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.

4 comments:

Anonymous said...

"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"
--- I wonder why the company need to raise this IPO when it can jus wait for a yr (ie the divident it generate can pay for itself) .........

2Y Capital said...

I guess partly because the owners are cashing out from the company, thus they are trying to 'sweeten' the deal by playing the dividend angle. Imagine if they are selling vendor shares without any dividend promise, under such market, it may not be so enticing to investors.

Anonymous said...

1HFY2009 profit is only 3.7M. How you project FY2009 as 13.3M?

2Y Capital said...

It's so long ago and there are no hard and fast rules but this is usually how i project. I either use 1H x 2 or use the growth rate to project 2H profit as the company may experience seasonality. So if 1H09 grow by x% over 1H08, i will assume that 2H09 will also grow by x% over 2H08. Hope that explains without going into the details.

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