KGI Securities analyst Joel Ng believes valuations for Audience Analytics, which launched its initial public offer (IPO) on Sept 14, are “attractive given its growth profile”.
See also: Audience Analytics launches IPO of 26 mil shares at 30 cents apiece; seeks listing on Catalist board
In a research note dated Sept 22, Ng points out that Audience Analytics' IPO price of 30 cents implies that the company will trade at 17.2 times FY2020 earnings and have a market capitalisation of around $50.5 million.
“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,” he remarks.
Ng says the company has a “strong market reputation”, given its ability to attract Fortune 500 companies as clients.
Audience Analytics operates four business units but derives most of its revenue from the “business impact assessment and recognition” segment, where it assesses companies for its regional business recognition awards using a range of research tools, surveys and verification methods. Its awards include the SME100 Awards, the HR Asia Best Companies to Work for in Asia Awards, and the Golden Bull Award.
In terms of financials, he points out that the group’s profits rose to $2.9 million in FY2020, an increase from $2.3 million in FY2019 on the back of an improvement in gross profit margins from 43.8% in FY2019 to 65.7% in FY2020. “Given its asset-light business model, we like the group’s ability to translate earnings into healthy free cash flows,” Ng comments. Audience Analytics generated more than $3.6 million in free cash flows each year in FY2019 and FY2020.
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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,” Ng opines.
He anticipates positive momentum with the company’s data analytics platform which he views should easily be able to scale up quickly.
Audience Analytics’ IPO will close on Sept 28 at 12pm, with its shares expected to start trading on 30 Sept.
Photo: Audience Analytics