IPO Highlights: XMH by SIAS

Main Activities: XMH is a Singapore-based distributor for a wide variety of marine and industrial diesel engines, power generating sets and related components. The company also provides customized products and services such as their in-house “e-Gen” power generating units and “XMH IPS” propulsion systems.

Source: SIAS Research EstimatesKey ratios (FY11F)
PER 7.0 P/BV 2.3
ROE 32.7%
Debt/Equity 15%
Current ratio 1.59Source:
SIAS Research EstimatesIPO DetailsNo. of Public Offer Shares1.5mNo. of Placement SharesFloat to PublicPlacement PriceNet IPO Proceeds to XMHLast Date of Application*Date of Trading*IPO Manager99.45m25.2%S$0.250S$18.85m24 January 2011, noon26 January 2011, 9amUnited Overseas Bank*Indicative timelineStock DetailsNumber of Shares*400 mMarket Capitalization*S$100 m


XMH Holdings Ltd. (XMH) is poised to list on the SGX Mainboard on 26 January 2011. 100.95m shares will be issued at S$0.25 each, representing 25.2% of the enlarged post-IPO shares capital. Our preliminary analysis reveals that the company has a stable business model and industry trends reflect a higher demand for XMH’s marine diesel engines. That said, our economic profit model indicates an intrinsic value of S$0.380, representing an upside of 52% over its IPO offering price of S$0.250.
Fundamental Drivers:
 Stable Business Model: Owing to the wide application of marine diesel engines and limited well-known brands within the industry, we believe that XMH operates in a steady business environment. This is further supported by their popular customized in-house products and strong customer following. 75.9% of FY2010 sales are attained from repeat clients.
 Firm Supplier Relationship: Thanks to XMH’s competent distribution network, the company was granted the exclusive distribution rights to a limited range of Mitsubishi brand of high speed and medium speed marine diesel engines and products in regions like Singapore, Indonesia and Maldives. Mitsubishi is one of the four globally renowned marine diesel engine brands and the firm supplier support provides XMH with an edge which competitors cannot replicate.
 Robust Growth Prospect: With the IPO proceeds, XMH can broaden its advantage against other peers by establishing an assembly line for their customized "e-Gen" power generating sets. This facility enables XMH to manufacture exclusive in-house components, shorten its lead time, ensure component quality and assemble more sophisticated products.
 Supportive Industry Catalysts: Indonesia’s demand for XMH’s marine diesel engines is likely to increase on the back of the execution of cabotage regulation, coupled with upcoming coal-fired power plant projects in Indonesia and escalating coal exports to China.