KUALA LUMPUR (April 14): Financial management software developer Autocount Dotcom Bhd, en route for an ACE Market listing on May 9, has set an issue price of 33 sen per share for its initial public offering (IPO) exercise that will raise RM30.88 million.

The IPO comprises a public issuance of 93.59 million new shares or 17% of its enlarged share base of 550.5 million shares, and an offer for sale of 44.04 million shares (8%).

Malacca Securities Sdn Bhd has been appointed principal adviser, sponsor, underwriter and placement agent for the listing exercise.

The 33 sen issue price is at a price-to-earnings ratio (PER) of 13.13 times, according to Malacca Securities officer-in-charge Jason Chan Kai Lok.

“When we started doing the IPO, we based it on 18 times PER, but along the way, the company’s [full-year] profit increased to RM14 million from RM10 million,” Chan explained.

Autocount is principally involved in the development and distribution of financial management software comprising accounting, point-of-sale (POS) and payroll. It has sold approximately 70,000 software licenses for use by approximately 210,000 businesses and companies, primarily in Malaysia and Singapore.

Autocount executive chairman Choo Chin Peng said that the group is a leading accounting software developer in Malaysia with a 13.76% market share, citing independent market research report conducted by Smith Zander International Sdn Bhd.

The group’s closest publicly-listed competitors are ACE Market-listed Ifca MSC Bhd, as well as Main Market-listed Cuscapi Bhd and Ramssol Group Bhd, Chan said.

Both Ifca and Cuscapi were loss-making in their latest full-years, while Ramssol is valued at a PER of 21.11 times.

Towards expanding its reach further in Asean, Autocount has earmarked over half of the IPO's proceeds, RM17.3 million or 56%, to set up offices in Thailand, Indonesia, Vietnam, and the Philippines.

Meanwhile, RM5.2 million (17%) will be utilised for research and development to expand its existing product features, which includes enhancing its cloud POS, e-commerce solutions, cloud accounting and cloud payroll and human resources.

Against an enlarged share base of 550.5 million shares, the group is expected to have a market capitalisation of RM181.67 million.

Breaking down the public issue, 27.5 million shares will be made available for application by the Malaysian public, 11 million to eligible employees and persons who have contributed to Autocount's success, while 55.05 million shares will be placed to selected investors.

Chin Peng and managing director Choo Yan Tiee — both the largest shareholders with each holding 41.02% direct stake currently — are each disposing 18.06 million shares, which will result in them each holding 30.76% in the company post-IPO.

Autocount boasted a significant profit margin of 35.75% for the financial year ended Dec 31, 2022 (FY2022). For the financial year ended Dec 31, 2022 (FY2022), Autocount posted a net profit of RM13.84 million, versus RM10.03 million in FY2021, RM5.72 million in FY2020 and RM4.18 million in FY2019.

Revenue-wise, the group posted a top line of RM38.72 million in FY2022, RM29.48 million in FY2021, RM19.64 million in FY2020 and RM18.89 million in FY2019. This translates to a profit margin of 34.02% in FY2021, 29.11% in FY2020 and 22.14% in FY2019.

The offering of new product services, as well as older software’s slated end of life on March 31 this year, contributed to FY2022's rise in net profit, Chin Peng said.

“Only 21% of our customers have upgraded to the newer version, we still have 79% of customers yet to upgrade,” he continued.

Autocount sales and marketing director Alex Ng said that the price of its newer version is 5% to 10% higher than its old software version, but noted that the group is offering customers discounts to encourage them to upgrade.

“It is not compulsory to upgrade, if they still remain with [the older] version and the [operating system (OS)] is still able to support it without any bugs, they have the option not to upgrade.

“[But] if Malaysia implements a new system or the OS does not support the old version, then they have no choice but to upgrade,” Ng said, adding that the group foresees an increase in upgrades in FY2023 in view of its ongoing marketing campaign.

Besides this, Choo noted that the group’s cloud solutions contributed 9% of its revenue in FY2022 and 6% in FY2021, and is foreseen to contribute “double-digits” in FY2023.