Y Ventures Group - DBS Research 2017-07-06: IPO Factsheet

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Y VENTURES GROUP LTD. 1F1.SI

Y Ventures Group - IPO Factsheet

Issue Statistics 

• Offer Price: S$0.22
• Share Offer: 35m placement shares
• Market Cap: S$44m
• Close Date: 7 July 2017 at 12.00 noon
• Share Trading: 11 July 2017 at 9.00 a.m.
• Sponsor, Issue Manager and Placement Agents: RHT Capital Pte. Ltd., UOB Kay Hian Private Limited

Business 

• Founded in Singapore, Y Ventures Group is a data analytics-driven e-commerce retailer and distributor; it has presence in multiple online marketplaces in different jurisdictions, including Amazon and eBay, as well as leading names in Asia such as Qoo10, Lazada, and Tokopedia.
• The Group specialises in online retail data analytics, marketing, distribution, as well as the sale of a wide range of merchandise under third-party brands and its private label “JustNile”.
• Utilising data analytics capabilities to analyse demand trends, pricing intelligence, consumer sentiment, and market competition, Y Ventures streamlines marketing and research efforts to increase sales, improve cost efficiency, and enhance merchandise penetration.

Competitive Strengths 

Proprietary e-commerce data analytics capabilities 

• Its ability to develop robust data analytics tools and capabilities to drive sales on various online marketplaces provides the company with a strong competitive advantage. It leverages on these data analytics capabilities to enjoy favourable prices from suppliers and principals.

Distribution of a wide range of products in different jurisdictions 

• Its expertise and established reputation enables Y Venture to offer its principals and suppliers an efficient channel to sell merchandise to multiple jurisdictions globally.

Scalable business model 

• It can deploy data analytics capabilities across new product categories and into new online marketplaces in a cost- effective manner.

Established and strong relations with suppliers and principals 

• Y Venture helps suppliers and principals to increase brand awareness and provides prompt valuable feedback and data insights.

Business Strategies and Outlook 

Geographical coverage and channel expansion 

• Y Venture aims to anchor and expand its presence in other jurisdictions such as the United Kingdom, Europe, Northeast Asia, and Southeast Asia.

Product range expansion 

• Y Venture intends to increase its product range by investing in product development and establishing new brand partnerships with potential suppliers and principals globally.

Enhancement of data analytics capabilities 

• Y Venture aims to enhance its IT capabilities, with a focus on generating actionable data analytics.

Strategic acquisitions 

• Expanding its business through strategic acquisitions or joint ventures to strengthen its market presence, expand its global network, and penetrate into new business opportunities.

Prospects 

• Global demand for e-commerce retail has surged due to growing accessibility to the Internet through the prevalence of mobile smart-phones and devices as well as the unparalleled convenience that e-commerce offers. 
• Notably, demand has increased, particularly in developed countries, due to: 
  1. greater cost efficiency; 
  2. greater consumer outreach by retailers; and 
  3. strong infrastructure that enables secure e-payments.

Key Risks 

Inventory holding costs 

• Holding and managing a significant level of inventory may incur high holding costs. Its financial position may also be adversely impacted if there is a downward adjustment in the net realisable value of its inventory.

Failure to anticipate changes in consumers’ buying preferences 

• Inability to promptly identify and respond to changes in merchandising and consumer preferences may implicate sales of merchandise.

Dependency on major customer, Zhoukoudian Trading 

• About 28% to 34% of total revenue for FY14 to FY16 is derived from one major customer, Zhoukoudian Trading, which is a wholesaler of books. There is no guarantee that Y Ventures will be able to maintain or improve revenue if Zhoukoudian Trading reduces or ceases the partnership.

Lack of formal supply agreements with suppliers and principals 

• Inability to meet customers’ orders or demand in the event that the suppliers and principals terminate the distributorship arrangements for any third-party brands.

Fluctuations in the costs of merchandise 

• The cost of merchandise may fluctuate due to factors such as changes in market supply and demand.

Improper use or disclosure of business data could harm reputation 

• Faces risks inherent in handling large volumes of data and in protecting the security of such data.

Exposed to risks of infringement of intellectual property rights 

• Y Ventures is in the process of registering its “JustNile” trademark. It may not have sufficient resources to effectively prevent any infringement of its intellectual property rights.

Dividend Policy 

• Y Ventures intends to distribute dividends of at least 20% of net profits attributable to shareholders for FY2017 and FY2018.

Singapore Research DBS Vickers | http://www.dbsvickers.com/ 2017-07-06

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