Monday, 31 December 2007
Here is the ranking of the IPO underwriters in Singapore for the year 2007. UBS ranked no.1 on the list in terms of amount raised, while DBS ranked top in terms of the number of issues it underwrote. Sterling Coleman lead in terms of the fees earned.
Here is wishing all blog readers a happy and prosperous 2008.
Sunday, 16 December 2007
Public offer of 16.195m shares at $0.67 per share.
Placement offer of 356.94m shares at $0.67 per share.
Revenue US$159.7 million
Net profit US$17.3 million
2007 1H results:
Revenue US$77.8 million
Net profit US$11.2 million
Assuming full year profit is doubled to US$22.4m, the EPS will be US 1.96 cents or Singapore 2.83 cents. Based on IPO price of S$0.67, it is priced at 2007 PE of 23x. Assuming EPS grow by another 30% in FY2008 to Singapore 3.68 cents, based on PE range of 20x-25x, the fair value will be between 74 cents and 92 cents.
While i certainly like this sector (ship building sector) in China, it is unusual to see the "Authority" requesting the following risks to be highlighted. Perhaps they know something which we dont!??! Anyway, the bigger rival listed here is Yang Zi Jiang and it is trading at around 35x 2007F PE.
At the request of the Authority, we have been asked to prominently highlight the following specific risks to be considered in connection with an investment in the Offering Shares:
Because our existing shipyard is operating at full capacity, we may not be able to successfully coordinate the construction of vessels to meet their scheduled delivery dates if the New Facility is not constructed within the scheduled time or at all.
Our contemplated construction of the New Facility is subject to certain conditions and may not be consummated within a reasonable time or at all. If the New Facility is not completed as planned, we could be exposed to potential liabilities under contracts for vessels intended to be constructed at the New Facility if such contracts become effective.
We have no control over the purchase price in relation to the contemplated acquisition of the land use rights in relation to the 405 mu Land as the land use rights are subject to a listing-for-sale process, and if such purchase price is higher than we expected, our business, financial condition, results of operations and prospects could be adversely affected.
Our Audit Committee may find it difficult to reject the acquisition of the 405 mu Land on which we intend to construct our New Facility, even if the purchase price is significantly above our budget, as there may not be suitable alternative land available in the vicinity of our existing shipyard.
As a result of the above, an investment in the Offering Shares should be considered highly speculative in nature. See “Risk Factors — Specific Risks” herein. See also “Risk Factors” herein for a discussion of other factors to be considered in connection with an investment in the Offering Shares.
The pre-ipo investors look rather interesting with Tommie Goh, Gay Chee Cheong, Chew Hua Seng and other prominent pre-ipo investors group and fund in this company, however, the bad IPO timing and big float is a serious concern here even though the grey price is heard to be +10 cents.
I will give it a miss for now since i am just back from vacation and not "in-tune" with the market right now but i give it a 2 Chillis rating due to the high valuation of its listed rival (Yang Zi Jiang) and the good growth prospects for the ship building sector in China.
This IPO was launched while I was on my annual vacation, thus there is no write up on it.
Anyway, it has proven to be a flop as it was priced at $0.76 eventually, versus an initial indicative price range of $0.76 to $0.94. Even then that did not help as it closed at 60cents on the first day of its debut, which is 21% below its IPO price!
What a disappointment and it further worsen the IPO sentiments in Singapore.
Thursday, 6 December 2007
KTL is a supplier of rigging equipment and related services to customers mainly in the offshore Oil & Gas and marine industries.
Public - 2m shares at $0.28
Placement - 38m shares
Manager: Philip Capital
FY07 (30 June 2007):
Revenue : S$41.8m
Net profit: S$10.3m ($6.1m comes from sale of Leashold property)
EPS: Singapore 2.6 cents
Market cap based on IPO price : S$44.8m
After stripping out the one-time gain from sale of leasehold property, the net profit is $4.17m and based on 160m post-ipo shares, EPS is Singapore 2.6 cents. Assuming FY08 grow by 30%, EPS will be Singapore 3.38 cents. Based on IPO price of 28 cents, it is trading at forward PE of 8x. Assuming a PE range of 8-10x, the fair value is between 27 cents to 34 cents. A small upside from IPO price.
I will give it a miss due to the low number of shares for public tranche as well as the fact that it is within its fair value range.
Soon Lian Holdings is a specialist supplier of over 1,200 different aluminium alloy products. The products are mainly sold to the marine and precision engineering industries.
Public offer - 1m shares at $0.21
Placement offer - 26m shares at $0.21.
Manager: Philip Capital
1H revenue : S$19.8m
1H net profit: S$2.7m
Net profit: S$3.3m
Assume FY2007 revenue doubled to S$40m and net profit to S$5.4m, the EPS for 2007 will be around Singapore 5 cents based on post IPO 108m shares. The market cap based on IPO price will be S$22.6m. The Company will be listed on SESDAQ and is a ultra small cap company. The listing PE is around 4.2x. Downside is limited due to the cheap valuation.
I will give it a 1 Chilli rating and give it a miss.
Wednesday, 5 December 2007
Total Offering: Placement 222 million shares and Public 3 million shares at $1.10 per share.
Manager and Underwriter: Citi
Sub-underwriter : UOB Kay Hian
Revenue : US$ 94.7m
Net profit : US$ 38.8m
Revenue : US$ 168m (Assume 1H07 x 2)
Net profit : US$ 75m (Assume 1H07 x 2)
EPS (post-IPO) : US 3.2 cents or Singapore 4.64 cents.
Based on IPO price of $1.10, it is priced at a FY07 PE multiple of 23.7x
Golden Agri - Trading at FY06 Historical PE of 13x (use historical as Q307 a bit erratic)
Indo-Agri - Trading at FY07 Est PE of 23.5x
Wilmar - Trading at FY07 Est PE of 24.6x
First Resources is fairly valued based on FY07 projections and the IPO price of $1.10. Any upside is likely to come from the FY08 projections as well as the high interest from Bio-Diesel projects due to the high oil prices.
Heard that the grey is currently up +10c to +15c from the IPO price. If this counter was listed a 2 months back, it would have enjoyed a very decent debut. My view is that this counter will likely debut with a stag of 10% to 20% upside from IPO price. I would give it a 2 Chilli ratings for long term prospects and profitability and the good peer valuation and share price movement will likely lend further support to this counter.
Wednesday, 28 November 2007
Number of Units : 165 million (Out of which 30m for Public, 135m for Placement)
Price per Unit: $0.78
Yield 5.72% for FY 2008 (after Sponsor waived off its rights to the Distributions)
Yield 6.74% for FY 2009
In my personal view, this is one of the smartest strategic move by one of the richest lady in Singapore. Hyflux, with its expertise in Water Treatment, owns many water treatment plants. The setting up of the Trust allows Hyflux to 'cash out' of its fixed assets by selling these assets to the Trust in exchange for Units and enticing investors with the 'yield' carrot. To me, the yield presented in the prospectus is unlikely to be achieved if not for the Sponsor waiving off its rights to the distributions in FY2008 and most likely in FY2009, it will elect to receive its management fees in units in order to meet the yield projections. To me, the entire exercise benefits Hyflux the most as it will allow Hyflux to recycle its capital and cash out on its assets.
The closest peer listed in Singapore is Cityspring but at least the performance fee of Hyflux will not be based on its share price performance. Although i like the business in which it is in, the yield presented in the Prospectus is really too low for me vis-a-vis the risks involved. The "Sponsor" might be a better investment target that the Trust. Anyway, my personal view is not to subscribe to the IPO. If you really need that yield, a property trust might just do the trick and the share price performance of Cityspring post its listing isnt helping either.
Monday, 26 November 2007
The Company is in the PCBA and OEM business for the Electronics Industry.
Public: 1m shares at $0.365
Placement: 54m shares at $0.365
I will not bother to do any analysis for this Company since the public float is so small (1 m shares only). Look at the current trend where the previous 4 IPOs are below water by around 15%-25%, my view is that you should just avoid this counter. If you are really keen to 'invest' in this IPO, you should be able to get it at better prices post IPO.
Friday, 16 November 2007
(IPO booth still in wraps before the stall opens)
Dynamic Colours is a leading manufacturer of coloured compounded resins & packaging materials serving the IT, electronics and petrochemical industries.
Public - 3.3m shares at $0.215
Placement - 61.2m shares
Manager and Underwriter: UOB Asia Limited
If you look at the results for the last 3 years, the revenue has been increasing but the net profit increased only marginally. Looking at the prospectus and using the net profit before tax figure, the net margin dropped from 8.9% in FY20004 to 4.8% in FY2005 to 4.3% in FY 2006. The 1H07 margins remained at around 4.3%.
1H 07 results:
Sales - US$39.6m
Net profit after tax - US$1.49m
Assume full year 2007 is 1H x 2, the sales will be US$80m and net profit will be US$3m. That will translate into a S$4.2m (assuming US$/S$ is 1.4). Based on post IPO shares of 209.97m, the EPS for FY07 is projected at 2 Singapore cents. At the IPO price of $0.215, the issue is priced at 10.7x FY07 PE. The market cap at IPO price is only S$45.1 million.
Tuesday, 13 November 2007
Public - 5m shares at 34 cents
Placement - 124m shares at 34 cents
Manager / Underwriter - OCBC Bank
Closing date: 19 Nov 2007 12pm.
The Company provides full-set solutions for the handset industry. Let me summarise the results for the financial year ended 31 March 2007:
Sales - US$46.2m (S$66m)
Net profit - US$8.8m (S$12.7m) assume US$/S$ is 1.44
EPS - US 1.77 cents (Singapore 2.55 cents) based on post-ipo no. of shares
Personally i dont like this sector. This sector in China is very competitive and cut throat. The FY2007 results really surprised me in terms of its profitability and 19% net margin. Based on the IPO price of 34 cents, the company is priced at 13x historical PE. The market cap based on the IPO price is around $169.2 million. One of the competitors in the same sector listed on SGX is Long Cheer. Long Cheer is currently trading at 6.13x PER and its net margin is much lower at 7.7%. Long Cheer's market cap is around $226 million. OCBC is one of the pre-ipo investors and they are selling vendors shares at the IPO. Personally, i never like IPO backed by OCBC.
Assuming FY2008, the EPS grow by 50% and EPS is 3.8 Singapore cents. Based on a valuation of 8x-10x PER, the fair value is around 30 cents to 38 cents. In this regard, i think upside is limited post-IPO and i will give this a miss. It will be tough to get from the IPO from the public tranche though.
Monday, 12 November 2007
Lippo-Mapletree Indonesia Retail Trust ("LMIR") is a retail reit that comprise of retail malls in major cities in Indonesia.
Public offer: 20m Units at $0.80 per unit.
Placement Offer: 625,469,000 Units at $0.80 per unit.
Assuming a FY2008 payout of 5.84 cents (based on its prospectus) and the IPO price of 80 cents, the yield is 7.3%
LMIR is the first indonesia retail reit offering in Singapore. The first Japanese Residential Reit "Saizen" ended more than 10% lower than its IPO on its debut, it will be interesting to see how this Indonesian Retail REIT performed. The other Indonesian-theme REIT is also by the Lippo Group and is known as First REIT but that is in the healthcare sector with higher yields.
What i think are the risks for investing in this REIT (resulting in me giving it a 1 chilli rating):
(1) Retail sector - will tie to the overall economy of Indonesia
(2) Country - High risk premium for Indonesia. Any Riots or Unrest will affect this sector greatly and you never know when the Indonesian govt may suddent change their policies etc.
(3) Forex risk - Any depreciation of Indonesia Rupiah against SG$ will be detrimental to Unit Holders.
(4) Large float - the float is very large and most likely, all the institutions who want to invest in this REIT will likely be satisfied.
(5) Weak IPO sentiments - Sentiments is hit in recent days and the market is currently not favorable to REITs.
Considering the risks above, i am not sure if the yield of 7.3% for 2008 will attract enough investors as any increase in price post IPO will most likely result in investors cashing out of LMIR and reallocating their assets into lower risk assets with better yields. I will skip this REIT since i am personally not a "REIT" person but the fact that Mapletree is in this REIT may provide some support to the share prices.
Sunday, 11 November 2007
(IPO booth at Raffles Place)
Public : 12m shares at $0.83
Placement: 388m shares at $0.83
Manager: Citigroup Global Markets Singapore
Underwriters: Deutsche Bank, DBS Bank
The proceeds will be used to develop the new towns. The 12m float is quite big for the public tranche, as such it will be 'relatively easier' to get this IPO from the ATM than usual. I cannot recall any similar companies listed on the SGX except that Yanlord (a large property developer in China) may be used as a peer comparison. If Yanlord's share price post listing is any indication for China New Town, then it will only be good news to CNT's shareholders.
On one hand, i didnt have much time to evaluate this company as i was travelling last week, on the other hand, i really dont know how to value this company with such unique operations either. I guess the comforting fact to IPO punters is that when i asked for more placement shares (than what was allocated to me), my request was rejected due to the overwhelming demand.
It is really a tough call right now to say if this IPO is worth a "stag". While i am bullish on the long term view of this Company in China (as a New Town developer in a big populated country), there are other concerns as well such as the big share float, whether they will receive new mandates for townships, short term corrective measures taken by the Chinese Government to cool the hot property sector etc.
Conclusion: If we can use Yanlord's post IPO share price as any indication, then there could be longer term upside to CNT. Subscribers to this company's IPO should hold a longer term view and IPO punters should perhaps give it a miss. My gut feel is that it will open above 83 cents though.
Tuesday, 6 November 2007
Anyway, i have no time to do the analysis in detailed for Sinotel Technologies and here is my take after taking a very quick glance at the prospectus and my experience with such companies.
Public Shares: 3m shares at $0.51
Placement shares: 67m shares
Issue Manager: SAC Capital
Underwriter: UOB Kay Hian
The Company is in the business of providing wireless network solutions, handset distribution and mobile entertainment enabler. Personally my experience with such companies, especially those providing 3G network solutions is that:
(1) Revenue can be very volatile and lumpy because it depends on the capital expenditure of China telecommunications giants;
(2) 3G issuance. I have been hearing that the Chinese Govt will issue 3G license for the last 2 years because of the 2008 Olympics and as of today, it is still uncertain as to when the Chinese govt will issue the 3G licences and 2008 Olympics is just less than a year away. If the 3G licenses are not issued, the telcos are unwilling to spend more $ to implement the network.
(3) Margins are dropping. Due to centralized bidding process by China Mobile and China Unicom, the margins are getting thinner. 3G networks solutions providers in China inlcudes listed companies like Hua Wei, Comba (Hong Kong) and China Grentech (NASDAQ). These rivals are much bigger than Sinotel.
Revenue - RMB 219m
Net profit - RMB 57.2m
I would caution about my projections as revenue and earnings can be rather volatile and difficult to predict for this industry. For convenience, i will project a 30% growth over FY 06 top and bottom line. My work would have been much easier if the prospectus include 1H07 results instead of 1Q07.
FY07 - Projections
Revenue - RMB 285m (or S$57m)
Net profit - RMB 75m ($15m)
No. of shares - 280m
EPS in Singapore cents for FY07 = 5.36 cents.
Assuming a PER of 10x-12x and the FY07 EPS, the fair value will be between 54 cents to 64 cents, representing some upside to the IPO price. The fair value will be higher if the following assumptions are true:
(1) We have more clarity on FY07 figures and we are able to use FY08 EPS projections
(2) 3G licenses are issued in late 2007 and early 2008. The issuance of 3G prior to 2008 Olympics will be a catalyst to this company.
(3) My market vibes report that besides Tan Kim Seng, ex-founder of KS Energy, the shares are placed out to "strong hands". We shall see if this 'market vibe' is true.
Happy balloting but it will be tough to get the shares from the public tranche.
Saturday, 3 November 2007
(IPO booth at Raffles Place. A very crowded week at Raffles Place for IPO booths)
Net profit: $29.676m
Net margin: 27.6%
Net profit: $40m
No. of shares = 660m. EPS 2007 projection = 6.06 cents
EPS 2008 projections x 30% growth = 7.88 cents
Personally i dont really like this company. It reminded me of Luxking and CHT. Luxing has a lousy net margin of 5% and is trading at around 5-6x PE and is still 25% below its IPO price. CHT is only 12% above its IPO price , trading at 5-6x PE with net margins around 20%. While at market cap of > S$300m verus $141m for CHT and $38m for Luxking.
If i used 2008F EPS projections and a slightly higher-than-peer valuation band of 8x-10x PER due to its better margins, the fair value range is 63 cents to 78 cents, thus giving this stock a more than 30% upside from its IPO price.
Although it will be tough to get the IPO shares from the public tranche, I will sell on the first day if i get this since i dont really like the industry. Good luck!
Thursday, 1 November 2007
(IPO booth at Raffles Place. Unlike China Hongcheng, it never showcase its products)
The peers listed in Singapore includes: HTL (not exactly similar space) trading at 6x historical, Man Wah (more similar) trading at 13x historical and Koda (not exactly similiar) trading at 10x historical. I will give it a fair value of 8x-10x PE conservatively for China Play and that will give Cacola a fair value of between 42 cents to 64 cents based on 2007 EPS estimates. At 42 cents, it represents a upside which is more than 30% from the IPO price.
What may possibly derail the "IPO stag" will be:
(1) Large placement float of 114.5m shares
(2) Lack of support from CIMB and investors post listing (see share price of China Hongcheng today which is below its IPO price)
(3) Sentiments turning sour on the stock market.
Wednesday, 31 October 2007
(Japanese-tori decorated IPO booth at Raffles Place)
You will need to consider if this asset class is suitable to you. For those who punt IPOs, it is likely to be a stag on the first day due to the following:
- Good underwriters in Morgan Stanley
- Stablisation process by Manager
- Yield compression to 5% may provide some upside to IPO price of between $1.10 to $1.30
Tuesday, 30 October 2007
(Marco Polo IPO booth at Raffles Place, pardon my poor image quality)
Downside will be that contracts are in US$ while costs are in S$ or IDR and what if the company also engage in 'currency hedging'. ?!?
Conclusion - just hoot and hope you get it.
Monday, 29 October 2007
(IPO booth at Raffles Place on a gloomy afternoon)
Placement - 181.876m
Public - 15m
"Friends & Family" - 8.3m
The chances of getting 1 or 2 lots from the public tranche is high . Good luck. Vested.
On the downside, there are some issues which you may need to consider for investing in a Property Fund Manager:
(1) Depreciating US$/S$ if management fees are mainly in US$
(2) Potential conflict of interest between the funds managed by the Fund Manager that may result in lawsuits.
Tuesday, 23 October 2007
(1) Difficult to get at the IPO
(2) Unattractive sector as it is very dependent on the semiconductor industry which is very volatile and cyclical.
(3) Fair value is only a slight premium to the IPO price.
Wednesday, 10 October 2007
(The IPO is one of the biggest i have seen in recent times, spanning a wide area with 'hotly' dressed ladies distributing prospectus at Raffles Place)...
China Oilfield Technology Services Group Limited is a major "one-stop" customised solutions provider of integrated tertiary oil recovery equipment and product in the Daqing oilfield region of the PRC. Its closest competitor that is listed here is Sky Petrol.
I will give 3 chillis rating to China Oilfield for the following reasons:
1. HL bank is a reputable manager. All its previous mandates has done pretty well post listing and i believe this will be no exception.
2. It is in the oil and gas sector and with oil prices hovering a record prices, this sector is still sizzling hot.
3. It is another "China" story. We cannot seem to get enough of Chinese stocks do we?
I will not attempt to give it a fair value, just HOOT at the ATM and see if your lucky stars shine on you... Good Luck!
Tuesday, 18 September 2007
(IPO booth at Raffles Place...)
Fuxing China is a manufacturer of zipper slider and zipper chains in the PRC and the products are sold mainly to local manufacturers of apparel and footwear products, camping equipment, bags etc. It is one of the few vertifcally integrated players in the PRC zipper industry and has a diversifed customer base of over 900 customers. The prospectus is here.
It is the second zipper company to list here after CMZ. The details are:
Public offer: 5m shares
Placement shares: 170m shares.
Issue Manager: SAC Capital
Underwriter and Placement Agent: UOB Kay Hian
Closing Date: 20 Sep 2007
Sales for 2006 - RMB 716.412m
Net profit for 2006 - RMB 155.609m
EPS (based on post IPO shares) - RMB 20.1 cents
EPS (based on SGD/RMB 0.2) - Singapore 4.02 cents
The shares are priced at 11.44x historical FY2006 PE.
Sales for Q1 2007 increased by 22% while net profit for the same quarter increased by 130%.
Assuming sales for FY 2007 increased by 25% and net margin of 22% is achieved, the net profit and EPS for FY 2007 will be RMB 197.013m and RMB 25.4 cents or Singapore 5.08 cents. That will priced Fuxing at a forward PE of 9x.
Assume EPS grow by another 25% in FY2008, EPS for FY2008 willl be 6.35 Singapore cents. Currently CMZ is trading at low PE multiples of 7-10x but since Fuxing is a fundamentally better than CMZ , it deserves a better premium over CMZ. I will give it a fair value of 8-10x FY2008F EPS and based on that valuation, the implied fair value for Fuxing will between 50 cents to 63 cents. A stag to the IPO price and another hit and run IPO counter. 2 Chillis rating.
Thursday, 13 September 2007
(IPO booth at Raffles Place)
It has been such a long time! Parkway Life REIT was last listed on 23 August and the next IPO will only list on 26 September. Well, at least it is a good sign and indication that the IPO market could be reviving and thankfully they send a more decent looking one to test the market. I will come up with a more detailed analysis over the next few days (fingers getting too rusty already from the lack of writing). Check back here again for a more detailed update and the 'fair value'.
Just by looking at the industry and the pictures on the prospectus, i would give it an interim 'stag and 2 chillis rating'.
Public shares - 5m
Placement shares - 155.4m
Price - $0.38
Managers - Jointly by SBI E2 Capital and CIMB
The Company is one of the largest producers and suppliers of downstream petrochemical products and are engaged in the fractionation of raw LPG for the production and sale of propylene, polypropylene and LPG.
The profits for Sinostar ramped up spectacularly in FY 2006 where net income is S$19.321m on sales of S$199m. It is a pity that there is no 1H2007 figures in the prospectus. Sales and profits are likley to exceed 2006 figures. Assuming a 30% increase in net profit in FY 2007 and a 30% increase in net profit in FY 2008, the net income will be $32.6m. Based on the post capital shares of 640m shares, the EPS will be 5.1 cents. Based on a fair market PE multiple of 10x-15x, our fair value is approximately $0.51 to $0.76. Looks like a stag to me.
Friday, 31 August 2007
THE turmoil engulfing the stock market has been dealing a huge blow to the once-thriving initial public offering (IPO) sector. The Straits Times THE turmoil engulfing the stock market has been dealing a huge blow to the once-thriving initial public offering (IPO) sector.
Investors who have been reaping windfalls from IPOs now have cold feet amid a hair-raising investment climate and are instead seeking safety in blue chips. Only one of the nine firms that listed on the Singapore Exchange this month - Ascendas India Trust - is still trading above its issue price. The rest have fallen between 6.25 per cent and 33 per cent below their issue prices.
This is in stark contrast to the first seven months of the year, when new listings regularly traded at a hefty premium over their IPO prices.
'Some investors have become so used to the idea of getting a regular windfall from IPOs that they have forgotten that there may be a risk involved. The moment they lose some money, they also lose interest,' a dealer said.
The local bourse has been on a roller-coaster ride, as the crisis in the United States' mortgage sector continues to plague global financial markets. Despite the souring appetite for risk, a Singapore merchant banker noted that some firms had gone ahead with their IPOs here, as the accounts presented on their prospectuses 'might have gone stale otherwise'.
'By failing to hold back, these firms are taking a risk that their IPOs will be poorly received by the investing public, which is unnerved by events on Wall Street,' he said. There has also been a flight to quality, as investors switched out of riskier stocks into blue chips, which seem to be weathering the wild market swings better.
Phillip Securities managing director Loh Hoon Sun said: 'Most new listings are fairly small and do not attract an institutional crowd. So, it is not surprising to find retail investors losing interest in these companies when their prices fell.'
Bigger IPOs have generally fared better of late. Ascendas India Trust, which has a market value of $1.1 billion, was still up 18.6 per cent over its IPO price of $1.18 when it closed at $1.40 yesterday. Parkway Life Reit, with a market capitalisation of $721 million, was down just 6.25 per cent from its $1.28 issue price. It closed at $1.20 yesterday. But textile maker China Hongcheng has fallen 33 per cent to 33.5 cents from its 50 cent debut on Aug 8. Its market value is only $89.8 million. Another smallish IPO, Sunmart Holdings, which makes spray products and has a market value of $70.4 million, fared almost as badly. It has fallen 30 per cent from its 25 cent debut on Aug 15 to 17.5 cents. Some dealers do not expect IPOs to make a speedy comeback, given uncertainties in the market .
Friday, 24 August 2007
Monday, 20 August 2007
I believe all the investors would want to know if this severe correction is the beginning of the bear market and whether the current rebound is a technical rebound or a resumption of the uptrend. 32 of you participated in this poll. The results is still slightly bullish bias with 37% on the bullish side and 28% on the bearish side. The remaining 34% of you are 'unsure' and feel that it could go either way depending on how the fall out of the US sub-prime market pans out.
Thursday, 16 August 2007
Wednesday, 15 August 2007
By MATTHEW PHAN
(SINGAPORE) With first-day closing premiums for initial public offerings (IPOs) regularly shooting for the moon, it has been a great 2007 for local IPO investors so far. But market players warn that the recent US sub-prime fallout means it is now less likely that prices will surge on the first day of trading.
Patrick Lee, head of UBS investment banking for Singapore and Malaysia, added: 'Placements will be more challenging in this environment. The more risky deals will be more difficult to push through. Investors are more focused now on seeing how markets trade and in managing their portfolios.' He said there was still anxiety over credit markets and the sub-prime fallout. 'The problem is that people don't know how widespread the contagion is. Once they do, the market will normalise,' said Mr Lee. But deals are still going through, he added, pointing out that Parkway Life Reit, which launched its IPO last week, was 'priced very successfully' near the top of the range, with the institutional tranche 14-15 times subscribed. 'What helped is that Parkway is a good name and the Reit space in Singapore is well regarded,' said Mr Lee.
Otherwise, the IPO pipeline remains robust. 'The US sub-prime mortgage and CDO situation has not affected our listing pipeline', Lawrence Wong, head of listings at the Singapore Exchange (SGX), told BT. 'We continue to see a healthy pipeline of mandates and interest shown by investment banks and intermediaries on a listing on SGX,' he said.
Tuesday, 14 August 2007
Here is the poll results for the timing in which visitors to this blog sell their IPO shares. 45% of those polled sell their IPO shares on the first day of trading (if it is above water) and i believe the mentality is somewhat like buying 4-D or Toto with $2 and the sudden 'wealth' seemed too good to be true. :)
The fact that the prices of most IPO shares dropped after the first day seemed to reinforce the belief to 'take the money while it is still there'.
34% of those polled wished they have better luck in getting the IPO shares. I have previously shared some tips on how to increase your chances to get the public IPO shares as well as how to lay your hands on the IPO placement shares. I hope these little tips will help you in one way or another.
Sunday, 12 August 2007
Offering: 288,865,000 units at $1.28 per unit. (subject to overallotment).
Public offer closing date: 13 August 2007 12 pm
Listing date: 23 August 2007 2pm
This is the 2nd "healthcare" reit after First Reit. Although the yield is lower than First Reit, it can be considered as a better quality Reit when compared to First Reit as it has 3 well-known hospitals that are located in Singapore (no political or forex risk) and is backed by a reputable sponsor (where Singapore is trying to be a medical hub). Unfortunately the yields from Parkway REIT is not 'spectacular' where it offers 4.74% in 2007, 4.88% in 2008 and 5% in 2009. It could, however, provide an alternative asset class to investors who wants to diversify their exposure from other types of property REITs.
Personally i believe Parkway REIT will be well received by the investors and assuming a yield compression to 4% on blended 2007/2008 yields, the fair value should be between $1.50 to $1.60 and that represent some 10-20% upside from its IPO price. In times of uncertainty, defensive stocks like Parkway REIT should still be well -received by the investing public, especially one from a reputable Sponsor with good properties.
(IPO booth at Raffles Place... not the right timing to get prospectus i guess)
Public Offer: 3.3 million shares at $0.55 each
Placement Offer: 62.1 million shares
Closing Date: 15 Aug 2007
- Companies in Structure Finance business has not performed well post-ipo. Without digging deeper into the amount of dividends paid since listing, as of 10 Aug 2007, Babcock & Brown (structured finance) is still 13% below its IPO price.
- Companies in "Shipping Trust" business has not performed well post-ipo as well. First Ship Lease Trust is still 7% below IPO.
- The business is priced in US$ and I believed US$ will continue to weaken against S$.
- Sentiments towards IPO has been very weak due to the recent market turmoil and the premium above its IPO price for recent listing is less than 10%.
- ETLA closed below its IPO price, reflecting the weak market sentiments.
Thursday, 9 August 2007
Wednesday, 8 August 2007
But the reality is, for every 1 good IPO, there are 9 other lousy ones. How many of us really have the foresight (to pick the right company) and the patience to hold the IPOs for 10, 20 and even 30 years?! and looking at the latest poll results (still in progress) where 45% of you said you will sell the IPO on the first day, no wonder you and i are still punting IPOs and not investing in them. Perhaps i should use change the title of my Blog to Punting in IPOs and sign off my postings with Happy Punting. :)
Tuesday, 7 August 2007
Monday, 6 August 2007
(IPO booth in Raffles Place, why is everyone turning their backs to me? A sign on how the share price will perform? :P)
Placement offer: 96,900,000 shares
Manager: Mitsubishi UFJ Securities
Underwriter and Placement Agent: SBI E2-Capital
Closing Date: 13 August 2007 12pm
Sunmart has 402,000,000 shares post-ipo and based on the IPO price of 25cents, the market cap is around S100.5 million. For the FY2006, revenue is S$ 47.15m, net profit after tax is S$ 9.56m and EPS based on post-ipo shares is Singapore 2.38 cents. Net margins have been increasing from 8% in FY2004 to 20.3% in FY2006. Assuming a 30% growth in revenue in FY2007, the revenue will be S$ 61.3m and assuming the net margin of 20% is applied, net profit will be S$ 12.2m. Based on post-ipo outstanding shares, EPS for FY2007 will be Singapore 3.03 cents. Assuming FY08 grow by another 30%, EPS for FY2008 will be Singapore 3.94 cents.
The closest listed peer is Full Apex which makes PET bottles for the softdrink industry. As of 6 Aug, Full Apex is trading 8.53x historical (31 March 2007) and 6.78x forward PE (31 March 2008). While you can argue that the customers and products of Sunmart is more diversified, under current weak market sentiments, the investors may not give this stock much excess premium. At the IPO price of 25 cents, it is priced at 10.5x historical and 8.2x forward. In this regard, the peers valuation does not give much excitment to this counter (unlike the China Sports case).
Assuming i give it the most aggressive valuation of 7-9x FY08 PE, the fair value range will be between 27 cents to 35 cents. Under current weak sentiments, I will decide whether to apply for this IPO closer to the application date (see the performance of China Hong Cheng and ETLA first). Check back this blog again nearer to the IPO closing date :) I will give it a 2 Chillis for now.
Sunday, 5 August 2007
Let us take a quick look at performance of the IPOs covered by this blog since 07-07-07.
After the recent bloodbath early this week, RH Energy, China Sports and Yongxin (rated 3 Chillis) still trade more than 90% above its IPO price. Well done :) Most of the IPOs are currently trading 20% to 60% above its IPO price with only Finance One below water.
As mentioned in my blog, Fair Value can be a very tricky thing and it seemed that after the bloodbath, the shares have actually dropped to my fair value?! Is my fair value then the correct value and earn me the right to boast about them? Of course not but it just happen that most of the stocks are trading within or close to my 'fair value' range right now. My definition of Fair Value is : Whatever the market deemed is the fair value will be the fair value. My fair value is just a guide for me to know when to take profits as market can be overly depressed or overly exhuberant most of the time.
And the top 3 performing IPOs as of 5 Aug 2007 are ......
Friday, 3 August 2007
I cannot find the IPO booth at Raffles Place for the last 3 days. Perhaps the Company and its Manager, DBS, doesn't feel the need to do so especially if they have already fully placed out the shares? hmm... let see if having no booth will affect the share price.
ETLA offers contract equipment manufacturing, sheet metal fabrication, and precision machining services. The prospectus is here.
Public offer: 3.8 million shares at 47 cents each
Placement offer: 34.2 million shares
Closing date: 7 Aug 2007
Manager: DBS Bank
Once again, this belong to the tech sector and once again, you know my 'dislike' for tech companies and once again i use a valuation maxtrix PE multiple of 8x-10x. (Two reasons why i dislike tech companies are: (1) they have very low net margins and (2) their products are always subject to price competition). The net profit for 2006 is S$6.86m and assuming a 50% growth (once gain, the CAGR can be misleading as they started from a low base), the 2007 net profit will be around S$10.29 million. Based on the post-ipo no. of shares of 140,691,100, the EPS is around 7.3 cents. In this regard, the fair value range will be between 58 cents to 73 cents.
All the IPOs covered by this Blog (after 07.07.07) is still in the green except for Financial One. I believe this one should open above water as well but i wont be holding on too long to it. (vested).
Thursday, 2 August 2007
Monday, 30 July 2007
July 2007 must be one of the 'busiest' month this year for IPO managers and underwriters. It seemed to me that all the companies are rushing to launch its IPO this month as the market was relatively hot (if we exclude the bloodshed last week on 26 and 27 July). At last count, there are 14 IPOs that are launched in this month of July alone verus only 3 IPOs in March 2007 when sentiments was very weak.
Why do sentiments play such an important role in the IPO market? Some of the reasons are as follows:
(1) It is easier for the Company to sell shares in bullish sentiments.
During bullish sentiments, it is much easier for the Company to attract investors. Some less discerning' and short term 'investors' will not care whether the fundamentals of the Company is good or not as long as they know that they can make a quick buck by fliping the shares. These 'investors' will buy the shares purely based on sentiments and many "not-so-sound" companies with no real substance will want to launch their IPO during this period
(2) Company can sell its shares at a higher valuation.
When sentiments are bullish, Companies going for listing will usually be able to list 'at the higher end' of the valuation range (thus receiving more money from selling their shares). Remember how Chemoil 'delayed' its IPO because the owner wasn't happy with the IPO valuation it received?
(3) Company can command a higher market cap post IPO
During bullish sentiments, the share price after listing will usually be much higher than its IPO price, thus creating good sentiment and goodwill among the investors. This willl in return, help to boost the market cap of the company as its share price goes up post IPO. Company with a bigger market cap finds it easier to attract talents as well as fund managers to invest in it. In addition, it is much easier for the Company to do mergers and acquisitions if it has a high market cap.
(4) Managers and Underwriter take less risk.
Manager and underwriters take less risk when sentiments are bullish as all the shares will usually be subscribed and they can earn their fees with little risk of the shares being under subscribed by the market. Thus you can see Managers rushing to launch the IPOs during good times. The Managers and Underwriters want to have the cake and eat it.
Since market sentiments has turned quite 'bearish' over the last 2 trading days, i wonder if there are any chance for the remaining IPOs in July- Yongxin, Dutech and Fujian Zhenyun to go 'underwater' i.e. below its IPO price. What do you think?
Sunday, 29 July 2007
(IPO booth at Raffles Place - Relatively smaller when the booth of Ascendas India REIT is opposite)
Fujian Zhenyun Plastic Industry Co., Ltd is principally engaged in the R&D, design, manufacture and sale of a broad range of plastic pipes and fittings. The prospectis is here.
Public offer: 1.75m shares at 62 cents
Placement offer: 33.25m shares
Closing date: 1 Aug 2007
Manager: Genesis Capital
Sales for 2006 is RMB 393m and net profit is RMB 63m and EPS (based on post-IPO 115m shares) is RMB 0.55 or Singapore 11 cents. The Company has been growing by 30% annually for the last 3 years and assuming this will continue in 2007, the sales for 2007F will be RMB 511m and net profit will be RMB 81.76m and EPS will be 14.2 Singapore cents. Based on the IPO price of 62 cents, it is priced at a forward PE of 4.37x. Sinopipe, the listed peer on SGX, is trading at a PE of around 6x. Assuming a same valuation matrix for Fujian Zhenyun, the fair value will be around 85 cents.
Personally i dont like this investment. I cant see what so exciting about a piping company with low entry barriers. There are better companies around for longer-term investment, this is another sell on first day investment for me.