Thursday, 30 December 2010

Happy New Year 2011

Dear blog readers,


Here is wishing you a Happy New Year in 2011. 
Happy Investing!


Thursday, 25 November 2010

Amtek Engineering Ltd

Amtek Engineering Limited ("Amtek") is offering 200m vendor shares at $1.30 each subject to over-allotment option. 180m shares will be via placement and the rest for the public.  The offer will close on 29 Nov at 8am (an unusual timing from the 12pm) and commence trading on 1 Dec.


According to FinanceAsia article, Amtek downsized its IPO after weak institutional demand to allow for "greenshoe" option so that they can help stabilize the market upon listing. Amtek provides end-to-end design and manufacturing solutions for precision metal, plastic and rubber components and casing. The company was privatised in Aug 2007 by Standard Chartered Private Equity and CVC Asia at around $0.69 per share (apple-to-apple comparison) versus the listing price of $1.30.  


The company intends to pay up to 50% of its net profit after tax as dividend and this will be its dividend policy. Considering that the majority of the shareholders are PE firms, this is not surprising.


Revenue for the year ended 30 June 2010 is US$638m and net profit after tax is US$21.682m. The EPS was US 4 cents and that is approximately Singapore 5.16 cents. That translate into a historical listing PER of 25! (wow!). The NAV per share is only $0.29 versus its listing price of $1.30.  That translate into a 4.5x price to book.


Venture Manufacturing had sales of S$3.4 billion and net profit of S$143.7m and is trading at 17.1x historical PE and 1.3x Price to Book. Based on 2010F earnings, Venture is trading at 13.4x PE and 1.3x Price to Book. Venture's EBITDA for 2010F is approximately S$246.6m versus Amtek's $107m for year ended 30 June 2010. In other words, Venture might be a cheaper and better alternative for investors to consider, although my caveat is that i have no insight into Amtek's forward performance for FY2010/11. Interestingly, the CEO of Amtek, Daniel Yeong, was previously the CEO of GES which was subsequently sold to Venture. You can say that he is a true blue entrepreneur and this is his "second pot" of gold even though he has no bachelor 'degree'. Daniel was brought into Amtek after the PE firms did the buy-out, i am sure that over the years, he has managed to restructure Amtek into a better firm. 


Unfortunately, the issue is a bit overpriced at $1.30 (and that is even below the original indicative range). I would give it a 1 chili rating and "avoid" at its IPO price. The fact that vendors are 'cashing out' is no added consolation.

Wednesday, 24 November 2010

Sabana REIT

Sabana Shari'ah Compliant Industrial Reit is offering 508 million units for $1.05 each in its initial public offering (IPO). About 432.5 million units will be for large institutional investors with the remaining 75.5 million available to small investors.

The units will give a yield of 8.22 per cent for next year, based on the expected distribution of 8.63 cents per unit. The yield for 2012 is expected to be 8.25 per cent or 8.67 cents per unit. The offering closes at 6pm on Wednesday with trading expected to kick off at 2pm on Friday.

Sabana holds 15 industrial properties across Singapore and will manage them in line with Islamic principles. To be Shari'ah Compliant, the premises cannot be used for gambling, for example, or the production of pork or alcohol for human consumption. An independent Shariah committee will advise the Reit manager and issue the compliance certification.

Mapletree Industrial Trust is currently trading $1.09 (and that translate into a yield of 6.82%m versus the yield of 8.22% for Sabana for next year). Having said that, MIT is a much bigger firm with better assets and Ah Gong's backing, thus the credit worthiness and ratings are at a premium.  Assuming a fair value yield of 7-8%, that will translate into a fair value price of between $1.12 to $1.23. However, the firm is launching its IPO amidst uncertainties over the Euro zone economy, jittery markets and a mini "war" breakout between the Koreans. In this aspect, while i expect downside to be limited, do not expect any spectacular 'fireworks' on its debut. I think it will likely be range bound between the fair value range i mentioned above. 

I would have preferred it to be priced "below $1" by issuing more units so that it can cross above $1 on its debut (something like how MIT has priced itself). However, what i am proposing is just more psychological than anything else. I will give it a 2 Chilli rating but dont think you will 'miss anything' even if you dont apply.

Wednesday, 17 November 2010

Mewah International Inc.

Mewah International Inc (the "Company") is offering 251.679m shares (226m New shares and 25.62m vendor) in a global offering at the lower than expected indicative price of S$1.10 per share, citing "volatile market conditions".  The public tranche offer of 12.584m shares will close on 22 Nov at 12pm. The Company is one of the largest palm oil processors in the world by "capacity", manufacturing and distributing edible oil products under well recognised global brand names. 


The Company has 3 refineries and processing plants in Malaysia and 3 packing plants in Malaysia (2) and Singapore (1). The Company is involved in both bulk segment (wholesale) as well as consumer segment (brand management).


Revenue for 2009 was US$2.86 billion and profit after tax was US$89.6 million. For 6 months ended 30 June 1010, the revenue was US$1.62 billion and profit after tax was US$35.5m. Comparing June 30, 2010 figures with the prior period, gross margin (gross profit/sales) has dropped from 11.9% to 7%. Net margin has also declined from 4.24% to 2.19%. While the quantum of net profit is 'huge', against all the peers i seen in the palm oil sector, this is one of the companies with the lowest net margin i have seen. The adjusted EPS for FY ending 31 Dec 2009 was US$0.06 or around Singapore 7.74 cents. That will translate into a listing PER of 14.2x. However, considering the 2010 will be a "down year" due to margins being squeezed by 100%, it is unlikely that the EPS for 31 Dec 2010 will match that of 2009. Assuming we are aggressive and use a 1Hx2 EPS of US$0.04 or Singapore 5.16 cents, that will translate into a forward PER of 21.3x. Of all the "plantation and agricultural" stocks listed in Singapore, only Wilmar and Indofood command such a PE ratios while Golden Agri, First Resources and Kencana are trading in the teens. Malaysian-listed palm oil plays such as IOI and Genting Plantations are trading in the 19-23x range. The fact that Wilmar just announced a disappointing Q3 results and the heavy corrections in the markets are not helping to boost interest in this counter. 


Valuation wise, I would regard the counter as more than fairly valued and with the declining margins seen, I would avoid this issue at current price as i don't believe the 2nd half performance can match the 1st. Top management wise, it is made up of the "Cheo" family (since they founded this business), so it is up to you to interpret if such structure is good or bad for the company. As in all family business, united they stand and disunited, they fall. :)  


Updated analysis thanks to "IPO Hunter" comments


On page 40, the Company indicated that revenue was US$2.2 billion and net profit after tax of US$52.2m. The gross and net margins are 7.3% and 2.4% respectively. EPS for the 8 months was US$0.03. Assume i still "pro-rate" this results over 12 months, the net profit will be US$78.3m and that represents a EPS of US 5.2 cents or Singapore 6.7 cents. That translate into a forward PER of 16.4x.  That helps to make it "in-line" with the market PE ratios and may even provide a small possible upside to $1.34 (assuming 20x forward PE).


The updated analysis is not going to change my 1 Chilli rating for this Company and i would still 'avoid' this IPO at current price. As usual, i can be wrong.

Friday, 5 November 2010

STX OSV Holdings Limited

STX OSV Holdings Limited ("the Company")  is offering 180m New Shares and 145.646m Vendor shares for sale at $0.79 each in its IPO. Goldman Sachs is the Global Coordinator while DBS is the Singapore public offer coordinator. 309.363m shares will be placed out while 16.283m shares will be via public offering. There will also be over-allotment option and stabilization action, if necesary. The market cap before allotment is around S$1.05 billion


The Company is one of the major global designers and shipbuilders of offshore and specialized vessels used in the offshore oil & gas exploration and production and oil services industries. Headquartered in Norway with about 9,000 employees, it has 10 yards (1 under construction) spread over 4 countries (Norway -5, Romania -2, Brazil - 2 and Vietnam -1). Singapore is the sales office with only 4 employees. Its vessels include the AHT (Anchor Handling Tug supply vessels), PSV (platform supply vessels), offshore subsea construction vessels and others such as coast guard vessels, ferries, ice breakers and seismic vessels. It is part of the STX group of companies and its decision to list in Singapore somewhat is an endorsement that SGX is a key listing venue for shipbuilding companies. 


The current order book indicate 23 vessels to be delivered in 2010, 23 in 2011 and 13 in 2012 and 5 in 2013. The order books for the later years should fill up in the coming months if the oil   price continue to creep up and break the $100 barrier, which would then spur demand for existing and renewed exploration needs.


This prospectus is well drafted (I like it). The information is concise and straight to the point and information are greatly presented to give you a concise picture of how earnings are derived. The IPO will close on Nov 10, 2010 and 12 pm.


STX OSV's revenue for the year ended 31 Dec 2009 was $2.054 billion and profit for the year after tax was $16m. For the 6 months ended 31 Dec 2010, the revenue was $953m and the net profit after tax was $91m. EPS for year ended 31 Dec 2009 (accounting for the issuance of new shares at IPO) was US$0.014. Using a current exchange rate of 1USD-$1.29, the EPS is Singapore 1.806 cents and that translate into a historical PER of 43.7x. However, that may not be indicative of the forward PER as we are coming to almost end of the year. The fully diluted EPS for 6 months 30 June 2010 was US$0.076 or Singapore 9.804 cents. Using a simple 'pro-rating', the full year projected EPS will be 19.6 cents. That will translate into a forward PER of 4.02x (hmmm... is my computation wrong somewhere?) For analysts who attended the IPO briefing, maybe you can help me with the 'forecasted' diluted EPS from the company?).  


The Company's dividend policy is to pay a stable (preferably rising) dividend over time.  The Company expects its annual cash dividend to be no less than 30% of the Company's distributable annual profit. The NAV per share will be $0.41 versus the $0.79 IPO share price.


The IPO proceeds will be used mainly to improve the yard in Vietnam and second shipyward in Brazil and the rest will be spread across other purposes. Post listing, STX Europe Holdings will hold 68.3% of the Company. If you look at the management, they are made up of mainly Norwegians, however, the board has many Koreans. Before you starting thinking that this Company is a European company, the 3 letters "STX" might ring a bell? STX Pan Ocean was listed in Singapore before it seeks dual listing back in South Korea a few years back. STX Group is Korea's 12th largest business group by total assets and has 54,000 employees worldwide.  


Personally, i think the company is very good in timing its IPO. The Company is listing its shipbuilding unit when everyone starts to believe that the good times will be 'back' and that shipbuilding orders for the oil & gas industry will return once oil price break above the $100 mark again. The Company looks 'cheap' based on the FY2010 projected PE even just by using the half year EPS. The peers such as Cosco, Yangzijiang and Otto Marine are trading at much higher multiples, especially Cosco. Assuming a fair value range of 10-15x and assuming my EPS of 1H x 2 is reasonable, the fair value will trade between $1.96 to $2.94 (sounds too good to be true). Assuming i just use first half EPS of (0.076 x 1.28) = Singapore 9.73c. The implied ultra conservative PE fair value will be S$0.97 to S$1.46.


I think the IPO is worth investing and subscribing as it is attractively priced.

Monday, 1 November 2010

Nordic Group Limited

Nordic Group Limited ("the Company") is offering 110m New Shares (2m for public and 108m via placement) at $0.20 each.  Established in 1998, the Company is an automation systems integration solutions provider serving mainly the marine and offshore oil & gas industries.  The Company has an order book of $37.4m at the date of prospectus and intends to distribute up to 30% of its net profit after tax for FY2010 as dividends. The IPO will close on 8 Nov at 12pm.


Revenue grew from S$19.2m in FY2007 to S$41.9m in FY2009 and net profit after tax grew from $2.35m to $8.4m in the same period.  Based on fully diluted basis, the EPS for FY2009 is Singapore 2.1 cents and that translate into a historical listing PER of 9.52x. For the 3 months ending 31 March 2010, the EPS is 0.5 Singapore cents, implying a growth of 66% over the same period last year. Assuming EPS for FY2010 grew by a moderate 30%, the EPS will be 2.73 Singapore cents and that translate into a forward PER of 7.3x. A fair value range of 7-10x will indicate a price of 19c to 27c. 


The issue is more fairly priced this time round and for a company that is exposed to the oil and gas sector with 'generous dividend' being promised, i guess the downside at 20c is limited.  However, as it is, the company is still a small cap company at $80m and has generous service agreements with its key management.  In addition, we are not privy to who the shares are being placed out to. It will be difficult to get it from the public tranche and with IPO sentiments turning sour, I would give it a miss as the small lots you get from the public tranche may not cover your selling commission.

Saturday, 23 October 2010

Oxley Holdings Limited

Oxley Holdings Limited is offering 224m New Shares at $0.38 each by way of placement for a Catalist listing (that what is the point of having an IPO booth?).  The Company is a property developer specializing in residential cum commercial developments. The Company intend to distribute at least 50% of its net profits as dividend in FY2011, at least 30% in FY2012 and at least 20% from FY2013-2015. (wow this is the longest commitment for a dividend payout policy i have ever seen). The offer will close on 27 Oct at 12pm (but not for public). The market cap will be $565.8m (much bigger market cap than some mainboard listed companies....)


The company did not disclose its revenue line but its net profit after tax for year ending 30 June 2010 is a paltry $549k. EPS based fully diluted basis is Singapore 0.04 cents. That translate into a historical listing PER of 875x which appeared to be "expensive" but we will need to know what is the projected earnings stream coming on in FY2011. The NAV per share (post IPO) is 8c versus what investors are paying for 38c! Pre-IPO investors paid 21.3c. The owners and pre-ipo investors controlled 85% of the company post IPO and will be under moratorium. As you can visualise, the stock will be tightly controlled and as in most Collin Stewart's IPO, the prices post IPO will be 'well managed'.


Personally, my gut view is that the counter is overpriced with possible consolidation in the property sector in the next few quarters.  But since this offer is "by invitation"only, most probably the invited guys will be privy to more detailed prospects/earnings than what we can skim from the prospectus. This counter is for investors who like niche property developer exposed to the Singapore-property sector but certainly not for me.

Wednesday, 20 October 2010

XinRen Aluminium Holdings Limited

XinRen Aluminium Holdings Limited is offering 198m New shares at $0.55 per share where 186m shares will be via placement and the rest for the public (12m).  There will be over-allotment option and DBS will be the stablisation manager.  The IPO will close on 25 Oct at 12pm. The Company has 3 business divisions, namely Smelting, Fabrication, Trading and Marketing. It is a leading producer of primary aluminium in the PRC. The IPO proceeds will be used to increase the capacity (55%), strategic investments (15%)  and working capital (30%). The market cap implied by the IPO price is S$604m.

From FY 2007 to FY 2009, revenue grew from RMB 3.3 billion to 4.26 billion and net profit flucutate from RMB 142.9m to RMB 306 million during the same period. For the 3 months ended 31 March 2010, revenue grew by 123.3% ro RMB 1,269.1m and net profit touched RMB 150.3m versus a loss in the same quarter in prior period. In Singapore dollars term, the revenue for 2009 was S$852m and net profit was S$61.2m. The EPS for 2009 based on fully diluted shares post IPO will be Singapore 5.6 cents. That translates into a historical PER of 9.8x.  

If you remember, Ferrochina fell under its debt. As of 31 Aug 2010 adjusted for IPO proceeds, Xinren has S$124.8m of cash, debt of S$407.7m and equiy of $226.5m. Investors would do well to watch the debt levels of this company closely in case there is any refinancing risk for its loans and the "joke" is that the all the loans and borrowings are classified under current liabilities. In other words, if the banks want to withdraw their facilities, they would have difficulty repaying the debts! In addition, short term loans usually bear a higher interest rate that long term loans, the company would do well to 'refinance' its short term borrowings into loans with longer term tenure that has a lower interest rate!

The NTA per share as of 31 March 2010 (assuming IPO proceeds is received) is $0.19 per share and that translate into a price-to-book ratio of 2.89x. Looking at the comparables listed in HK (Aluminium Corp of China and China Zhongwang Holdings), they are trading art forward 2011 PE of 25x and 5x and PB of 1.86x and 1.67 respectively. Assuming EPS grow by 20% in FY2010, the EPS will be Singapore 6.72c. (This prospectus is "tough to read". The information is all over the place). At 15x PE, the fair value of XinRen will be around $0.84. This will be a hit-and-run counter for me unless the company can address some of the concerns i have.

Tuesday, 19 October 2010

Mun Siong Engineering Limited

Mun Siong Engineering Limited ("Company") is offering 107m New Shares at $0.20 each where 2m shares will be for public and the remaining 105m shares via placement.  The Company is an integrated mechanical engineering and electrical and instrumentation service provider for the Process Industries and its major customers are the petroleum majors, petrochemical companies and multi-national EPC contractors.

Revenue increased from $26.2m in FY2007 to $67.7m in FY2009 and net profit before tax rose from $1.7m to $9.8m in the same period. Q1 2010 show a revenue of $14m and net profit of $2.1m.  The offer will close on 20 Oct at 12pm and will commence trading on 22 Oct.  The EPS based on post-invitation shares for FY2009 is 1.94 cents and that translate into a historical PER of 10.3x. The NAV per share (taking into account the IPO proceeds) will be around 8.38 cents. The market cap is around $83.34m at the issue price.

The comparable bigger EPC sompanies like PEC and Rotary are trading at less than 10x forward PEs. In this regard, for this small cap company, it is really priced on the higher side that is trying to list amidst positive IPO sentiments. The only good thing is that the company is raising funds by issuing purely new shares for growth and no pre-ipo vendors trying to flip and make a quick buck. Unfortunately there are better EPC companies trading a cheaper valuation and other than the low price per share of $0.20, i don't see many compelling reasons to invest in this company for the long term.

Saturday, 16 October 2010

Is multiple applications for IPO permitted?

I think many investors were asking this question on whether multiple applications are allowed for IPOs. The answer is - it depends usually on the size of the issue. 


For small IPO issue where they have trouble attracting the 'minimal' 500 or 1,000 shareholders, multiple applications is strictly not allowed. This is because the IPO issue manager is trying to ensure a reasonable spread among investors such that they are able to fulfill the minimum number of shareholders listing requirement. 


For big IPO issues such as Global Logistics or Mapletree Industrial Trust, they have no issue or problems attracting and meeting the minimum shareholders requirement. In such IPOs, you can still apply at the ATMs using CPF or Cash even though you are already allocated some shares under the placement tranche. This is because during the book-building exercise, the issue manager already know that they have met all the listing requirements, especially the minimum no. of shareholders requirement.


Hope this answer the query you have. For avoidance of doubt, do consult your remisier or broker but of course, the 'never do homework' ones will not be able to advise you properly. Happy IPO investing.

Friday, 15 October 2010

Anchun International Holdings Limited

Anchun International Holdings Limited (“Anchun”) is offering 130m shares at $0.28 each where 105m are new shares and 25m are vendor shares. 2m will be for the public and the rest via placement. The IPO will close on 21 Oct at 12pm. The Company is a leading integrated chemical systems engineering and technology solutions provider to PRC petrochemical and chemical industries, In particular, manufacturers of ammonia and methanol based products. The company was awarded the 2009 Forbes China Up * Comers award by Forbes China magazine.

Revenue grew from RMB 114.8m in FY2007 to RMB 294.8m in FY2009 and net profit grew from RMB 38.4m to RMB 75.2m during the same period. Assuming the service agreement is in place in FY2009 and based on the post IPO shares of 505m shares, the EPS will be RMB 14.6c or approximately Singapore 2.93 cents. That translate into a listing PER of 9.56x. The market cap based on the IPO price is S$141.4m.

Looking at the pre-IPO investors, you can see a familiar name Ma Ong Kee, who get in a very cheap price. Let’s see if he can do some magic to this counter. China XLX, a company listed on HK and Spore is another pre-ipo investor in this counter.

Assuming the company can grow at a conservative 25%, the EPS will be 3.7 Singapore cents and that translate into a forward PE of 7.56x. The company reminded me of an old S-chip favorite that has fallen out of favor. Jiutian Chemical. Ring a bell? Anyway, the public float will be small, only 2m, so getting it will be tough. Looking at current sentiment, just treat it as a apply-and-sell type (stag) and you should be fine but don’t fall in love with it.  

Monday, 4 October 2010

Mapletree Industrial Trust

Mapletree Industrial Trust is offering 594.9m units at $0.93 per unit. DBS and Goldman Sachs is the joint global coordinators and together with Citi and SCB act as the underwriters as well. The company is poised to be one of Singapore's largest listed REIT with an initial portfolio of 70 properties valued at $2.1 billion on 31 Aug 2010. The properties are spread all around Singapore.


The "annualised" yield for FY2010/2011 is 7.6% and projected to grow to 8.0% to FY2011/2012. The IPO will close on 18 Oct at 8am. The placement tranche of 488.7m was overwhelming subscribed and cornerstone investors took 322.6m shares! Luckily, they have a big public tranche of 106.1m for the people in the street. The company will have a market cap of $2.09 billion. For the year ended 31 March 2010, the REIT has a revenue of $178m and a net income of S$86.7m.


The cornerstone investors are APG, AIA, Henderson, Columbia, Shaw and Prudential. The NAV is S$0.86 and the IPO represents price-to-book premium of 1.08x.


The peers include Ascendas Reit (6.19%), Cambridge Industrial Trust (8.92% closest comparison?) etc but for convenience, i will group it with the logistics Reits such as Mapletree Logistics (6.86%) as well. From bloomberg, the peers are trading at between 6-8%.


Again, MIT managed to priced itself at the higher end of the IPO price range due to overwhelming demand. I would consider this REIT as a better buy than Global Logistics (since both are launched around the same period). Assuming a yield compression to 6% before investors switch out to other Reits with better yield, the possible price will be around  $1.18 to $1.24 and that represents a more than 20% upside. Hopefully it will not benchmark itself to Cambridge valuation. Happy investing...


15 Oct - they ran out of prospectus...

Global Logistics Properties

Global Logistic Properties launched its IPO at $1.96 per Offering Share. According to sources, the demand from institutional investors were hot, as such, they ended the book building period earlier than expected and priced it at the high end of the range (which to me, means that the counter is likely to be fairly priced and has a much lower margin of safety). The company is offering 1.07 billion shares via placement and 102.3m shares via public offer. Cornerstone investors have subscribed for approximately 589m shares but has no moratorium. Investors may apply for the IPO using their CPF monies. The offer will close on 14 Oct at 10am and list on 18 Oct and the offer is subject to over-allotment as well as stabilization by the manager.


The prospectus states that the Company is a market leader in modern logistic facilities in China and Japan (why Japan? i wonder. I guess they have to package it nicely to offload the under-performing but mature Japanese properties???)


Revenue rose from US$250m in FY2008 to US$412m in FY2010 and according to the prospectus, China economic and demographic conditions will drive demand for logistics facilities while Japan will provide a stable cash flow. For the year ended 31 March 2010, the Company incurred a profit of US$240m before a drop in fair value of its properties by $369m resulted in a net loss of $149m for the year.  However, for the 3 months ended 30 June, the company made $116.4m before fair valuing its properties upward resulted in a net profit of $500.6m for the same period.


The IPO is fairly priced at a slight premium to its book value, i.e. approximately 1.086x its book value. This is one of the mega IPO in Singapore for 2010.


Without considering any fair value changes to its portfolio, assuming a pro-rated profit of US$465m and a USD/SGD rate of 1.30, the implied EPS will be Singapore 10.68 cents and at the IPO price of $1.96, it translate into a forward PE of 18.35x


The top guys in this Company (Jeffrey Schwartz and Mr. Ming z Mei will make about US$2m a year each before share bonus while the top management team of 4 others will draw at least S$ 3.75m in total.


The cornerstone investors include Alibaba.com, National Social Security Fund of China, CBRE GRES, Chow Tai Fook, Peter Lim Eng Hock, ING Clarion Real Estate, Lion Global Investors, Nan Fung Group and Owl Creek.


Conclusion:  The IPO is fairly priced (but not aggressively overpriced), i believe the company is poised to grow even bigger in the coming years and the IPO proceeds will be the catalyst and the bullets it will need. The 'fair value' accounting of its properties will, without doubt, bring uncertainties and volatilities to its earnings. With stabilization manager and overwhelming demand, investors should have no problems 'stagging it' on its first day but i will drop the 3 chillis rating to 2 as it is priced at the higher end of its IPO range.

Yamada Green Resources Limited

Yamada Green Resources Limited “the Company” is offering 30.08m Vendor Shares and 74.9m New Shares of which 2m will be via public and the rest via placement.  The shares are priced at $0.22 each. The IPO will close on 6 Oct at12pm.

The Company is a major supplier of self-cultivated shitake mushrooms in Fujian Province PRC and operates one of the largest cultivation base there. Its products are broadly classified into mushrooms or processed food products.

Revenue grew from RMB 73m million in FY2007 to RMB 236.2m in FY2009 and net profit after tax grew from RMB10.4m to RM81.7m over the same period. The net margin improved from 14.2% to 34.6% during this period. The unaudited 3M 2010 revenue grew by another 63% and net profit grew  by 85% respectively over the same period in FY2009. 

Post IPO, the company intends to expand its cultivation base, expand its eucalyptus plantations and establish its own distribution and marketing network. There will be 406.6m shares post IPO, i rather they issue less shares and priced it higher. I guess the IPO managers are still of the view that investors believe "lower priced" China shares are 'better' as the down side risk is 'lesser'. I rather they be more confident in this regard. 

Based on the post IPO no. of shares, the company is listing at a historical PER of 5.23x (assuming the service agreement is in place in FY2009 based on the post-IPO shares). The market cap will be $89.45m.

Assuming the net profit increased by more than 50% in FY2010, this means the net profit will be RMB 122.5m. This will translate into a EPS of approximately 6 Singapore cents. Based on the IPO price of 22c, it is priced at a prospective PER of 3.67x which is very 'cheaply' priced.

Sinograndness (another listed S-chip in button mushroom) is trading at around 6.2x PE. Assuming Yamada trades at 5-6x prospective, it will translate into a fair price of 30-36c. But a few push back factors will be the vendor share sale and huge float. It will likely be another hit and run story. 

Tuesday, 31 August 2010

Indofood Consumer Branded Products

30/08/2010
Indofood Consumer Branded Products to launch IPO on 28-30 September, appoints underwriters 
Story
Indofood Consumer Branded Products (ICBP), a unit of Indonesian foods company Indofood Sukses Makmur, plans to launch an initial public offering of a 20% stake on 28–30 September 2010. A report in the online edition of Kontan cited the company’s IPO prospectus. ICBP will use 70%-80% of the IPO proceeds for settling its debt and the remaining funds will be used to boost its working capital, the item noted. In the first quarter 2010, ICBP got IDR 4.11tn in loans from its shareholders, the report added.

The company appointed Kim Eng Securities, Credit Suisse Securities Indonesia, Deutsche Securities Indonesia and Mandiri Sekuritas underwriters for the offering, according to the report.

ICBP plans to raise IDR 4tn–IDR 5tn (USD 555m) from the IPO.
Source
Kontan
Value
USD 555m (targeted IPO proceeds)
Stake Value
20%
 

Tuesday, 24 August 2010

New Blog Designs

Dear IPO blog readers,


Just wanted to drop a note to tell you that i have 'revamped' both my blogs 


Singapore IPO blog will remain dedicated to the Singapore IPO market while i am now more actively updating my personal blog on financial freedom. 


Do drop by my blogs to take a look. If you are a blog owner and would like to do a link exchange to either of the blogs, just drop me a email (slower response) or directly into the comments and i will do the necessary linkage.


Happy investing and trading. I will share more on the topic on what i think is the fastest way of reaching financial freedom in my personal blog in the coming weeks. :) 

Wednesday, 28 July 2010

Consciencefood Holding Limited

Consciencefood, an Indonesian maker of instant noodles, launched an initial public offer to raise $18.8m.

It is selling 104m shares at 22 cents apiece. The placement of 96m new shares and almost 8m vendor shares represents 26.3% of the company’s enlarged share capital.

Two million shares are available for public subscription, while the remaining 102m will be placed out.

The invitation opened yesterday and will close at noon next Tuesday (3 Aug 2010). Listing and trading of the shares on the Singapore Exchange is expected to start at 9am next Thursday. Collins Stewart is the manager, underwriter and placement agent for the public offer.

This is the "instant noodle food" play primarily in Indonesia. Hence if you are bullish on this sector and country, you should be 'exposed' here. Do note that the barriers to entry is low and there are many "competing brands" in the market.


The bulk of the fund raising is to establish a new manufacturing plant in Jarkarta.

Financially, the company has grown pretty fast over the last few years. Assuming the Service Agreement is in place since 1 Jan 2009 and based on the post-IPO number of shares, the EPS of 2009 will be 2.96 Singapore cents.  Based on the IPO price of 22 cents, it is listing at a historical PE of 7.43x.  The market cap post listing will be $87.2 million.

The pre-ipo investors are Phillip Ventures, Asean China, UVM Venture and Aventures and they are the main vendors in this IPO. They received their shares based on a 45% discount to the IPO price. (overhang in shares post moratorium 6 months later?)

While it is good to see more regional companies coming to list in Singapore, it is hard to be bullish where most of the IPOs tanked below its issue price post listing in recent weeks.

Friday, 23 July 2010

Kreuz Holdings Limited

Kreuz and its subsidiaries (collectively, the “Group”) is principally engaged in the provision of subsea services which includes activities supporting new offshore installation and construction projects, as well as inspection, repair and maintenance (“IRM”) of existing offshore production and pipeline facilities.



The subsea services offered by the Group are mainly performed through air diving (up to depths of 165 feet), saturation diving (depths of between 60 to 1,000 feet) and remotely operated vehicles (“ROVs”). The key operating assets to be owned by the Group include two work accommodation/dive support vessels Swiber Supporter and Swiber Glorious, one 12-man saturation diving system (K-SAT 02) and six air diving systems. The Group also has a stable pool of experienced offshore skilled personnel whom it can deploy to work on offshore projects.

The Group is offering 80m New Shares at $0.27 each with 4.5m shares for the public and the rest via placement. This is basically a "PIPE" deal where a listed company "spun out" its profitable subsidiary to raise more funds for expansion. In this case, the listed company is Swiber. Revenue for FY2009 is US$56.4m and net profit is US$11.9m. Post IPO, Swiber will own aboout 63.2% of Kreuz. The offer will end on 27 July 2010 at 12pm. The EPS based on audited 2009 figures and adjusted for service agreement as well as enlarged share cap is 3.54 Singapore cents and that translate into a listing historical PER of 7.63x. The share cap based on the IPO price will be S$136.89m and this means it is one of the "bigger' Catalist listed company. I guess Kreuz headed for Catalist is because it doesnt have the 3 year track record and the Catalist allows it to raise funds quickly.

I am not sure why but it seemed that new investors are getting in at 27 cents while the original shareholders have paid between 31.92c to 52.90c per share. Quite unusual to see that. Public will hold around 15.8% of the company. The order book as of the prospectus was approximately US$ 133.2m. The order will be completed between 5 to 60 months.

Business wise, i think the company is well positioned and the sector is attractive but may be overly dependent on Swiber as well as too "concentrated" on the "sub-sea" segment of the oil & gas industry. Overall, i like this company and could be a 'gem' in the making if they can get their business strategies right.

The IPO is fairly priced with possibly upside potential as Ezra and Swiber are trading at 10-12x PE multiples. Assuming EPS is 'unchanged' for FY2010, the fair value will be between 35c to 42c. It is always good if the prospectus can give you an idea of what the FY2010 EPS is likely to be but unfortunately, we can never tell from the prospectus. These are figures which only cornerstone investors or the underwriters will know but they will only share with you 'verbally'.
The Group generally works through main contractors (including the Swiber Group) to provide services to end-customers who are major oil and gas companies such as British Gas India Pvt Ltd, Brunei Shell Petroleum Co Sdn Bhd (“Brunei Shell”), Reliance Industries Limited, Conoco Philips Inc, Alam Maritime Resources Berhad and Petroliam Nasional Berhard. The offshore projects that the Group has supported are located in India, Malaysia, Brunei, Myanmar, Indonesia and Thailand.

Tuesday, 13 July 2010

Smartflex Holdings Ltd

Smartflex Holdings Ltd is a provider of IC module assembly and testing sevices for contact and dual interface smart cards based in Singapore.

The Company is offering 13m New shares at $0.22 each where 1.5m shares is via public offering and the rest via placement. Offer will close on 15 July at 12pm. The market cap is S$18.1m.

Revenue grew from US$14.6min FY 2007 to US$18.1m in FY2009. Profit after tax grew from US$1.2m to US$1.9 during the same period. EPS based on post IPO shares will be 2.33 US cents for FY2009. Based on post IPO shares and assuming service level agreement is in place in FY2009, the company is being listed at a PER of 6.65x.  The company intends to pay out 20% of its net profit attributable to sharesholders as dividend for FY2010.

The IPO is fairly priced and the market cap is too small. I personally dont favour such tech counters for long term investing and would avoid this IPO.

Leader Environmental Technologies Limited


Leader Environmental Technologies Limited ("LET" or the "Company") is offering 116.5m shares (2 m public shares, 114.5m placement shares) at $0.21 each. The Company is an environmental protection solutions provider in China and is engaged in the R&D, manufacturing, assembly, installation and support services of environmental protection systems. It services include dust elimination, desulphurization.

Revenue grew from RMB 100.7m in FY2007 to RMB 181.7 in FY2009. Net profit grew from RMB 39.7m to 64.3m during the same period. Net margin is hovering above a healthy 28% for the 3 years. The IPO will close on 14 July 2010 and 12 pm.

The company is listing at a historical FY2009 PER of 7x based on enlarged share cap and assuming service level agreements were already in place and based on the IPO price, the market cap will be $92.74 million.

While i do like this industry, this company actually bring up old memories of a former S-chip that was a market favourite but has since come under judicial management - Sino Environment. Sino used to be a market darling, rising to more than $3.50 at its peak but is now languishing at 13.5 cents. Many people lost their fortune in that company.

There is always a huge risk investing in Chinese companies, especially with regards to the quality (or even existence) of the earnings in the accounts. The fact that this is a S-Chip audited by Ernst & Young, one of the remaining big 4 accounting firms, may bring a little more comfort than usual. The company will also declare at least 10% of its FY2010 earnings as dividends.

As mentioned in my earlier part, i like this industry. China will have to focus more on enviromental protection in the coming years. The only concern i have is more management specific, i.e, can the management be trusted. Will the company go bust a few years after listing?

Assuming EPS grow by 25% in FY2010 and EPS will be 3.75 Singapore cents. Based on the 21 cents IPO price, company is listing at prospective PE of 5.60x. A fair value of 8-10x will imply a price of 30c to 37.5c. The low public float will mean that it will be quite difficult to get it from the public tranche.

Tuesday, 6 July 2010

ES Group (Holdings) Limited

ES Group (Holdings) Limited (the "Company" or "Group") is a marine and offshore group engaged or involved in new building, conversion and repair of ocean-going vessels. Their customers are primarily shipyard operators in Singapore involved in the construction and repair of seaborne vessels, offshore rigs and semi-submersibles. They build, convert and repair a wide range of vessels, such as tugs, barges, rigs, offshore support vessels, oil tankers and cargo ships.
 
The Group's business can be categorised into two main segments as follows:
 
New Building and Conversion

They fabricate steel structures for new buildings and vessel conversions for customers whom are reputable shipyard operators in the marine and offshore oil and gas industries, such as Sembawang Shipyard, Keppel FELS and ST Marine. They also have experience and technical expertise in (i) building a wide range of specialised and customised vessels such as tugs, barges, jack-up rigs, offshore support vessels, oil tankers and cargo ships, as well as (ii) carrying out FPSO, FSO and FSU conversions.
Repair

They also have the capability to undertake repairs for a wide range of offshore vessels and barges, both afloat and drydocked.

Financial Highlights

Revenue for the Group grem from S$40.8m in FY2007 to $52.7m in FY2009. The profit also grew from $3.9m to $8.3m during the same period. Based on the post-ipo shares, the EPS was 4.5 cents for FY2009 and that translate into a historical PE of 5.3x.

The Company is placing 21.2m New Shares at $0.24 each to raise funds for ex pansion. The market cap post listing is $33.9m. The offer will be via placement and will close on 7 July 2010 at 12pm. The Company also intends to pay out 30% of its net profit as dividends for FY2010.

Personally I think this company has much better prospects than several other Catlist listings which we have seen so far. The fact that it is prepared to pay a 30% dividend despite being a "Catalist" listing also indicate that the management is confident of its 2010 prospects and cash position. I would have given this stock a better rating but unfortunately, it is not for public subscription. Whilst the prospectus doesnt shed much light with regards to 2010 performances or budget, assuming the company will perform credibly or much better than FY2009, a fair value of 6-8x PE will indicate a fair value of 27 cents to 36 cents.
 

Friday, 2 July 2010

CCM Group Limited

I was travelling for a while and frankly, i didn't miss much action in Singapore. The IPO market remains to be 'dead' with no IPOs. Even the distribution of K-Green Trust by Keppel Corporation was via "distribution in specie" to its shareholders with no new funds being raised.

CCM Group Limited ("the Company") is placing out 25m New Shares via placement at $0.20 each for a Catalist listing.  The Company is a general contractor and aims to be a 'one-stop' shop for its customers.  The order book as of May 2010 stands at $92m. Revenue for the Company grew from $11.4m in FY2007 to $27.97m in FY2009. Net profit was $3.1m in FY2009. The EPS for FY2009 on a fully diluted basis is 3.39 cents. Based on the IPO price of 20 cents, the Company is listing at the valuation of 5.9x, which to me, is a fairly valued IPO. The market cap is $18m based on its IPO price.

This is an ultra small cap company in a sector which i dont like. So avoid this counter unless you have reasons to be bullish or vested. Zzzz...

Friday, 7 May 2010

Mann Seng Metal International Limited

Appeared for "record purposes" only

Sorry, i missed out this one. Not that you missed anything as this is a catalist listing and all the shares are placed out at $0.25 each (no public tranche) and the market cap is $22.5m (ultra small cap?)

The Company was established in Malaysia in the 80s and is now an integrated metal engineering services provider. Revenue for this company grew from RM 43.7m to RM 57.0m and profit before tax grew from RM 4.1m to RM 11.1m from FY2007 to FY2009. The FY 2009 figures are "estimated".

Based on 90m shares and project net profit of RM11.1m, the EPS is around RM 12.33 cents or Singapore or approximately Singapore 5.3 cents. That translate into a listing PER of 4.7x, which is reasonable for a Catalist listing.

The share offer is fair valued and if the company continue to grow in 2010, then the listing price would be considered as "cheap". Assuming the company grow at 20%, the PER will drop to 3.9x.


Wednesday, 5 May 2010

New Century Shipbuilding Limited


New Century Shipbuilding Limited is one of the largest shipbuilding groups in the PRC, ranked 5th domestically and 13th worldwide in terms of orderbook measured by deadweight tons "DWT".

Its major products are medium and large sized oil tankers and bulk carriers and its shipyards are located in Jinjiang City, Jiangsu Province.

Revenue rose from RMB 7,043.8m in FY2007 to RMB 11,159.2m in FY2009 and net profit rose from RMB 405.8m to RMB 2,348.6m in the same period.

As of March 31, 2010, the order book is RMB 23.8 billion for Bulk Carriers and RMB 3.5 billion for Oil Tankers.

The Company is offering 560m New Shares at a maximum price of $1.19 and the offer price will based on a book-running exercise. The company also intends to distribute no less than 20% of its annual profit from 2010 to 2012.

In US$ terms, the company generated sales of US$1.6 billion and net profit of US$461.4m for the year ended 31 Dec 2009. Based on the post IPO no. of shares, the EPS was 7.70 US cents. Assuming the US$/SG$ rate is 1.38, the EPS is 10.63 Singapore cents and the company is listing at the historical PER of 11.1x.

As of yesterday, Cosco is trading at 33x and Yangzijiang at 9.2x.  As such, New Century could be a better alternative in term of valuation and good dividend prospects for the next 3 years. than Cosco. Investors in Cosco might want to consider switching into New Century.

The public tranche will close on May 5, 8am and the price will be then determined. The IPO will start trading on 11 May. With most markets dropping in tandem due to the Greek debt problems, it is likely to be priced below the $1.19 indicative price.

IPO punters may want to avoid this IPO in this poor market sentiments and investors who want exposure to this counter should be better off buying from the market post listing.

NOTE:  THIS IPO WAS SUBSEQUENTLY WITHDRAWN ON 5 MAY 2010

Thursday, 22 April 2010

Global Palm Resources Holdings Limited

Golden Palm Resources Holdings Limited launched its IPO for 110 million new shares at $0.46 each. A pathetic 3m shares will be available for the public while the remaining 107m shares will be via placement.

The company is a producer of crude palm oil and palm kernels in Indonesia and its prospectus boasted that it has access to land banks suitable for future cultivation of oil palms.

Revenue in FY 2008 was Rp 267.7 billion (S$38.6m) and net profit was Rp 70 billion ($10.7m).  For the 9 months ended 30 Sep 2009, the revenue was Rp 2222.5 billion (S$30.6m) and net profit was Rp 144.4 billion (S$19.8m).  EPS for the 9 months adjusted for post IPO shares of 412.968m shares was 4.82 cents. Somehow it seemed odd that the company showed a 9 months profit in 30 Sep 2008 of S$22m but the profit dropped to S$10m by 31 Dec 2008. Seemed like there are last minute late adjustments / losses to the accounts in Q4 2008. Assuming that was a one time off adjustment in 2008 and that 2009 EPS for full year is a 'conservative' 5.28 Singapore cents, the company is listing at a PER of 8.7x.  The NAV per share post IPO is 26.7 cents, a 42% discount to its IPO price, thus investors have to note that they are paying a premium to the net book value of the company (which frankly, it is very difficult to value biological assets).

The market cap will be around $190m and the IPO will close on 27 April 2010 at 12pm.

Compared to its other peers like Indoagri, Wilmar and Kencana Agri, it seemed likes this IPO is priced to sell. However, Golbal Palm is not as established and well known that its other peers and is much smaller in terms of revenue.  A fair value PE of 10x-12x assuming unchanged EPS for 2010 will mean a price range of 52 cents to 63 cents. However, the recent listings so far have been fairly disappointing and looking at recent trend, it seemed to fluctuate within a plus/minus 10 percent range.  Personally, with only a 3m public float, the chances of getting it will be low and with such a low profit range, i would give this a miss if i am punting the IPO. I would prefer to stick to better names like Wilmar and Indoagri if i want some exposure to the palm oil sector.

Saturday, 10 April 2010

Tiong Seng Holdings Limited

Tiong Seng Holdings Limited ("TSH") is offering 189m New Shares (finally i see someone that is not selling vendor shares!) with 15m shares for the public and 174m shares via placement at 28c each. TSH is principally engaged in building construction and civil engineering in Singapore as well as property development in PRC. As of 17 Feb 2010, its order book for construction and civil engineering projects is estimated at S$953 million.

Its revenue grew from $132.8m in FY2006 to $272.3m in FY2008.  For the first 9 months to 30 Sep 2009, its revenue was $301.7m versus $200.8m in the same period till 30 Sep 2008. The net profit somewhat fluctuates from $9.7m in FY2006 to $10.3m in FY2007 and $9.3m in FY2008.  However, for the first nine months till 30 Sep 2009, the net profit stands at a staggering $29.2m. It seemed that most of that profit is driven by the more profitable property development projects which can be lumpy at times. Assuming Q4 show a conservative profit of $5m, the full year net profit will be $34.2m. That translate into an EPS of Singapore 4.53 cents based on the enlarged share cap. At the IPO price of 28cents, it is equivalent to a PER of 6.18x. Without doing any due diligence on my numbers, assuming the company is able to sustain its profit growth by 25% for FY2010, that will translate into an EPS of Singapore 5.66 cents and at a PE range of 5-7x, the fair value will be $0.28 to $0.40. At the IPO price, its market cap is $211.1m.

The offer will end on 14 April 2010 at 12pm and starts trading on 16 April 2010 9am. There are over-allotment and stablisation action allowed for this company. Which is good if the demand is good. So far, the track record of DBS for the last 12 months have been fairly impressive as they are more selective ín terms of IPO mandates and less aggressive in terms of IPO pricing, leaving some meat for retail investors. Usually you will be able to get out on the first day at a profit. Even the 'worst performing IPO by DBS'', Sin Heng is only down 6% as of Friday's closing and most IPO punters would have been able to 'get out' safely on the first few weeks. (Tiger Air and PEC are doing well and Cache Logistics likely to do well too). I can't say the same about recent IPOs mandated by UOB Kay Hian though (lets see how Debao versus Cache debuts on monday. The Qingmei IPO was a huge disappointment).

While personally I dont really like the construction sector stocks, i think traders/investors who are in for a punting mood can still try their luck on this counter, especially when you know that there are no pre-ipo investors cashing out on you and that your IPO proceeds is not being used to enrich them.
Its future plans include increasing construction business in core markets, establish a pre-cast factory and expaning buisiness in China.

Friday, 9 April 2010

China Minzhong Food Corporation Limited




















China Minzhong Food Corporation ("CFMC") launched its IPO by selling 119.602m new shares and 77.742m vendor share at $1.20 each. 9.867m shares will be available for the public while the rest will be through placement. The IPO will end on 13 April at 12 pm.

CFMC believed that it is the leading vegetable processor in China. It is also one of the few integrated vegetables processing companies with its own cultivation bases.  Its key products can be broadly classified into processed vegetables or fresh vegetables produce.

CFMC's revenue grew from RMB 445m in 2007 to RMB 1,058m in 2009. During this period, the net income grew from RMB 119m to RMB 288m. For the year ending 30 Sep 2009, the revenue was $224.6m and net profit was $61.2m. Based on the enlarged share cap, the EPS for FY2009 was $0.11. At the IPO price of $1.02, the company is listing at a historical PER of 9.3x. The IPO proceeds will be used mainlyto increase production and cultivation capacity. The NAV per share post IPO will be $0.65

The market cap based on the IPO price will be $645m and there will be over-allotment as well as stablisation action performed by JPM.

Pre-IPO investors came in at various prices, ranging from 18c to 72c. The more prominent ones are : Tetrad Ventures (aka GIC) at 28c, CMIA Funds (aka as the manager who was brought down by Ferro China) at 18c, OCBC Capital at 72c. Prudential Asset Managment is the public corner stone investor and has subscribed for 25m shares and Fidelity HK is also a cornerstone investor subscribing for 6.67m shares.

This is an interesting company as it is one of the first of this kind to be listed here.  If not for the fact that GIC is an investor, the company would probably have tried to list in HK.  It is listing at a fair PE mulitple of around 9.3x.  Assuming earnings went up by 25% in FY 2010 and a fair value range of 9x to 12x, the EPS will be $0.1375 and the Company's fair value will range from $1.24 to $1.65.

Given the fact that GIC has invested, it lends some 'credibilty to the operations and given the fact that this is one of the bigger IPO to be listed here, it will command a premium over its other China listed S Chip. With JPM acting as stablising manager, the selling pressure on the first week should be well absorbed and the IPO is worth 'a stag'.

However, the fact that many pre-ipo investors are PE funds, it is likely to face some selling pressure when the moratorium is over in 6 months time.

Thursday, 8 April 2010

Cache Logistics Trust

Cache Logistics Trust ("CLT") is a Singapore-based REIT established principally to invest in income-producing real estate used for logistical purposes in Asia-Pacific. CLT's initial portfolio of properties comprises six high-quality logistics warehouse properties located in Singapore.

The properties under Cache Logistics Trust (CLT) will be leased to CWT Ltd. (CWT) and C&P Holding Pte. Ltd. (C&P) under master lease agreements. The leases will have a weighted average lease expiry (by GFA) of 6.4 years, with locked-in annual rental escalations of 1.5% per annum for the first five years of the initial contracted lease term.

CLT is granted a right of first refusal (ROFR) by CWT and its substantial shareholder, C&P, to acquire logistics properties in the Asia Pacific region owned by or offered to CWT and C&P. It is interesting to note that this is another "listed company"trying to hive off its assets into a REIT/Trust, the other list cos that have walked down the same path includes, Hyflux, Capitaland etc.


CLT does not have a credit rating as yet that limits the maximum allowed gearing to 35%. There is still some room for debt funded acquisition as CLT's post-IPO gearing would be 26%. While management views that 35% gearing as a comfortable level, it is open on getting a credit rating to raise its allowed gearing level to 60% should a suitable acquisition opportunity arise. There is also potential for capital appreciation if the trading environment in Singapore continues to recover and cap rates for industrial properties fall.


Based on forecasts found in CLT's prospectus, its IPO is priced at a DPU yield of 8.7% and 8.8% for FY10F and FY11F respectively. This is higher compared to peers such as Ascendas REIT (AREIT SP) and Mapletree Logistics Trust (MLT SP), which trade at consensus yields of 6.9% and 7% respectively for FY10F. IPO investors will be paying for CLT units at a price-to-book (P/B) ratio of about 1.0 vs. AREIT and MLT units currently trading at P/B ratios of 1.2 and 1.0 respectively.

The IPO is attractively priced with a reasonably attractive yield. Investors would do well to subscribe to this counter. Assume CLT heads towards "yield equalisation of 7%", the fair value of CLT will be $1.09.

Debao Property Development Ltd

My apologies to all readers here. Just came back from overseas and i thought i could get a picture of the IPO booth today (saw it yesterday) but interestingly, they dismantled the IPO booth before the IPO closes! The IPO close on 8 April 2010 at 12pm.

Debao Property Development Ltd is an integrated property developer in Foshan City, PRC. The company is offering 138m shares at 43 cents each comprising of 125m New Shares and 13m Vendor Shares. 1.5m shares will be via public offer and 136.5m shares via placement. The vendor shares are sold by pre-ipo investors and the list is rather long (comprising many individuals and BVI companies). Pre-IPO investors are getting in at 50% discount to the IPO price and that translate into a price of 21.50 cents. Pre-IPO investors still hold a chunky 27.54% post IPO and the share price is likely to face selling pressure once the moratorium is over.

The IPO proceeds will be used for existing property development projects, acquiring new sites and for working capital. The market cap based on enlarged 1.125m shares is $483.75m and the adjusted NAV per share post IPO is Singapore 20.23 cent. In this aspect, at 43 cents, investors are paying a high premium over its net worth (more than 112%).

Revenue was RMB 136.6m in FY 2008 (a drop of 54% over FY2007).  Net profit dropped to RMB 2.7m versus 111.97m in FY 2007 (a drop of 97.5% over FY2007). For the 1H 2009, revenue was RMB 202.67m and net loss was RMB 16.1m

I am not going to spend too much time and effort on this company as I believe investors are better off not buying the IPO. The company is too 'concentrated' in Foshan and the Chinese government is keen to rein in prices in the booming property sector. The overhang in shareholders post moratorium will also not be a good sign.

Give this IPO a miss.

Wednesday, 24 March 2010

TTJ Holdings Limited

TTJ Holdings Limited is offering 15m shares for public and 95m placements shares at $0.20 each.  The company is one of Singapore's largest independent structural steel fabricators and also operate 2 dormitories in Singapore.

The financial year ends on the 31st July. From FY2007 to FY2009, the revenue grew from S$64.6m to $138.1m.  Net profit fluctuates from $9.2m in FY2007 to $13.2m in FY2009. The directors intend to distribute 20% of its profit after tax as dividends for the FY ending 31 July 2010.

The application of the IPO will close at 12pm on 30 March 2010 and will commence trading on April Fool's Day, 1 Apr 2010. The market cap is $70m based on the IPO price and is listing at historical PER of 5.25x based on the enlarged share cap.

The main use of the proceeds will be $10m for expansion into the business of strutting business and $4m for the construction of a new fabrication facility in Middle East.  (My view:  Amazing why the company is still going to Middle East where the construction boom has likely ended with many companies mired in debts). 

The company also had a generous "profit sharing" scheme whereby the executive officers and the CFO will share 6% of the PBT and the CEO has a separate profit sharing scheme of at least 2% PBT. With no minimal profits to be attained before the scheme kicks in and with a friendly board of directors, my personal view is that the scheme is quite generous and unlikely to be challenged going forward but hopefully it will bring the company to greater heights. Just for illustration if the scheme is in place since inception, if the FY2009 profit before tax is $15.812m, the 5 executive officers and CFO will share $948,720 and the CEO will get $522,480.

While the IPO is cheaply priced, looking at the most 5 recent IPOs where the share price tanked below the issue price, it will require some effort for the share price to remain above water. I would give this a miss.

Wednesday, 10 March 2010

Qingmei Group Holdings Limited

Qingmei Group Holdings Limited ("QM") is offering 184m shares at 31 cents apiece, of which 160m are new shares and 24m are vendor shares.  It comprise 2m via public offer and the rest via placement. The IPO application will end on 15 March 12pm and will begin trading on 17 March 2010.

QM is principally engaged in the original design manufacturing of mid-end and high-end sports shoes soles under its own trademarks and brandname.

Its key customers are shoe brand owners such as Double Star, Jin Shu Wang, Kang Ta, Qiao Dan, K Birad, 361, Xtep and ERKE.

QM generated revenue of RMB 294m in FY 2007 and grew it to RMB 833m in FY2009. Net profit during the same period rose from RMB 47m to RMB 182m. Assuming the service agreement was in place in FY2009 and based on the fully diluted shares of 640m, the EPS is Singapore 6.08 cents. Based on the IPO price of 31 cents, it is listing at a historical PER of 5.10x.  The market cap at listing is S$ 198.4million.

The company intends to distribute not less than 30% of its net profit in FY2010 and FY2011. Assuming the "worst case" scenario of same profit, the dividend per share will be 1.82 cents and based on the IPO price of 31 cents, the projected yield is at least 5.8%

The pre-IPO investors bought at around 17.8 cents and one of them, CIM XX is cashing out half its shareholdings at the IPO and that will bring its shareholding down to 3.75% (which will then avoid the disclosure post moratorium). CIM XX is basically an investment vehicle managed by "David & Han" team from UOBKH.

It is tough to project FY2010 performance without having direct access to the management. However, having said that, it is likely that the company will grown in FY2010. I will assume a 20% growth rate which implies EPS for FY2010 will be 7.3 cents and that translate into a forward PE of 4.24x.

There are no "similar companies" listed on SGX but China HongXing (one of its customers under ERKE brand) is listed here. It is trading at 14x historical PE. China sports is trading at 4x and China Eratat at 2x.

Personally, i think QM is fairly priced for a S-Chip IPO as investors are "risk-averse" to S chips. The shoe industry is not exciting as China Hongxing announced a poor set of results with margins being squeezed. I would give this IPO a miss.

Thursday, 11 February 2010

Cogent Holdings Limited

Cogent Holdings Limited is offering 92m shares at $0.22 each. (Of which 2m shares are of public offer and 90m shares are via placement). The IPO will close on 23 Feb 2010, 12pm.

Cogent has more than 30 years of operating history and is one of the leading full service logistics management services  provider in Singapore offering Transport management service, Warehousing and Container Deport management service and Automotive logistics management services.


Revenue grew from S$27.5 million in FY2006 to S$60.1 million in FY2008 and net profit grew from $1.3 million to $7.0 million in the same period. For the 1st 6 months ending 30 June 2009, the revenue is $29.4m  and the net profit is $3.7m. 

The company intends to pay dividends of at least 50% of its FY2009 profit attributable to shareholders and at least 20% of its profit for FY2010.  Assuming the net profit is $13.3m, the dividend paid out will be $6.65m and based on the post-IPO shares of 319m shares, that will translate into an EPS of 4.17 Singapore cents and Dividend Per Share of  2.08 cents.  The projected yield will be 9.45% for FY2009. At the listing price of $0.22, the company is listing at a historical PE of 5.27x. The Company may also pay out the dividends on a quarterly basis.

It is interesting to note that the company is paying out a majority of the $ it raised from the IPO as dividends as the amount raised from selling new shares amounted to $9.1m but the Company will be paying out approximately $6.7m as dividends (assuming the FY2009 projected profit is $13.3m). Post IPO, the Tan brothers will still hold 71.2% of the company.

While i dont really like the sector, the company is attractively priced for the IPO as its competitors such as Freight Links and Poh Tiong Choon are trading at 8~10x PE. Assuming Cogent trades at 7-8x PE for FY2009, the fair value will be around 29 cents to 33 cents. Company should be worth a stag but the public tranche of only 2m shares means that investors who apply at the ATM will need lady luck to smile on them.

Tuesday, 2 February 2010

China Hu An Cable Holdings Ltd

China Hu An Cable Holdings Ltd ("Hu An Cable") is offering 176m shares at $0.42 each of which 118m shares were new shares and 58m vendor shares. 5m shares will be via public offering and 171m shares via placement. The IPO will end on 4 Feb 2010,  12pm. There is a 30m over-allotment option and CIMB will act as the stabilising manager. The market cap post listing will be $246.9m.

Hu An Cable is a wire and cable product manufacturer in China and its products are used across various industries.

Revenue has grown from RMB 788m in FY2006 to RMB 1,385m in FY2008 and net profit has grown from RMB 46m to RMB 92.5m during the same period.  Based on the post-IPO shares, the EPS for FY2008 is RMB 15.7 cents.  For the 9 months ending FP2009, the revenue is RMB 943m and the net profit is RMB103m. The EPS is RMB 17.5 cents for FP2009.  Assuming a simple pro-rating, the EPS will be 23.3 cents and that will translate into Singapore 4.66 cents. At the IPO price of $0.42, the IPO is priced at a 9x PE for FY 2009.

The Company does not intend to pay out any dividend for FY2009 but intends to pay out 15% for it FY2010 net profit.

Based on the FY 2009 "pro-rated" results, at the IPO price of $0.42 per share, the Company is fairly valued using average listing multiples for newly listed S-Chips. I believe upside is limited at this juncture but investors may want to revisit this company after the full year FY2009 or 1H 2010 results are released.

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