Dancomech Holdings Bhd (Dancomech), started off through the incorporation of Danco Engineering and Trading, a sole proprietorship in August 1989. Since then, Dancomech has grown into one of the largest Process Control Equipment (PCE) and Measurement Instruments trading and distribution company, commanding a 2.5% market share in Malaysia in 2015.

The group‘s PCE and Measurement Instruments products are mainly used in the water services, palm oil and oil & gas industries. Todate, the group has been granted seven exclusive sole distributorship rights and 11 distributorship rights by its suppliers. The group boosts of 12 PCE product categories ranging from valves, switches and actuator as well as five Measurement Instrument product categories ranging from sight glass, gauges and recorders.

In order to build its presence in the east coast of Malaysia, the bulk of its IPO proceeds (RM6.5 mln or 36.1%) will be spent on the setting up offices-cum-stores which will be strategically located close to petrochemical plants and plantation farms. Meanwhile, the group also aims to upgrade its testing lab to improve trading efficiency. Additionally, the group targets to increase its products range by acquiring distribution rights and development of new products under the group’s own brand.

Dancomech has delivered a historical four-year (2012-2015) net profit CAGR of 10.3%, on the back of a historical four-year revenue CAGR of 1.3% totaling RM11.0 mln and RM68.3 mln respectively in 2015. At an indicative offer price of RM0.75 per share, Danco trades at 2015 PER of 10.2x, a slight discount vs. its closest competitor, Unimech Group Bhd at 12.1x, thereby implying a slight potential upside.

Source: M+ Online Research - 18 Jul 2016