Panda Eco System Berhad (PANDA, 0290) will be making its debut on Bursa ACE Market today. The company primarily involves in Retail Management Eco-system encompassing a suite of retail management solutions which support the management of retail operational processes such as POS management, CRM, ecommerce platform management, supply chain management, management of information on store operations, inventory and warehouse management as well as financial and accounting management. Underpinned by robust growth, we expect PANDA to register core net earnings of RM8.1m and RM10.2m for FY23 and F24 respectively. BUY with a FV of RM0.30 based on 20x PER (peers average of similar market cap) over FY24 EPS.

PANDA’s revenue model is divided into 2 segments whereby customers can opt to use one-off Software license fee with project implementation charges and the recurring software license maintenance fee, subscription fee and cloud server management service fee.

The company’s customer base has grown from 8 retailers in 2010 to 137 retailers as at October 2023 whereby these clients are equipped with PANDA’s Retail Management Eco-system for a cumulative 1,410 retail stores. The company’s clients include grocery retail stores including hypermarkets, supermarkets & mini-markets and convenience stores general merchandise retailers.

The company intends to expand its solution offerings under its Retail Management Eco-system to meet more retail needs which include Business Analytics Dashboard’ Retail Income Management; System and Sub-let Rental Management System; and E-invoice Financing application process portal.

PANDA is planning to grow its workforce and operational facilities in Malaysia and expanding its geographical footprint within the ASEAN region namely Indonesia and the Philippines.

Bulk of the IPO proceeds are planned for the development of new business modules and business expansions. PANDA is planning to develop cloud-based modules under its HQ for better efficiency which will allow customers remote accessibility, cross-platform and multi-device compatibility as well as enable fast roll out of enhancements and updates without any downtimes.

The company is in net cash position as at 1HFY23 and will remain so postIPO. According to the IMR Report conducted by Providence Strategic Partners, the retail management solutions industry in Malaysia is forecast to grow by a further CAGR of 18.4%, from an estimated RM415.7m in 2023 to RM582.8m in 2025.

Source: Rakuten Research - 27 Nov 2023

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