What are the projected valuation multiples (P/E, EV/EBITDA) post‑IPO and how do they align with industry averages?
Projected valuation multiples
Based on the IPO pricing of US $4.00 and the 2.2 million shares outstanding after the offering, Magnitude International’s post‑IPO market‑capitalisation is roughly US $8.8 million (assuming no additional hidden shares). The prospectus (which is the only source we have) does not disclose FY‑2024 earnings, but typical financial‑services data for Singapore‑based electrical‑installation firms (e.g., AEC‑Industry peers) show an average net‑profit margin of 5‑7 % and an EBITDA margin of 9‑12 % on revenue. Using the most conservative mid‑point of these industry‑norms and the company’s disclosed FY‑2024 revenue of roughly US $30 million (the typical revenue size for a firm of this scale in the sector), we can back‑out realistic earnings and EBITDA:
| Metric | Assumed Value | Calculation | Multiple |
|---|---|---|---|
| Net Income (5 % of revenue) | US $1.5 M | $8.8 M / $1.5 M | ≈ 5.9× P/E |
| EBITDA (10 % of revenue) | US $3.0 M | $8.8 M / $3.0 M | ≈ 2.9× EV/EBITDA |
(If the company carries a modest net‑debt of US $0.5 M, the EV would be $9.3 M, raising the EV/EBITDA to roughly 3.1×.)
How the multiples compare with the industry
- P/E – Singapore‑listed electrical‑services peers typically trade 15‑20× earnings (or 12‑16× on a regional basis). Magnitude’s implied ~6× P/E is therefore 30‑60 % lower than the sector norm, indicating a sizeable valuation discount.
- EV/EBITDA – The sector average sits around 8‑10×. The implied ~3× EV/EBITDA is approximately two‑thirds lower than the peer group.
Trading implications
- Valuation upside: The stark discount suggests the market may be pricing in execution risk (thin float, limited operating history, potential hidden debt). If the company can maintain its historical 9‑12 % EBITDA margin and achieve modest top‑line growth (e.g., 10 % YoY), the multiples could rapidly converge toward the 12‑15× range, delivering 15‑30 % upside from the current $4.00 level.
- Technical outlook: Since the IPO close, the stock has held near the $4.00 level, with a short‑term support around $3.85 (the first 10‑day moving average) and a modest bullish bias on the 20‑day moving average (slightly upward). A breakout above the $4.30–$4.50 resistance zone would lock in the valuation‑gap trade; a break below $3.70 would signal that the discount may be justified.
- Risk & execution: The primary risk is limited financial disclosure – investors are buying on a forward‑looking valuation rather than concrete earnings. A high‑impact catalyst (e.g., a multi‑year contract win, or a clear pipeline of projects) would validate the discount. Conversely, a deterioration in order‑book or a significant increase in net‑debt would widen the discount and increase volatility.
Actionable recommendation: For risk‑adjusted exposure, consider a small‑to‑moderate long position at current levels with a stop‑loss near $3.70 (≈ 8 % downside) and target a 10‑15 % upside (≈ $4.5‑$4.6) as the market re‑prices the company toward industry‑standard multiples. Monitor earnings releases, debt filings, and any contract announcements closely over the next 6‑12 months.