On Friday, ABC Technologies filed its final prospectus in which the company priced its IPO at $10.00 per share for proceeds of $100M. This is down significantly from the $12-15 per share and proceeds of $255-$293M it was looking to raise previously. The company expects the IPO to close no later than March 26, 2021.
As we discussed when it first listed, we didn't expect strong demand for this IPO. As an auto parts manufacturer, it operates in a cyclical industry and overall and this isn't a high growth stock. Given our current environment in which growth is taking center stage, a company growing in the low, single-digits won't command much attention.
That being said, there are a few more details to talk about here - specifically, it's exposure to the EV industry. Here is a good summary:
Much like Magna, if it can make notable wins in this area, that should help with the company's growth profile. It is still unlikely to grow at a fast pace, but it will insulate it from declining demand by traditional auto manufacturers. With the new details, the company will have a value of $525M based on 52,522,392 shares outstanding.
That will give it a forward P/S ratio of 0.50 and an EV/EBITDA of 4.02. This compares favourably to others in the industry. On a P/S ratio it is at the mid range, and on an EV/EBITDA ratio, it looks to be on the lower end.
Given the updated details, ABC Technologies looks like it may turn out to be a value play.
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Mathieu Litalien
About the author
Mathieu is an individual investor and has been investing part-time for the better part of the past 20 years. He is primarily interested in fundamental analysis, focusing on the long-term and his portfolio is composed primarily of dividend-paying equities. Mathieu has a moderate risk profile and also looks for growth and value. His passion for finance and the markets have led him to his MBA and writing for Seeking Alpha and Stocktrades. Mathieu also focuses primarily on stock research and content production for Stocktrades.ca Premium and the Stocktrades blog.
