Despite a lacklustre IPO in 2019, Grand Venture Technology has turned out to be one of the better performing manufacturing stocks in the past year. Will the company’s recent acquisition spree help keep this uptrend intact?
When Grand Venture Technology (GVT) launched its IPO back in January 2019, it got a cool reception from investors. Total subscription demand was a mere 1.3 times the total number of shares offered.
Indeed, given it was seeking $13.2 million in proceeds from a Catalist listing, this was not an IPO that would make investors sit up and take notice. Moreover, the company was in manufacturing, which was not the most exciting of industries, compared to high-tech start-ups vying for unicorn status that were very much in vogue at that time.
Then came the pandemic which worsened the fortunes for many companies in the electronics manufacturing sector overnight. GVT was not spared either, seeing a dip in its share price to about 21 cents from its then-usual trading levels of 26-27 cents at the start of 2020. However, as the company started to deliver better numbers in the second half of 2020 and 2021, its share price climbed sharply. On Sept 7 last year, the stock hit an all-time high of $1.45.
For investors who bought GVT at its IPO offer price of 27.5 cents, they would have seen its share price surge nearly four-fold based on the Jan 19 closing price of $1.06, valuing the company at $350.6 million. Since Nov 30, 2021, the company has been upgraded to the Mainboard.
One beneficiary — and driver — of GVT’s share price appreciation is private equity fund Novo Tellus Capital Partners, better known for turning around and growing the business of AEM Holdings. In January 2021, Novo Tellus acquired a 29.6% stake in GVT for $29.87 million or 33 cents per share. As at Sept 14, Novo Tellus holds a 27.4% stake.
In an interview with The Edge Singapore, Novo Tellus managing partner Loke Wai San says the fund invested in the company because, firstly, it saw that GVT had a great management team that “says what they do, and does what they say”. The second reason was that Novo Tellus believes GVT is one of the winners in the global semiconductor supply chain as it shifts to Southeast Asia.
Loke points out that GVT is a beneficiary of this shift, both in the front and back ends of the semiconductor industry, as well as the life sciences market. He also highlights that GVT “goes beyond precision metals, they are also into precision ceramics and quartz, and the advanced materials [space] which is very interesting”.
To be sure, GVT’s share price gains have been backed by its earnings growth. In FY2019 ended when the year the company went public, it reported earnings of $3.1 million and revenue of $40.1 million. In FY2020, the numbers improved to $5.2 million and $61.4 million respectively. GVT has a December year-end.
In the most recent 3QFY2021 ended Sept 30, 2021, GVT reported earnings surged by 250.9% y-o-y to $5.17 million. This came on the back of a 90.9% y-o-y jump in revenue to $31.88 million. For the nine months ended Sept 30, 2021, earnings and revenue came in at $13.68 million and $85.42 million, representing a 95.9% y-o-y and 270% y-o-y increase respectively.