Alpina launches IPO to ride growth potential of integrated building services
The increasing number of ageing buildings in Singapore’s built environment has created a growing demand for building services and facilities management providers like Alpina Holdings. To capture the growth opportunities, Alpina on Jan 21 launched its IPO on the Catalist of the Singapore Exchange. The offer closed on Jan 26 and trading is scheduled to begin on Jan 28.
Under this IPO, 37 million placement shares were offered at 31 cents each. The company will issue 32 million new shares, but five million shares that are part of the IPO are vendor shares. The company will receive proceeds of around $8.1 million whereas controlling shareholders executive chairman and CEO Low Siong Yong and executive director Tai Yoon On will receive $1.6 million from selling their shares. There is no public tranche made available to retail investors.
At 31 cents, Alpina’s market capitalisation upon listing stands at $57.1 million. It values the company at 11.3 times FY2020 earnings. United Overseas Bank is the sponsor and issue manager and placement agent, and UOB Kay Hian is the sub-placement agent for the placement.
Alpina plans to use the IPO proceeds to expand its existing business, beef up its facilities management services segment, fund potential acquisitions and for general working capital.
The company is eyeing the growing market of what is dubbed “integrated building services”. This includes work such as maintenance of mechanical and electrical systems of buildings and related services such as cleaning, security, landscaping and general upkeep. This sector has been identified by the government as part of the so-called industry transformation roadmap where better efficiencies and higher value can be created.
Low, referring to the company’s 17 years of history, says it is well-poised to ride on industry trends. Alpina, which employs more than 400 skilled technicians, is qualified by the Building and Construction Authority to bid for public sector projects with no caps on the tender value. “The IPO provides an excellent platform for the company to enhance its corporate profile and better position itself to capitalise on such opportunities,” he says.
Meanwhile, Tai says the company will maintain its focus on growing a bigger share of business from its dominant customer base: the public sector. He notes that the government has been dishing out more integrated facilities management contracts that are bundled together. While this means the client needs to deal with just one contractor instead of multiple ones, it also means the contractors who win the tenders get a bigger cut of the overall budget for these activities.
For Alpina, this shifting trend is an opportunity to capture a bigger share of the market. “Listing is a good option to give us not only a competitive edge in our bids, but also the opportunities to expand our business to capture more projects,” says Tai.
For its latest full year FY2020 ended Dec 30, 2020, Alpina reported a revenue of $37.9 million, down 12% from FY2019, which it attributes to disruption caused by pandemic-related measures. However, it reported earnings of $5 million for FY2020, almost double that of $2.7 million in FY2019, thanks to government wage subsidies.
In any case, at least for 1HFY2021, Alpina has already shown better earnings. Earnings for the six months ended June 30, 2021, was $4.1 million, up from just $0.9 million in the preceding halfyear. Revenue in the same period was up 76.6% to $25.3 million.
The company says it took advantage of the upcycle to invest in technology and training so that its output and productivity can be improved, given how labour crunch is an ongoing issue. “So far, we have been delivering our projects without delay,” says Low.
The company management notes that since its projects are mostly from the government — that hardly gives out long-term tenders to maintain a fair competition landscape — this means that Alpina’s revenue can be rather lumpy without any recurring contracts at hand. As at end December 2021, the company’s order book stands at $151.9 million.
Nevertheless, Low is confident that Alpina, which secures an average of 10 projects a year, will see this number increase following the listing. “In order to maintain better profit margins and stable revenue, we will try our best to secure new contracts with profitable tender prices while also retaining good control of project costs and management for ongoing contracts,” he says.
While there is no formal dividend policy for now, Alpina plans to pay at least half its FY2022 and FY2023 earnings to shareholders.