F-1: Sagtec Global Limited Files for IPO on Nasdaq Capital Market

Sagtec Global Limited, a British Virgin Islands-based holding company operating through Malaysian subsidiaries, has filed an F-1 registration statement for an initial public offering on the Nasdaq Capital Market, aiming to raise capital for business expansion, marketing, and research and development.

Summary

• Sagtec Global Limited, a British Virgin Islands holding company with operations primarily in Malaysia, has filed for an initial public offering (IPO) of its ordinary shares on the Nasdaq Capital Market.
• The company's business focuses on providing customizable software solutions, including a smart ordering system called Speed+, software development services, data management, and social media management.
• Sagtec also sells food ordering kiosk machines and power-bank charging stations.
• For the year ended December 31, 2023, Sagtec reported revenue of RM29,280,649 (USD6,380,339) and net profit of RM4,656,301 (USD1,014,622), representing a growth of 125.24% in revenue and 97.00% in net profit compared to the previous year.
• 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), indicating a growth of 176.68% in revenue and 309.54% in net profit compared to the same period in 2023.
• The company intends to use the net proceeds from the IPO to expand its business operations in Malaysia, fund marketing and promotion campaigns, invest in product research and development, and create a fixed asset reserve for procurement of Point of Sale systems.
• The IPO price is expected to be between US$[] and US$[] per Ordinary Share.
• The company has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol SAGT.
• The offering is contingent upon the listing of the Ordinary Shares on the Nasdaq Capital Market.
• Mr. Ng Chen Lok, the Executive Director, Chairman and Chief Executive Officer, will own approximately []% of the company's total issued and outstanding Ordinary Shares after the offering, representing approximately []% of the total voting power, assuming that the underwriter does not exercise any portion of its over-allotment option.
• The company will be a controlled company under the Nasdaq Stock Market Rules.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting strong growth in revenue and profit, but also acknowledges several risks and challenges. The sentiment is cautiously optimistic.

Positives

• The company has experienced significant revenue and profit growth in recent years.
• The company has a strong market position in Malaysia.
• The company has an experienced management team.
• The company's product, Speed+, provides comprehensive and customizable solutions for customers.
• The company has growth strategies in place to strengthen its local presence and increase its product range.

Negatives

• The company relies on a limited number of major customers for a substantial portion of its revenue.
• The company is subject to foreign exchange control policies in Malaysia.
• The company may not be able to successfully implement its business strategies and future plans.
• The company is dependent on the need to continually maintain a wide range of software technological solutions which are relevant to our customers needs.

Risks

• The company's operations are subject to various laws and regulations in Malaysia.
• The company is affected by regional and worldwide political, regulatory, social and economic conditions.
• The company's continued success is dependent on its key management personnel.
• The company's reputation and profitability may be adversely affected if there are major malfunctions in its software solutions.
• Increased competition in the sale of software solutions in Malaysia and the region may affect the company's ability to maintain its market share and growth.
• The company's business is subject to supply chain interruptions.
• The company may be affected by an outbreak of other infectious diseases.
• 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'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 which could limit investors ability to make transactions in the company's Ordinary Shares and subject the company to additional trading restrictions.
• The trading price of the company's Ordinary Shares may be volatile, which could result in substantial losses to investors.
• Certain recent initial public offerings of companies with public floats comparable to the anticipated public float of the company have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. The company may experience similar volatility.
• If securities or industry analysts do not publish research or reports about the company, or if they adversely change their recommendations regarding the company's Ordinary Shares, the market price for the company's Ordinary Shares and trading volume could decline.
• Because the company does not expect to pay dividends in the foreseeable future, you must rely on price appreciation of the company's Ordinary Shares for a return on your investment.
• Short selling may drive down the market price of the company's Ordinary Shares.
• Because the company's public offering price per share is substantially higher than its net tangible book value per share, you will experience 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 and such market prices may be volatile.
• You must rely on the judgment of the company's management as to the uses of the net proceeds from this offering, and such uses may not produce income or increase the company's share price.
• 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. His interests may not be aligned with the interests of the company's other shareholders, and he could prevent or cause a change of control or other transactions.
• As a controlled company under the rules of Nasdaq Capital Market, the company may choose to exempt the company from certain corporate governance requirements that could have an adverse effect on the company's public shareholders.
• 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. These practices may afford less protection to shareholders than they would enjoy if the company complied fully with Nasdaq corporate governance listing standards.
• You may face difficulties in protecting your interests, and your ability to protect your 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 the company's shareholders may not be enforceable.
• The company is an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements applicable to other public companies that are not emerging growth companies.
• The company is a foreign private issuer within the meaning of the Exchange Act, and as such the company 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 to the company.
• 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 estimates total revenues, net will be between $9.50 million and $10.00 million, total operating expenses will be between $0.90 million and $1.00 million, and net income will be between $1.50 million and $2.00 million for the year ended December 31, 2024.

Management Comments

• 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.
• As a software company, we eschew the traditional cons associated with software sales, such as expensive software purchases, high upfront costs for hardware, a lack of updates for purchased software, and limited flexibility to cater to business needs.
• Instead, our product, Speed+, offers a comprehensive all-in-one solution for our customers, through our subscription-based model, which is both affordable and simple to install and operate.

Industry Context

The company operates in the software technology sales business, which is highly competitive. The company's competitors may possess greater financial resources and more up-to-date software with better specifications and features. They may also have a larger customer base and offer a wider range of software features and specifications coupled with greater marketing resources.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards in terms of financial performance or operational metrics.
• The document mentions competitors in the software technology sales business but does not provide specific details about their performance or market share.
• The document mentions that the company's competitors may possess greater financial resources and more up-to-date software with better specifications and features, but it does not provide specific examples of comparable companies or projects.

Related Party Transactions

• The company has engaged in transactions with related parties, including sales of goods and services, purchases of goods and services, and payments made on behalf by a director.
• For the year ended December 31, 2023, sales of goods and/or services to related parties amounted to RM4,988,468 (USD1,087,002).

Stakeholder Impact

• Shareholders: The IPO will provide an opportunity for investors to participate in the company's growth.
• Employees: The company's growth plans may create new job opportunities.
• Customers: The company's focus on R&D may lead to improved products and services.
• Suppliers: The company's expansion plans may increase demand for their products and services.

Next Steps

• The company will need to successfully list its Ordinary Shares on the Nasdaq Capital Market.
• The company will need to execute its business strategies and future plans to achieve its expected results.
• The company will need to manage its costs and maintain its competitive position in the market.

Key Dates

Keywords

IPO, initial public offering, software solutions, SaaS, food and beverage, Malaysia, Nasdaq, emerging growth company, foreign private issuer, Sagtec Global Limited, Speed+, data management, social media management, kiosk machines, power bank charging stations