FOS CAPITAL LTD IPO Analysis

FOS CAPITAL

IPO PRICE 25c

Shares on Issue 45 mil

Number of Shares to be held by the Existing Shareholders on Completion of the Offer 33 Mil

Numbers of shares in Escrow 33 mil ( All existing shares are escrowed )

Free Float 12 Mil shares

Cash 5.1 Mil

Mcap 11.25 Mil

EV 6.1 Mil

FOS operates in the commercial lighting space. It currently generates revenues of circa $15m pa and is profitable.

From inception 2 years ago, FOS has completed 2 strategic acquisitions of commercial lighting businesses (Frend & JSB Lighting) creating a national business employing 50 staff with 13 high quality brands and a fully integrated manufacturing facility.

The commercial lighting industry is highly fragmented and ripe for consolidation. FOS is one of the few with genuine domestic manufacturing capabilities and so is in prime position to be the catalyst.

Acquisition strategy investing in diversified industrial, electrical & technology based businesses

Seeking businesses to extract synergy benefits and achieve critical mass

Experienced board & management team with proven record able to execute strategy

2 Core acquisitions to date:

Frend Lighting from Gerard Lighting June 2019 and

JSB Lighting from ASX listed HGL Ltd November 2020
FOS has an established national commercial & industrial lighting manufacturing & distribution business and is wellplaced to rapidly expand via acquisition and organic growth.

FOS intends to aggressively grow its business both organically and by acquisition

Organic expansion

Adding new product lines to the existing range , Distributing the Megabay product range internationally and Recruiting additional experienced sales executives

Acquisition Strategy

FOS intends to acquire complementary businesses to obtain critical mass

Acquisitions will assist with securing additional products, staff & customers

Acquisitions will also be targeted to attain geographical spread

Mid term target : FOS is targeting revenues of +$50 Mil over the next 3 years and Targeted EBIT margins of +10%

FOS lighting product ranges and Customers are as follow




Conclusion


FOS is a simple story. 15 mil Revenues , Cash flow positive , Tiny Mcap of 11.2 mil and got 5.1 Mil Cash . Revenues to grow Organically and via acquisitions. Extremely tight capital structure. ALL 33 mil existing shares are escrowed . 82 % Shares owned by Top 20 and some long term investors in Top 20.

IMO FOS will be a dividend paying mid size company in next 18 to 24 months

I have invested in similar type of companies in the past when they were little and under the radar . Unity Wireless UWL in IPO at 25c and current share price is $ 3.10 and It is a 2 Billion Mcap company now ( Still Holding ) and Recently listed Proptech Group limited PTG IPO at 25c and Current share price is 79c and It is a 100 Mil Mcap company now ( Sold half .. Holding Free carry )

I am expecting very similar performance from FOS

It is a company strictly for medium to long term investors who are patience enough to wait and let the story unfold !

It should open 25 to 30 % Higher from IPO Price But looking at a tiny free float and extremely cheap valuation ,It got a potential to surprise us on the up side !

GLTAH

Please DYOR

ALL IMO

Get yourself vaccinated !

Bhavdip