World Class Global IPO - DBS Research 2017-06-12: IPO Factsheet

World Class Global Limited - DBS Vickers 2017-06-12: IPO Factsheet WORLD CLASS GLOBAL LIMITED 1E6.SI

World Class Global Limited - IPO Factsheet

  • Offer Price: S$0.26.
  • Share Offer: 3.98m public offer shares; 132.02m placement shares.
  • Close Date: 13 June 2017 at 12.00 noon.
  • Share Trading: 15 June 2017 at 9.00 am.
  • Sponsor, Issue Manager and Placement Agents: Zico Capital Pte. Ltd (subsidiary of Zico Holdings), UOB Kay Hian Private Limited, OCBC Bank.



Business 

  • World Class Global Limited is a real estate company that undertakes property development and property investment in major cities in Australia and Malaysia.
  • World Class Global has launched development projects such as Australia 108 and AVANT in Melbourne, Australia.
  • The company also holds various land parcels in Penang, Malaysia, and has plans to develop the land, and refurbish existing buildings into commercial and/or residential premises.
  • Aspial is the controlling shareholder of World Class Global Limited. 


Competitive Strengths 


Established track record of developing quality residential properties 

  • World Class Global has an established track record in developing quality and well-designed residential properties in sought-after locations.

Ability to manage exposure to volatility in property prices 

  • Leveraging on the management’s experience in property development, the company is able to develop plans to meet its customers’ needs and launch projects for sale within a reasonably short timeframe. This reduces exposure to volatility in property prices.

Ability to respond and adapt to changing consumer needs 

  • Leveraging on the management team’s experience in the property development business, knowledge of consumer needs and preferences, and professionals for each property development project, the company believes it is able to appeal to its target market, thus enabling it to achieve its financial and commercial goals.


Business Strategies 


Keeping abreast of developments in consumer needs and preferences 

  • Emphasis on feedback and views from sales and marketing consultants and property agents to develop plans which are attractive to the target market.

Launch and commencing construction on new projects, and increasing portfolio of development sites 

  • For the development sites that it has acquired, the company will work on launching projects for sale. It will also commence construction on launched projects by appointing relevant professionals and obtaining relevant licenses and permits.

Entry into strategic alliances or partnerships 

  • Negotiations with potential third party investors to participate in the existing and/or new projects.

Expansion to other sectors and property investment 

  • To expand to include property development in other sectors, such as hospitality. It may also expand its business to include acquisition or development of property for investment purposes, to earn rental or other income.


Prospects and Outlook 


Weakened demand for Australian properties 

  • World Class Global believes that demand for Australian properties may soften due to the impact from regulatory measures, and supply risks arising from the number of apartments expected to be delivered to the market in the near-term. 
  • External risks include slowing growth rate of regional economies and uncertain market conditions globally.

Stable market in Malaysia despite tighter regulations 

  • The tighter lending rules and cooling measures in Malaysia may moderate further increases in property prices in Malaysia.
  • World Class Global believes that the Penang property market is expected to remain stable due to a sustainable environment in Penang, more job opportunities and availability of good schools and first-class hospitals.


Key Risks 


Volatility of performance in the property industry 

  • Affected by general economic and market conditions, property market conditions, sentiment, competition and government regulations.

Short operating history 

  • Short operating history and track record may not provide a sufficiently meaningful basis for investors to evaluate business, financial performance and prospects.

Negative operating cash flows and net losses in FY2014, FY2015 and FY2016 

  • No record of sale of development properties as the projects were not completed and had yet to be handed over to purchasers.

Exposed to foreign exchange risks 

  • The company’s revenue, purchases are denominated in SGD, AUD and RM. Fluctuations in the exchange rates would affect its profitability.

Subject to limitations of property valuations 

  • Changes in regulatory conditions or other relevant factors could affect valuations and the returns from these projects.

Increase in construction costs 

  • Costs of labour and equipment, construction materials such as metal, stone, cement, sand etc. may fluctuate in accordance with changes in supply and demand conditions.

Risks in relation to pre-sold properties 

  • Delay and/or failure in the delivery of pre-sold properties, purchasers may terminate the pre-sale agreements and claim refunds of monies paid, damages or compensation for late delivery.


Dividend Policy 

  • World Class Global intends to distribute dividends of up to 50.0% of the net profits attributable to shareholders for FY2019 and thereafter.




DBS Group Research DBS Vickers | http://www.dbsvickers.com/ 2017-06-12
DBS Vickers SGX Stock Analyst Report Maintain Same



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