Ga Sai Tong Enterprise Ltd IPO – Plain English Investor Guide

Hey there! Thinking about investing in Ga Sai Tong’s IPO? Let’s break down what you actually need to know, without the Wall Street jargon.

Key IPO Numbers

Let’s start with the basics:

• Price per share: $5.00 to $7.00
• Shares being sold: 1.3 million Class A shares
• Total shares existing before IPO: 11.7 million total – 10.7 million Class A and 1 million “supercharged” Class B shares (held by founders)
• Authorized shares: 450 million total allowed. They could create 38x more shares than exist today, which might water down your ownership.
  Why this matters: Class B shares have 10x the voting power of regular shares. Founders keep golden tickets – they get more say than regular investors.

Fun math: At $7/share, this IPO could raise $9.1 million – about 3.7x their annual revenue and 37x their 2024 profit. That’s like selling a used Honda Civic for the price of a mansion.

How They Make Money (And Why Growth Is Concerning)

• First half 2024 revenue: $1.36 million
• Full-year 2024 revenue: $2.46 million (up 5% from 2023’s $2.35 million)
• 2024 costs: $1.23 million (up 10% from 2023)
• Gross profit stuck at $1.22 million both years
• Actual profit (net income): $246,650 in 2024 vs. -$16,503 loss in 2023

Translation: They turned a money-losing year into profit – like a lemonade stand that finally made money after fixing a leaky pitcher. But food costs are rising faster than sales, and growth slammed the brakes in the second half (only $1.1M revenue vs $1.36M earlier).

Dividend Reality Check:
They’ve paid small dividends before but won’t pay any soon – all cash is being reinvested. Think of it like your friend who says “I’ll pay you back later” after borrowing lunch money.

What They’ll Do With Your Money

• $2.7 million (30% of the cash) goes to day-to-day operations and emergency funds – enough to cover about 3.2 million staff hours at minimum wage
• The rest goes to new restaurants and packaging upgrades

5 Big Risks You Can’t Ignore

1. Founders Rule Everything: Class B shares give executives 91% of voting power post-IPO. It’s like if your friend kept 10 TV remotes while you get 1.
2. Insider Lock-Up: Big shareholders can’t sell for 6 months. After that? Potential stock dump – imagine everyone trying to sell concert tickets at once.
3. Hidden Debt: They have $2.7 million in current liabilities – like starting a road trip with credit card debt and a parking ticket.
4. Pricey Stock: At $7/share, you’re paying $37 for every $1 the company earned last year. Most restaurants trade at $15-$20 per $1 profit.
5. Dilution Danger: 450 million shares authorized vs 13 million post-IPO. Your slice of the pie could shrink dramatically.

The Bottom Line

Potential Upside 👍

• Turned losses into profit
• Expanding restaurants and packaging sales

Scary Downsides 👎

• Founders have near-total control
• Possible insider stock dumps in 6 months
• Stock priced like everything goes perfectly
• Debt lurking in the shadows
• Nuclear option to dilute shareholders

Final Thought:
This IPO’s small size ($6.5M-$9.1M) funds just 2-3 restaurants and keeps lights on. The company shared limited details about their actual business model and competitors – never a great sign. Only consider this if you’re comfortable with high-risk bets and don’t mind founders driving while you sit in the backseat.

Remember: If you wouldn’t buy a used car from someone with this much debt and control issues, think twice about the stock.