Is JE Cleantech Holdings a Good Buy?

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Contributor, Benzinga
April 19, 2022
$0.76
-0.1101[-12.65%]
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Open0.706Close-Vol / Avg.97.685K / 17.722KMkt Cap3.805MDay Range0.668 - 0.80052 Wk Range0.601 - 2.511
  • With recession fears and a major geopolitical flashpoint impacting global markets, many would-be public companies are gun shy.
  • In this uncertain environment, corporations with a steady (if not outright boring) profile might be able to outperform.
  • All public market debuts are risky — especially low-valuation ones — so due diligence is a must.

Unlikely to grab mainstream business headlines amid the meteoric rise of popular sectors such as electric vehicles, renewable energy infrastructures and decentralized financial apps, Singapore-based JE Cleantech Holdings cuts an odd figure against its market peers. Specializing in cleaning systems for industrial and commercial uses, JE Cleantech doesn’t exactly provide the primal urgency of popular public market debuts.

On April 21st, 2022 JE Cleantech Holdings Limited had its initial public offering (IPO) on the NASDAQ under the ticker JCSE. They offered 3.75 million shares at $4 each to raise $15 million. The stock has performed well since, as of June 22nd it sits at $15.20 a share.

Mainly, the company’s products — while not the most inspiring — represent core necessities. In addition, Singapore is a growth market, as is the surrounding Southeast Asia region. JE Cleantech Holdings Ltd manufactures a broad range of cleaning systems, including aqueous washing systems, plating and cleaning systems, train cleaning systems and other equipment.

What Does JE Cleantech Do?

As its brand name implies, JE Cleantech focuses on the design, development, manufacturing and sales of cleaning systems for the Singapore market. The company first established roots in November 1999 and launched its core business in 2005. Since 2013, JE has provided centralized dishwashing services for the food and beverage industry, which includes food courts, hawker centers, restaurants, cookhouses, eldercare homes and inflight catering service providers.

According to the company’s IPO prospectus filed with the U.S. Securities and Exchange Commission (SEC), its mission “is to be an industry leader in the cleaning systems and provision of centralized dishwashing services industry and in the design, development and manufacturing of precision cleaning systems industry.”

For prospective investors of JE Cleantech’s IPO, the firm commands these advantages:

  • Market recognition: JE features an extensively vetted track record in the precision cleaning industry for over 15 years, ranking fifth in the sector in the Singapore market (translating to sales market share of approximately 2%).
  • International expansion potential: The cleaning specialist seeks to establish a new office in Malaysia where it enjoys a 27% sales market share, thus leveraging its experience and acumen in the lucrative Southeast Asia region.
  • New opportunities: Unsatisfied with merely “analog” cleaning systems, JE is transitioning to robotic floor scrubbers, which present viable applications for commercial and public transportation use.
  • Relevant experience: The company’s management team possesses many years of experience specifically in the cleaning solutions industry, thus aligning pertinent skills with core businesses.
  • Stable customer relations: Thanks to JE’s reputation and quality craftsmanship, the company enjoys stable relationships with its major clients.

Moving forward, JE Cleantech may attract attention from speculators because of its balanced profile. Should global economic conditions improve, commercial activity should rise accordingly, thus necessitating increased cleaning solutions. But if not, JE could theoretically pivot more strongly to its automated cleaning division, enabling clients to benefit from sanitation services while limiting overhead.

JE Cleantech Financial History

Although you might expect a nanocap company like JE Cleantech to have questionable financials, this area is part of the firm’s strongpoints. In 2020, JE increased revenue by over 17% year-over-year to $15.9 million, an impressive result considering the global impact of COVID-19. In the half year ending June 30, 2021, the company grew revenue 38% YOY to $6.6 million. Further, it posted net income of $456,000.

That said, one of the drawbacks in the financial structure is that JE doesn’t pursue long-term contracts with its centralized dishwashing and general cleaning services. Therefore, continued revenue is not guaranteed.

JE Cleantech Potential

Although vanguard or high-growth-potential IPOs tend to draw substantial attention, the world has dramatically changed over the past two months. With a pandemic, rising inflation, a trade war and a real war all colliding at once, investors don’t have the risk-on appetite that they did last year.

But that’s also why JCSE stock may appeal to some speculators. Because the underlying company is tied to a necessary, dependable and growing industry, it might make sense — assuming that you’re going to take the risk anyway — to participate in an IPO where the market is more tangible.

But on the other end of the equation, JE Cleantech features heavy dependency on a core group of clients. Management even admits this issue in its prospectus’ risk factors section, stating that its top five customer groups amounted to 86% of revenue for the six months ended June 30, 2021. Therefore, JE could suffer either from its own underperformance or that of its clientele.

Where to Buy JE Cleantech IPO Stock

If you want to own JE Cleantech, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of best brokers to consider.

Frequently Asked Questions

Q

How long has JE Cleantech been around?

A

JE Cleantech Holdings Limited has been around for a while, since 1999.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.