(IPO booth at Raffles Place. A very crowded week at Raffles Place for IPO booths)
Changtian Plastic & Chemical Limited ("Changtian") is engaged in manufacture and sale of adhesive tapes, release papers, BOPA films.
Public - 5m shares at $0.47. closing on 6 Nov
Placement - 210m shares
Manager - Boulton Capital
Underwriter - UOB Kay Hian
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!