There are synergies with the 3 divisions and bigger players can take advantage of this by streamlining their process efficiency to reduce costs.

For example, the contract they secured for a particular residential project can consist of the security and cleaning services at one go.

Also, when a family resists an employment services for full time FDW, they can choose the alternative services of part-time cleaning which appeals to them.

This is purposefully chosen such that the business do not have to depend upon each individual major customer or supplier which will impact their business should anything happens.

The company business is subject easily to regulatory laws abiding the demand and supply of the nature of industry.

This can be good or bad, depending on how you view at them.

For instance, the government has placed certain criteria for accreditation for those opening up a security business by requiring them to obtain a licence from the PLRD to supply the services of a security officers under Section 15 of the PSIA.

For the cleaning service, the NEA has also in 2014 implemented a new licensing system by imposing a higher standards across the industry with the goal of encouraging a more professional and reliable services.

For the employment service, the government has also reduced the concessionary rate of the levy rate from $120 to $60 per month in order to cater to the aging needs of the elderly and children. This will help to increase the demand for such services in the future.

One of the company intent with the proceeds is to grow their overseas presence by setting up a joint venture with another company due to the difficulty in complying law in that particular countries.

The company has also little to no experience dealing with overseas operations, so the question of whether local market share is sufficient to grow over the long run. Overseas expansion will add on risks to the portfolio.

This is on the opposite end of the spectrum for cons of regulation laws.

The supply of foreign labor is highly dependent on the regulatory laws abiding the conditions. The introduction of restrictions on foreign labor may place a huge dent on the operations of these companies. 

For instance, the Indonesian government has announced in May that they will stop sending in maids from Indonesia to abroad in order to protect their rights.

4.) High needs for working capital

The average number of days for the cash conversion is about 44 days so you can expect a lot of cash being tied up for working capital purpose needs. Again, I am not familiar with the industry so do not know if that is the norms. Generally, I'd like company which can expect to turnaround their cash conversion a little faster than that.

I have presented both the pros and cons that I can think of.

I think if one wants to have a quick punt on this you should minimally bid for at least 100,000 shares to make it worthwhile, assuming a 10% successful allocation, they are only worth 10,000 x $0.22 = $2,200.

Given their current cheap valuation, I do think they have legs to run further so it may also be wise to keep them slightly for longer periods and see where they go from here. For all we know, this could be another multi-bagger like the ones we see recently with acromec.

It's up to the individual to decide. The closing applications is on 7th Jul noon.