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.