Global Invacom Group Limited - Is it planning to delist from the SGX?

21/11/2014 – Global Invacom Group Limited has had a busy three months, listing on London’s AIM market, making an acquisition in Israel, buying back shares and announcing a 26% rise in H1 profit.

The satellite and TV peripheral equipment maker says it closed on November 10 its acquisition of Israeli company Onepath Networks Limited, which provides telecoms solutions for corporates, government and the military.

The cost of the acquisition was initially not disclosed. The company said at the time it was less than 5% of its market capitalisation, which means it would have cost less than S$5.78 mln, based on its current market cap of S$115.7 mln.

But it disclosed it had paid US$3.5 mln for Onepath, whose Net Asset Value was US$3.4 mln.

Global Invacom said in its recent H1 earnings release, in which it said that it expects the Satellite Communications (Sat Comms) industry to continue to grow due to the development of new technology UltraHD, Digital Channel Stacking (DCS) and also growing demand for HD content.

Meantime, on July 2, Global Invacom shares started trading on London’s Alternative Investment Market (AIM) for smaller companies with a concurrent placing raising gross proceeds of US$15 mln (S$18.7 mln).

The company says it will use the proceeds to expand, and general working capital.

Global Invacom says it believes the listing on AIM will increase their profile in Europe and other countries.

It will look for acquisitions to expand its capabilities through new technologies, new territories and new broadcasters.

The Singapore headquartered company with manufacturing facilities in Malaysia, China and the United Kingdom just announced earnings for 1HFY14:

Revenue: +26.3% to US$69.8 mln
Profit: +7.7% to US$3.7 mln
Cash flow from operations: US$2.8 mln vs US$6.1 mln

Revenue grew mainly due to rising demand from US customers, contribution from Global Invacom Manufacturing (UK) Limited (GIML) since its acquisition in November 2013, and contribution by its Contract Manufacturing segment after receiving additional subcontract assembly work from an established customer.

Revenue from Asia declined by 70.9% due to completion of large delivery to a major new customer during 1HFY13.

The US still makes up just over one-third of sales, and it rose by 59.5%.

Europe had a stronger growth rate of 41.1%, but sales there make up less than one-fifth of sales.

So-called other regions grew by 227.3%, but made up only a small part of their revenue.

The administrative cost rose 36.1% due to professional fees incurred for the listing on AIM and the manpower expenses from the GIML acquisition in November 2013.

Global Invacom hired more RF design and production engineers to develop new products for two major customers.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. Will it delist from SGX?

Global Invacom used to be called Radiance Group, but changed its name on July 9, 2012.

Less than two years later, they were listed on AIM with the aim of raising their profile.

By implication this means their Singapore listing did not raise their profile enough.

Having secured an AIM listing, will they now leave the Singapore market?

Question

2. How much do they hope the increased profile will contribute to earnings?

Presumably they’ve done their sums and have a target in mind.

Total number of questions in the full story: 12)

We have invited the company to an on-camera interview, and/or to reply to our questions in writing.

At the time of publication we have not received a reply (which is why you are seeing this message).

We will update this report if we do.

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