My Thoughts on Mercury Securities IPO

Discovered lots of juicy details from the Mercury Securities IPO Prospectus 🌶️🥵

Here are some of my thoughts on the stockbroking and corporate finance advisory business:

Stockbroking business:
- The stockbroking business is a lucrative business with super high margin – contributing 60%-80% of the company’s revenue. Basically once the engine starts running, the money just wont stop flowing in.
- But it is also heavily dependent on the market trading volume – when the market is good, the sales would naturally be great – it also means that the sales and profit number from 2020 to 2021 is not really reflecting the normalised sales & profit figure of Mercury properly. We all know how crazy the Malaysia market is in 2020 and 2021.
- With the current market share of less than 1% in the local stockbroking business, it is really not very promising given that they have been in the market since 1992 – but looking at the flip side, what would their sales & profit number be if they were to utilise their IPO money properly and increase their market share to a meagre 2%? It really lies on the execution of the management team.

Corporate finance advisory business:
- The corporate finance advisory business is in a boom for the past 3 years – fuelled by IPO boom, increased private placement mandate to 20% for PLCs, and more M&A and fundraising deals
- The corporate finance advisory business is another segment full of drama for Mercury Securities and the drama that happens perfectly demonstrated the risk in investing in Mercury Securities
- Basically what happened is that, one of the corporate finance team left the company to jump ship – btw this is not one person jumping, it is one whole team of around 20 people
- From what I heard, the team had a fight with the company and pieces of the drama were published online too – so you will know if you kepo go and check ok
- In short, there is a concentration risk – not concentration on customer, but the reliance on your biggest salesperson (aka corporate financial adviser) that bring in deals – convincing them to stay in your company
- Having said that, it doesn’t change the fact that the advisory business is still a good business, as long as you don’t mess things up, be careful when dealing with the regulators, you are fine.

So what do you think about Mercury Securities IPO? Are you subscribing?