Tuesday, 25 August 2009
Passion Holdings Limited
The company is an integrated designer, producer and retailer of wide range of handicrafts and furnishings. The manufacturing facilities are located in Longyan City, Fujian Province and the products are either sold under its Passion brand name or as ODM products.
The financial year end is June 30 and revenue has grown from RMB 277m in FY2007 to RMB 542m in FY 2009. Net profit also grew from RMB 63.88m to RMB 111.635m during the same period. The market cap is S$97.5m post IPO. The EPS based on 390m shares is RMB 28.62 cents or Singapore 6.06 cents. Based on the IPO price of 25 cents, this translate into a historical PER of 4.12x, which in my view, is fairly valued for a S-chip. In addition, the pre-IPO investors got in at a very low price of less than 10c! If the market PE expands to 6-8x, then it will translate into a fair value of 36 cents to 48 cents.
Personally, i don't really like this company due to the kind of business (highly competitive) it is in and the fact that the vendors are cashing out. This is one of those "Sell on first day" kind of IPO to me just to take advantage of the positive IPO sentiments.