F-1/A: Sagtec Global Limited Files for Initial Public Offering on Nasdaq

Sagtec Global Limited, a British Virgin Islands holding company operating through Malaysian subsidiaries, has filed for an initial public offering of 1,750,000 ordinary shares on the Nasdaq Capital Market.

Summary

• Sagtec Global Limited, a British Virgin Islands holding company, is planning an initial public offering of 1,750,000 ordinary shares.
• The company operates primarily through its majority-owned subsidiaries in Malaysia, focusing on customizable software solutions.
• The IPO price is expected to be between US$4.00 and US$4.50 per share.
• Sagtec's offerings include a smart ordering system called Speed+, software development, social media management, and data management services.
• The company also sells food ordering kiosks and power-bank charging stations.
• For the year ended December 31, 2023, Sagtec reported revenue of RM29,280,649 (USD6,380,339) and a net profit of RM4,656,301 (USD1,014,622).
• For the six months ended June 30, 2024, revenue was RM19,655,442 (USD4,166,761) and net profit was RM1,922,099 (USD407,466).
• The company anticipates that after the offering, Mr. Ng Chen Lok will own approximately 68.03% of the outstanding shares.
• The offering is contingent upon listing on the Nasdaq Capital Market.

Sentiment

Score: 8

Explanation: The document presents a company with strong growth, a diversified product range, and a clear strategy for expansion. While there are risks associated with the business, the overall tone is positive, indicating a promising investment opportunity.

Positives

• The company has experienced significant revenue growth, with a 125.24% increase in revenue and a 97% increase in net profit from 2022 to 2023.
• The company has a strong market position in Malaysia.
• The company has an experienced management team.
• The company offers a comprehensive and customizable software solution through its Speed+ product.
• The company has a flexible subscription-based model, reducing upfront costs for customers.
• The company has a diversified product range, including software, hardware, and related services.
• The company has strong and stable relationships with its suppliers and customers.

Negatives

• The company relies on a limited number of major customers for a substantial portion of its revenue.
• The company relies on a limited number of suppliers for a substantial portion of its cost of sales.
• The company is subject to various laws and regulations in Malaysia.
• The company is subject to foreign exchange control policies in Malaysia.
• The company is dependent on key management personnel.
• The company may be affected by malfunctions in its software solutions.
• The company faces increased competition in the software solutions market.
• The company is subject to supply chain interruptions.
• The company may be affected by a re-occurrence of a global pandemic.

Risks

• The company may not be able to successfully implement its business strategies and future plans.
• The company is subject to customer and supplier concentration risks.
• The company is affected by regional and worldwide political, regulatory, social and economic conditions.
• The company is dependent on the need to continually maintain a wide range of software technological solutions.
• The company's continued success is dependent on key management personnel.
• The company's reputation and profitability may be adversely affected by malfunctions in its software solutions.
• The company faces increased competition in the sale of software solutions.
• The company's business is subject to supply chain interruptions.
• The company's business and operations may be materially and adversely affected in the event of a re-occurrence or a prolonged global pandemic outbreak of COVID-19.
• The company is exposed to risks arising from fluctuations of foreign currency exchange rates.
• The company and/or its customers may not be able to obtain the necessary approvals or certifications for the use of its software solutions in Malaysia.
• The company is subject to environmental, health and safety regulations and penalties.
• The company's insurance policies may be inadequate to cover its assets, operations and any loss arising from business interruptions.
• The company may be harmed by negative publicity.
• The company is exposed to risks in respect of acts of war, terrorist attacks, epidemics, political unrest, adverse weather conditions and other uncontrollable events.
• An active trading market for the company's Ordinary Shares may not be established or, if established, may not continue and the trading price for the company's Ordinary Shares may fluctuate significantly.
• The company may not maintain the listing of its Ordinary Shares on Nasdaq Capital Market.
• The trading price of the company's Ordinary Shares may be volatile.
• The company may experience extreme volatility that was seemingly unrelated to the underlying performance of the company.
• If securities or industry analysts do not publish research or reports about the company, the market price for the company's Ordinary Shares and trading volume could decline.
• The company does not expect to pay dividends in the foreseeable future.
• Short selling may drive down the market price of the company's Ordinary Shares.
• The company's public offering price per share is substantially higher than its net tangible book value per share, resulting in immediate and substantial dilution.
• The initial public offering price for the company's Ordinary Shares may not be indicative of prices that will prevail in the trading market.
• The company's management has discretion as to the uses of the net proceeds from this offering.
• If the company is classified as a passive foreign investment company, United States taxpayers who own the company's securities may have adverse United States federal income tax consequences.
• The company's controlling shareholder, Mr. Ng Chen Lok, has substantial influence over the company.
• As a controlled company under the rules of Nasdaq Capital Market, the company may choose to exempt itself from certain corporate governance requirements.
• As a company incorporated in the BVI, the company is permitted to follow certain home country practices in relation to corporate governance matters in lieu of certain requirements under Nasdaq corporate governance listing standards.
• Shareholders may face difficulties in protecting their interests, and their ability to protect their rights through U.S. courts may be limited, because the company is incorporated under British Virgin Islands law.
• Certain judgments obtained against the company or its auditor by its shareholders may not be enforceable.
• The company is an emerging growth company and may take advantage of certain reduced reporting requirements.
• The company is a foreign private issuer and is exempt from certain provisions applicable to United States domestic public companies.
• The company may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.
• The company will incur significantly increased costs and devote substantial management time as a result of the listing of its Ordinary Shares on Nasdaq Capital Market.

Future Outlook

The company intends to use the net proceeds from this offering to expand its business operations in Malaysia, for marketing and promotion campaigns, for product research and development efforts, and to create a fixed asset reserve for procurement of Point of Sale (POS) systems, with the balance being used for working capital purposes.

Management Comments

• Mr. Ng Chen Lok has been instrumental in spearheading the growth of our Group.
• Mr. Ng Chen Lok has over 10 years of experience in the software development industry in Malaysia and is primarily responsible for the planning and execution of our Groups business strategies and managing our Groups customer relationships.

Industry Context

The company operates in the competitive software solutions market, particularly in the food and beverage industry, where there is a growing demand for digital ordering and management systems. The company also benefits from the increasing adoption of social media and the need for data management services.

Comparison to Industry Standards

• The company's revenue growth of 125.24% from 2022 to 2023 is significantly higher than the average growth rate in the software industry, which is estimated to be around 10-15% annually.
• The company's net profit margin of approximately 16% in 2023 is comparable to other successful software companies in the region.
• The company's focus on customizable solutions and a subscription-based model aligns with industry trends towards flexible and cost-effective software offerings.
• The company's expansion into hardware sales, such as food ordering kiosks and power bank charging stations, is a strategic move to diversify revenue streams and provide a comprehensive solution to its customers.
• Compared to companies like Toast and Square in the US market, Sagtec is focusing on a specific geographic market (Malaysia) and has a more diversified product offering beyond just POS systems.
• Unlike some competitors that focus solely on software, Sagtec also provides hardware solutions, which can be a competitive advantage in the Malaysian market.

Related Party Transactions

• The company has engaged in transactions with related parties, including sales of goods and services, purchases of goods and services, payments made on behalf by a director, employee benefit expenses charged from related parties, and selling and administrative expenses charged from related parties.

Stakeholder Impact

• Shareholders will have the opportunity to invest in a growing company with a diversified product range.
• Employees will benefit from the company's growth and expansion.
• Customers will have access to innovative and customizable software solutions.
• Suppliers will have the opportunity to expand their business with the company.
• Creditors will be repaid as the company continues to grow and generate revenue.

Next Steps

• The company will list its Ordinary Shares on the Nasdaq Capital Market under the symbol SAGT.
• The company will use the net proceeds from the offering to expand its business operations, marketing efforts, and product development.
• The company will continue to develop and enhance its software solutions and related services.

Key Dates

Keywords

Software Solutions, Smart Ordering System, Point of Sale, Social Media Management, Data Management, Food and Beverage, Kiosk Machines, Power Bank Charging, Subscription Services, Malaysia