🔵 So, what is NORTHERN's competitive advantage? The editor also looked at the projects completed by the company (although FPE25 has the support of ENGTEX and its subsidiaries, many of its customers are relatively well-known), most of which are mainly C&I, that is, NORTHERN needs to "customize" a solar PV system for these customers, because the inclination or load-bearing capacity of the roof of each factory is different, and NORTHERN needs to study here to see how to maximize the absorption of solar energy and convert it into electricity to reduce the energy expenditure of the customer's factory.
🔵 In addition to the EPCC business of solar PV systems, NORTHERN also began to create sustainable income in FY24, that is, through SARE and REPPA (mainly to see who is responsible for billing and managing customers), it began to sell electricity from solar PV systems. The company currently has 17 projects on hand, with a total power production capacity of about 6.16 MWp.
🔵 In addition, NORTHERN also provides maintenance and repair (O&M) services for solar photovoltaic systems; but generally speaking, when a company provides EPCC, O&M is also included. Currently, NORTHERN separates it out and calculates it as another business.
🔵 In addition to having a higher profit margin than its peers, NORTHERN actually has another focus as an IPO, which is that after listing, LAGENDA (7179) will hold a 12.5% stake in the company; at the same time, the two companies have also reached a cooperation agreement, and NORTHERN will have the First Rights of Refusal to install solar photovoltaic systems in LAGENDA's affordable housing industry. In other words, if LAGENDA's customers want to install solar photovoltaic systems, NORTHERN has priority.
🔵 Although we just mentioned that NORTHERN's residential project revenue increased in FPE25, in fact, the company has not yet obtained any contracts from LAGENDA; the company currently has RM83.2 million in orders. The key point is that these projects will be included in the remaining 6 months of FPE25. As for the revenue, how much PATM should be conservatively calculated, readers can also calculate it by themselves.
🔵 In addition, NORTHERN has about RM1.8 billion in tenderbooks on hand. As for the success rate, since we are not licensed analysts, we cannot give readers an estimate, but in the industry, it is generally between 10% and 20%. Unless the company is more "special", it is around this level.
🔵 This time, NORTHERN's IPO price is RM0.630, and the PE valuation is 24.7 times if calculated based on FY24, and about 16.8 times if calculated based on FPE25 annualization (Annualised, page 25 of the prospectus). It is expected to raise RM42.4 million in funds, most of which will be used for operating expenses and loan repayments, and the rest will be used to move the office to the new Menara Lagenda (next to 3 Damansara) and pay for IPO expenses.
Conclusion:
After reading NORTHERN's prospectus, I subjectively think that this company is quite interesting. There are two points that I deliberately left to the end so that readers will not be biased; first of all, NORTHERN was established in November 2019, which should be regarded as the shortest-established and fastest-listed IPO in history (CROPMATE was established in 2018). Second, the two management members of the company are very young, only 36 years old, and it seems that they can continue to work hard in the future, which is very courageous.
So, I wonder what readers think of NORTHERN after reading it? Those who will subscribe can press ❤️, and those who will not subscribe can press 😢
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