Audience Analytics - KGI Securities 2021-09-22: IPO Note

AUDIENCE ANALYTICS LIMITED (SGX:1AZ)

Audience Analytics - IPO Note

Audience Analytics (SGX:1AZ) partners with companies to grow their businesses. Audience Analytics operates a wide portfolio of awards, exhibitions, conferences, digital and print media. The group plans to tap on its existing businesses to expand the business analytics segment.

Audience Analytics will be issuing 26mil placement shares, comprising of 18.2mil new shares and 7.8mil vendor shares, at a price of S$0.30 each. The company expects to raise gross proceeds of S$7.8mil and net proceeds of around S$6.4mil.
Application for the IPO opened on Tues, 14 September and will close on Tues, 28 September, 12pm noon. Audience Analytics will start trading on Thurs, 30 September, 9am. We believe valuations are attractive given its growth profile.

Audience Analytics was founded in 2002 by Datuk William Ng and Dato’ Ryan Ooi. The company has a strong market reputation, such that it has managed to attract Fortune 500 companies as clients. The group operates four business units, but derives most of its revenue from the “Business Impact Assessment and Recognition” segment, or BIA&R.
Through a wide portfolio of awards, exhibitions, conferences, digital and print media and business analytics, Audience Analytics helps businesses in multiple sectors better understand their businesses, make better decisions, promote their businesses, and partners with them to grow their businesses.
Through BIA&R segment, the group conducts business impact assessments on companies which apply for or are invited by the group to apply for the business awards organised by the group, including but not limited to the SME100 Awards, HR Asia Best Companies to Work for in Asia Award (HR Asia Awards) and the Golden Bull Award.

Audience Analytics' controlling shareholders are Bain Equity Sdn. Bhd. (Bain Equity), Datuk William Ng and Dato’ Ryan Ooi. Bain Equity is held by Datuk William Ng (60%) and Dato’ Ryan Ooi (40%). Immediately after the placement, Bain Equity is expected to have a direct interest in approximately 84.54% in the group.

The group’s profits rose to S$2.9mil in FY2020, an increase from S$2.3mil in FY2019 and S$2.1mil in FY2018. This was on the back improvement in gross profit margins, which increased from 43.8% in FY2019 to 65.7% in FY2020. Malaysia and Singapore are its key markets, contributing 36% and 30% of total revenues in FY2020 respectively.
Given its asset-light business model, we like the group’s ability to translate earnings into healthy free cash flows. Audience Analytics generated more than S$3.6mil in free cash flows each year in FY2019 and FY2020.

Audience Analytics plans to use most of the IPO proceeds to expand its business analytics segment and to grow into new geographical markets. The group already has a strong foothold in Singapore and Malaysia. The group will simply need to leverage its existing businesses and brands to scale meaningfully in the other countries that it already has a presence in.
In addition, we see positive momentum with its data analytics platform which should easily be able to scale up quickly.

At the IPO price of S$0.30, Audience Analytics will trade at 17.2 FY2020 P/E and have a market capitalisation of around S$50.5mil. We believe valuations are justifiable based on the growth profile and potential to expand rapidly in the region. The reopening of borders and COVID-19 related restrictions will likely provide a tailwind to its exhibition business in 2022.

Lockdowns due to COVID-19 will impact attendance of its events and exhibitions. As Audience Analytics relies on its brands, some of which are licensed, non-renewal of licenses, or negative publicity of its brands/awards will have a negative impact on its ability to attract new customers and preserve existing clients.
See

Joel Ng KGI Securities Research | https://www.kgieworld.sg/ 2021-09-22

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