Global Engine Group Holding (GLE) Commences U.S. IPO Effort

A Quick Take On Global Engine Group Holding

Global Engine Group Holding Limited (GLE) has filed to boost $17 million in an IPO of its atypical shares, in line with an F-1 registration assertion.

The agency gives IT associated consulting providers to companies in Hong Kong, Taiwan and southeast Asian markets.

GLE remains to be a tiny agency in fragmented and extremely aggressive markets.

I’ll present an replace once we study extra IPO particulars.

Global Engine Overview

Hong Kong, China-based Global Engine was based to supply a variety of enterprise planning to technical design and operations providers to corporations within the telecom, knowledge middle and Internet of Things industries.

Management is headed by founder, Chairman and CEO Andrew Lee, who has been with the agency since inception in 2018 and was beforehand Managing Director at 21Vianet Group Limited and Commercial Director at Hutchison Telecom Hong Kong Limited.

The firm’s main choices embody:

• Business planning

• System design

• Project administration

• Development and operation providers

• Feasibility research

• Maintenance

• Support

Global Engine has booked honest market worth funding of $459,000 in quantity because of associated occasion as of December 31, 2021 from buyers together with China Information Technology Development Limited and particular person buyers.

Global Engine – Customer Acquisition

The agency pursues purchasers in search of its consulting and implementation service choices by way of a direct enterprise improvement strategy.

For its most up-to-date fiscal yr ended June 30, 2021, the corporate generated 81.3% of its income from Hong Kong and 18.7% from Taiwan.

General & Administrative bills as a proportion of complete income have trended increased as revenues have elevated, because the figures under point out:

Click to enlarge

(Source – SEC)

The General & Administrative effectivity a number of, outlined as what number of {dollars} of extra new income are generated by every greenback of General & Administrative spend, rose to 9.0x in the latest reporting interval, as proven within the desk under:

Click to enlarge

(Source – SEC)

Global Engine’s Market & Competition

According to a 2021 market research report by HKTDC Research, the telecommunications business in Hong Kong in 2019 was roughly $12.3 billion and represented 3.5% of Hong Kong’s gross home product.

In December 2020, the Hong Kong authorities enacted its Smart City Blueprint 2.0, which created “over 130 initiatives aimed at making the lives of the general public more convenient.”

As of September 2020, the ICT business and associated fields employed roughly 76,200 individuals in Hong Kong.

Also, Hong Kong’s family broadband penetration fee was a formidable 95% in September 2020, whereas ‘its web connections are among the many highest on the earth.’

The ICT consulting and providers market in Hong Kong is extremely fragmented and really aggressive.

Global Engine Group Financial Performance

The firm’s latest monetary outcomes could be summarized as follows:

• Growing topline income

• Increasing gross revenue however lowered gross margin

• Higher working revenue

• Decreased money move from operations

Below are related monetary outcomes derived from the agency’s registration assertion:

Click to enlarge

As of December 31, 2021, Global Engine had $1 million in money and $3.3 million in complete liabilities.

Free money move in the course of the twelve months ended December 31, 2021, was $483,960.

Global Engine Group Holding Limited IPO Details

Global Engine intends to boost $17 million in gross proceeds from an IPO of its atypical shares, though the ultimate determine might differ.

No current shareholders have indicated an curiosity to buy shares on the IPO value.

Management says it can use the web proceeds from the IPO as follows:

Management’s presentation of the corporate roadshow is just not out there.

Regarding excellent authorized proceedings, administration says the agency is “not currently a party to any material legal or administrative proceedings.”

The sole listed bookrunner of the IPO is Univest Securities.

Commentary About Global Engine’s IPO

GLE is in search of U.S. capital market funding to proceed its normal company enlargement efforts.

The firm’s financials have generated growing topline income, rising gross revenue however lowered gross margin, elevated working revenue however lowered money move from operations.

Free money move for the twelve months ended December 31, 2021, was $483,960.

General & Administrative bills as a proportion of complete income have risen as income has elevated; its General & Administrative effectivity a number of was 9.0x in the latest reporting interval.

The agency at the moment plans to pay no dividends (though it has paid dividends within the latest previous) and plans to retain future funds for its progress plans.

GLE’s trailing twelve-month CapEx Ratio is 3.6, which signifies it’s spending considerably on capital expenditures as a proportion of its working money move.

The market alternative for offering ICT consulting providers in Hong Kong and Taiwan is giant however fragmented and extremely aggressive.

Like different corporations with Chinese operations in search of to faucet U.S. markets, the agency operates inside a WFOE construction or Wholly Foreign Owned Entity. U.S. buyers would solely have an curiosity in an offshore agency with pursuits in working subsidiaries, a few of which can be positioned within the PRC. Additionally, restrictions on the switch of funds between subsidiaries inside China might exist.

The latest Chinese authorities crackdown on IPO firm candidates mixed with added reporting and disclosure necessities from the U.S. has put a critical damper on Chinese or associated IPOs leading to typically poor post-IPO efficiency.

Prospective buyers could be effectively suggested to contemplate the potential implications of particular legal guidelines concerning earnings repatriation and altering or unpredictable Chinese regulatory rulings which will have an effect on such corporations and U.S. stock listings.

Univest Securities is the lead underwriter and IPOs led by the agency during the last 12-month interval have generated a mean return of 24.0% since their IPO. This is a top-tier efficiency for all main underwriters in the course of the interval.

The main danger to the corporate’s outlook is the areas during which it operates are topic to arbitrary and capricious regulatory actions which can happen on little or no discover.

While the agency has carried out admirably as a tiny consulting providers firm, there’s a query as to its skill to profitably develop its operations inside or exterior its current geographic focus.

I’ll present a remaining opinion once we study extra IPO particulars from administration.

Expected IPO Pricing Date: To be introduced.