IPO Note (Updated 22 September 2021)
Scalable business model
- Audience Analytics (Audience) partners with companies to grow their businesses. Audience 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 will be issuing 26mn placement shares, comprising of 18.2mn new shares and 7.8mn vendor shares, at a price of S$0.30 each. The company expects to raise gross proceeds of S$7.8mn and net proceeds of around S$6.4mn.
- Application for the IPO opened on Tues, 14 September and will close on Tues, 28 September, 12pm noon. Audience will start trading on Thurs, 30 September, 9am. We believe valuations are attractive given its growth profile.
Audience 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.
The group’s profits rose to S$2.9mn in FY2020, an increase from S$2.3mn in FY2019 and S$2.1mn 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 generated more than S$3.6mn in free cash flows each year in FY2019 and FY2020.
The group 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.
Valuation & Action
At the IPO price of S$0.30, Audience will trade at 17.2 FY2020 P/E and have a market capitalisation of around S$50.5mn. 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 the group 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.