Zico

Zico: UOB Kay Hian initiated with a conviction BUY and TP of $0.57, citing that Zico has a first-mover advantage and will use the additional capital from its IPO to consolidate the fragmented professional services market. This will drive double-digit earnings growth for the next few years from both organic expansion and acquisitions. House reckons that Zico has the potential to grow into a powerful presence in the ASEAN region and emerge as a genuine challenger to the big accounting firms as an integrated provider of professional and legal services. Slater & Gordon’s success in Australia and the UK has shown that buyouts of smaller rivals can be a highly value-enhancing strategy for shareholders. Zico’s active but disciplined approach to bolt-on acquisitions emphasises: a) businesses with efficient operations, b) suitability of integration into the Zico network, and c) an ASEAN presence. UOB Kay Hian thinks their concentration on the ASEAN region will be especially lucrative for the company, given the favourable structural growth of ASEAN and the implementation of the ASEAN Economic Community from 2015.