UPCOMING IPO: A “Unique” Fire Extinguisher Company Going IPO!

UPCOMING IPO: A “Unique” Fire Extinguisher Company Going IPO!

Do you have a fire extinguisher at home? Vote below and let me know! ?

Do you know the fire extinguisher located at the corner of offices, shopping malls, beside the lifts and stores need to be serviced and renewed every year? We often hear people saying “better to be safe than sorry”, but do you have the complete safety tools to keep your loved ones safe when you’re not around?

This post was originally posted here. The writer, May Ting is a veteran community member on InvestingNote, with a username known as @mayting and has over 270 followers.

Had an opportunity to meet with the management team last week to have a discussion on the company. They even gave us a small fire extinguisher as door gift ? Little did I know this fire extinguisher can be placed inside my car for emergency use! (According to the director, the cylinder can withstand up to 40 degree celsius, so its safe to put in vehicles).

On 5th August 2022, Bursa Malaysia will welcome a new IPO, Unique Fire Holdings Berhad, with a motto to be “your guard against fire”, is a prominent distributor of fire protection systems, equipment and accessories. Unique will be listed on Ace Market in Bursa Malaysia with an IPO price of RM0.26, raising a total of RM21.78 million with a total market cap of RM104 million upon listing.

Wondering how this company has grown and having 25 years track record operating in the fire protection industry and right now going to be listed? Fire extinguishers has been a mandatory necessity for everyone, UNIQUE will be an interesting company for you to take a look on.

What is the company going to do with RM21.78 million?

First, let’s take a look at how the company is going to allocate RM21.78 million, the total gross proceeds from the public based on the IPO.

From the table above, we know that most of the proceeds will be allocated to the expansions of manufacturing facilities, penetrating new foreign markets and to expand the operational capabilities. The others will be allocated to working capital and listing expenses. The executive director also mentioned that the company is currently in healthy debt proportion, hence the IPO proceeds will not be used to repay debts.

Unique Striving With 3 Main Revenue Sources: Assembly, Distribution and Manufacturing

Now let’s dive into the company’s business activities and revenue streams.

Unique has three main revenue streams including assembly, distribution and manufacturing. Over the past 3 years, the group’s revenue has been largely contributed (46% to 49% total revenue) by the assembly of fire suppression systems and equipment.

You can take a look on this video to understand how Unique227 fire suppression system works: https://youtu.be/vUdkQOzMUCQ

The second largest contributor segment of the group is through distribution of fire suppression systems, equipment and accessories under the group’s own brands (Unique, Unique 227 and Unique5112) and third party brands (Orient, Kiddle, Viking, CD, ZYfire, Demco and System Sensor). 70% to 80% of the revenue is from in-house brands. Unique sources their products from both domestic and foreign manufacturers and suppliers, to supply the products to their customers. They do not involve modification or alteration.

Besides, Unique also manufactures fire protection equipment under its own brand involving the transformation of input materials into finished products. In particular, they manufacture hand portable dry chemical fire extinguishers, where we manufacture the fire extinguisher cylinders in-house and put together the parts and fill the cylinders with extinguishing agents.

Unique’s Fire Safety Products In One Picture

You’ve probably seen the fire extinguishers, fire hose reel and the fire detector alarms before, but what makes them special among other brands is their custom graphics designed on fire extinguishers which you can see on the right side of the picture below (catering to customers who would like to have fire extinguisher in their house with a blend with their house design). Apart from having higher price, the group is able to provide fast delivery to every order as they have in-house transportation and enough opacity to store stocks.

Investment Highlight & Outlook Of The Company

So what’s so special about this fire extinguisher company? Here’s 3 key highlights which might interest you on Unique.

1) Strong Branding & Growing Customer Base

With a 25 years track record, the group has a growing customer base from a total of 1,500 in FY19 to 1,700 in FY21. Unique has a strong branding recognition from M&E and EPS contractors and the group targets to enhance their marketing in different countries including Hong Kong and Middle East. New distributors will be appointed in Brunei, Cambodia, Hong Kong, Myanmar and Vietnam to grow the Group’s export sales.

2) Expansion On The Headlines To Cater More Customers

The group is targeting to increase the usable floor area by 10,228 sq ft (from 114,656 sq ft to 124,884 sq ft). 1 new manufacturing line can cater a total output capacity of 235k cylinder per year. The group plans to expand 3 new manufacturing lines, and acquire both British Standard and Malaysia Standards Certifications.

New sales offices and warehouses in Johor and Penang will also be established from the IPO proceeds. The group believes that these two states will be the main to grow the business by taking reference of these two states being the third and fourth largest states by revenue contribution in FYE2021. The newly built offices and warehouses will improve the delivery times to customers. Additionally, the group also plans to install a solar PV system with a capacity of 269 KW, which can reduce the utility cost by RM0.19 million per year on average.

3) Fire Protection Systems, Equipment and Accessories Are Mandated By Various Regulatory Buddies

Fire protection is mandatory in built environments which supports human activities. One good note for the company is that inside a private dwelling, a separate set of living quarters with a private entrance either from outside the building or from a common hall, lobby, vestibule or stairway inside the building, that are incorporated in the Uniform Building By-Laws in Selangor, Penang, Terengganu and Melaka are required to have portable fire extinguishers.

Unique is currently bottlenecked by the downturn of construction sectors, the group believes that a recovery in construction will bring more opportunity and sales to the company. Also, with a higher awareness on fire safety, the group believes more states will be enforced to have portable fire extinguishers to protect the human and environment.

Disclaimer: This article is only for educational sharing. None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.

Once again, this article is a guest post and was originally posted on @mayting‘s profile on InvestingNote. 

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