Saturday, 3 November 2007

Changtian Plastic & Chemical Limited


(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



FY 06:
Sales: $107.59m
Net profit: $29.676m
Net margin: 27.6%

FY07: Projections
Sales: $140m
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!

18 comments:

Loh Hon Chun said...

Suddenly the IPOs are back in waves.

Nelson said...

My projection for FY2007 is almost identical to yours but I rate it 12x FY2007. TP around $0.72.

2Y Capital said...

Dear Loh and Nelson.. thanks for dropping by... Nelson do share more of your projections and views whenever you drop by. i.e. whether you like that particular counter etc. :)

Nelson said...

I think the business itself is not that sexy at all. Nonetheless, the market cap should attract bigger institution holding. Some other quoted CNA, the fair value for this stock should be between 63 t0
78 cents, when compared against its peers like CHT. Anyway, I have got placement from this IPO.

2Y Capital said...

Nelson, you must be a UOB client... are you in the IPO club?

Nelson said...

Yes, I am UOBKH client. What is IPO club? I don't know anything about it.

Loh Hon Chun said...

How to be selected to be the special UOBKH client to be placed for an IPO?

hongjun

Nelson said...

you have to be an active trader as they would look at your commission to them.

2Y Capital said...

Hongjun, it really depends on your trading volume and the clout your dealer/remisier has. Anyway, if you want to know how to get placement shares, you can check my lessons here.

http://singapore-ipos.blogspot.com/2007/08/how-to-lay-your-hands-on-placement.html

Loh Hon Chun said...

thanks for the pointer :)

2Y Capital said...

The grey market is currently around 70-73 cents.

Nelson said...

By any chance do you have any update on the grey market price? Thanks

2Y Capital said...

Hi Nelson.... today market closed no grey transactions ah... anyway i am vested as well. :)

Nelson said...

Let's cross our fingers that the debut will perform as grey market indicated. Busy listening to Bernanke's testimony.

Nelson said...

just to let you know that I sold both Changtain (at 0.60) and Marco Polo (at 0.405) on opening day. Market is too unstable; waiting to buy back later perhaps.

Loh Hon Chun said...

when you see all the put warrants are top gainers, and call warrants are top losers, something is really really bad.

2Y Capital said...

hi Nelson. I sold Changtian and Cacola on the first day as well but i wont be looking to buy them back :)

Nelson said...

I would not buy so soon and I did not bother to get Sinotel either.I think the market panic may persist for another week or two. Until then, I will stay sideline.

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