Terratech (IPO)

Terratech IPO: Marble producer Terratech Group is offering 108.7m placement shares (43.5m new, 65.2m vendor) at $0.23 to list on the Catalist board. The net proceeds of $7.0m will be used for the expansion of production capacity and processing facilities and working capital. Post-IPO, Terratech will have a free float of 17.7%, with its controlling shareholders holding ~67.7% of outstanding shares. Incorporated on Mar ’13 in the Cayman Islands, Terratech principally engages in the business of the exploration, development, quarrying, extraction, removal and processing of marble from the Kelantan Marble Quarry in Malaysia, and the commercial sale of marble and marble products. Terratech registered a net loss of $5.4m in FY13 versus a net loss of $1.6m in the previous year. There was no revenue recorded over the past two years, as the group was focused on quarrying planning, construction, infrastructure development and building of inventory for sale, and as such did not generate revenue from its operations. As at the Jun ‘14, Terretech’s order book for its marble products stood at ~$23.5m, with a significant proportion of the order book expected to be recognised as revenue in FY15. As the group’s products are primarily used in the building and construction industry, revenue recognition of its order book would be dependent on its customers’ project schedules. On its prospects, Terratech expects marble consumption to increase going forward, led by growing consumption in China, while industry reports forecast marble prices to remain stable or slightly increase over the next few years. Based on the IPO price of $0.23, Terratech trades at 6.8x P/B with a total market capitalization of $141.5m. While there are no direct peers listed on SGX, UK listed peer Fox Marble Holdings trades at 4.5x P/B. The IPO placement offer closes on 25 Jul ’14 at noon, with trading expected to commence on 30 Jul ’14 at 9 am. Prime Partners is the sponsor, issue manager and underwriter for the IPO, with OSKDMG as the joint placement agent.