Dishwashing firm aims to raise $4.1m in year's second IPO

The new year has seen an uptick of interest in share market listings, with another firm launching an initial public offering (IPO) yesterday.

GS Holdings, which operates centralised dishwashing facilities, is seeking to list on the Catalist board.

Eindec Group, which manufactures and distributes clean-room equipment and heating, ventilation and air-conditioning equipment, launched its IPO on Wednesday, while another three companies that lodged preliminary offer documents last month may also announce firmer listing plans.

There were only 13 IPOs last year, according to financial portal ShareInvestor.

The placement by GS of 24 million shares at 25 cents each is expected to raise net proceeds of about $4.1 million. There is no retail tranche.

GS Holdings' market capitalisation is expected to be about $31 million after the placement, which will close at noon on Jan 14. Its shares are expected to start trading on Jan 18.

The firm plans to expand capacity, increase automation and explore other ways of helping customers cut dishwashing costs. Its customers include food courts, coffee shops, restaurants and a hospital.

GS said it has seen an "encouraging" response to its IPO and remains confident of its business despite the turmoil in share markets.

"We are a long-term play, there is never a 'right' time to list. We can't control the market... but we are very confident," chief finance officer Kenneth Foo told The Straits Times.

He said he was optimistic because market research suggests that 98 per cent of firms that could use centralised dishwashing services still have yet to do so. The potential market size was estimated to be between $290 million and $340 million in 2014, he said.

Sales potential was large as the industry is still "relatively young", he said. "Three years ago, have you heard of centralised dishwashing business? I think hardly. "(The industry) is also very driven by the shortage of labour. Dishwashers are mainly older folk; young people, no."

An indication of the growth potential was the fact that as at Dec 15, the company had secured about $14.2 million in revenue for the next 12 months based on existing contracts at that date, Mr Foo said, dwarfing the revenue of $2.4 million generated in 2014.

In 2014, GS had a 40 per cent share of the 2 per cent of the market that was being serviced, he added.

The firm has also cut outsourcing costs, which were responsible for gross losses from 2012 to 2014. As a result, it earned a gross profit of about $300,000 in the first half of 2015, Mr Foo said.

The firm is expanding quickly. It has three centralised dishware washing facilities in the north and west of Singapore and is relocating one to a larger site in Loyang to serve some customers more quickly.

That facility, which will be operational in March, will "at least double" the firm's capacity and improve margins, Mr Foo said.

jkoh@sph.com.sg

This article was first published on January 8, 2016.
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