Aztech Global Ltd IPO (“Initial Public Offering”) is the latest talk in town. Basically, Aztech Global describes itself as a key technology enabler for the connected world of tomorrow, with a focus on providing one-stop design and manufacturing services.
The company manufactures IoT (Internet of Things) devices, Data-communication products and LED lighting products. Some example of IoT devices that the company manufactures are smart security cameras, IoT lighting products, home plugs, satellite modems, climate control mattresses and tracking devices.
IoT devices and Data communication products makes up 82.6% of the company’s FY20 revenue and 17.2% comes from LED lighting. North America and Europe contributes 59.7% and 32.9% of its revenue respectively while 7.4% comes from other markets.
Now that we understand what the company is doing, you may be wondering why Aztech Global is seeking for an IPO? The company believes that the global IoT market is still growing and there is a rising demand for energy efficient lighting products.
How Will Aztech Global Use The Proceeds?
You can find the information on page 66 of the prospectus. Below is a breakdown of how Aztech Global will use the proceeds.
|Use of gross proceeds from the issuance of the New Cornerstone Shares||Estimated Amount|
|Expansion and enhancement of manufacturing facilities||50,000|
|Expansion of business through, inter alia,|
investments, mergers and acquisitions, joint ventures and/or strategic collaboration
|Enhancement of R&D capabilities||15,000|
|Increase sales and marketing channels for overseas markets expansion||10,000|
|Expansion of ODM/JDM business to capitalise on opportunities in the growing IoT market||5,000|
Does Aztech Global Pay Dividends?
In the prospectus, it was mentioned that there is no fixed dividend policy. The directors intend to recommend dividends of at least 30.0% of their net profit after tax (excluding exceptional items) generated in FY2021 and FY2022.
I believe the reason for the conservative payout ratio is because the company wishes to retain cash to grow (expand) the company.
Aztech Global IPO is offered at an Invitation Price of S$1.28 per Offer Share. The closing date and time for the Public Offer is 10th March 2021 at 12pm. The company will commence trading on 12th March 2021.
Invest only if you believe IoT global market will continue to grow. I classify Aztech Global as a growth stock since there is no fixed dividend policy and payout is only 30%.