NRA Capital Pte Ltd

Written by: Jacky Lee

Thursday 15 Jan 2015

Zico Holdings – Press release

Acquisition of corporate secretarial business from Stamford Law

Room to grow

ZICO Holdings and Stamford Law Corporation have announced a Joint Venture Company will be established to manage and hold the title, right and interest in corporate secretarial files (Portfolio) to be acquired from Stamford Law by ZICO.

The JVC to be established will be 51% owned by ZICO and 49% owned by Stamford Law while the total cash consideration for the Proposed Acquisition of the Portfolio is approximately S$2.4m

According to the group, the joint venture with Stamford Law and acquisition of the corporate secretarial portfolio is closely in line with their expansion plans. As part of the strategy to enhance ZICO’s services, the partnership with Stamford Law, one of Singapore’s leading corporate law firms, is a clear testament of ZICO’s direction and commitment to expand the provision of professional services and attract a fuller spectrum of clients. The mutually beneficial acquisition will also build ZICO’s portfolio of stable and recurring revenue streams while the synergies achieved from economies of scale will lead to benefits such as potential lower overall operational expenses and streamlined work processes. Going forward, the group remain focused on driving growth opportunities across all business and ASEAN geographical segments.”

 

Our View:

Zico Holdings is one of the best 2014 IPO performance stock since listing in November last year, up 67% from its S$0.30 IPO price to S$0.50 currently. Based on its 9-months FY14 results, Zico is trading at 21.7x annualised FY14 PER and 17.7x P/NTA which seem expansive. However, given its strong ROE at 82%, strong recurring income (close to 50% of its revenue was recurring) and net cash position. Any further margin expansion in the near future could make its current share price look attractive. Its business is mainly from ZicoLaw (believed to be one of the largest law firms in Malaysia is term of employees).

After taking into account the funding of the Proposed Acquisition, ZICO has a remaining balance of S$8.74m of the initial public offering proceeds raised. ZICO continues to actively seek opportunities to expand its services and business as well as other opportunities in mergers and acquisitions.     

 

Additional Company Specfic ReportsDate
Zico Holdings – Press release
free
15 January 2015
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