customers can keep their freebies even if they choose to leave.

2. I understand that for some restaurants they have junior kitchen helpers (99.9% Foreign Worker) that performs multiple roles of cleaning the toilet, washing the dishes, cutting and peeling, etc but this is a luxury that smaller F&B outlets do not enjoy. To hire a Singapore/PR dishwasher is almost an impossible task, manpower like that simply does not exist. In rare cases where you are lucky enough to find a SG/PR to fill up the dishwashing role, very often they do not turn up when you need them the most.

3. The business model of GS depends solely on economies of scale. The fixed cost per tub is really just a function of their customer base. Hence as they pull in more customers, their margins improves. I estimate that the critical size needed for GS to turn profitable is roughly at a revenue of 15M. Currently 1H2016 revenue is at 4.4M, implying that the company is well on track to profitability by FY2017. Keep in mind that fixed cost of GS (property, machineries, etc) are heavily subsidized by government under (CDG or PIC scheme) up to as high as 60%. Thus, we should expect to see more government grant under ‘other income’ of the income statement.