Thursday, 25 April 2013

Croesus Retail Trust ("CRT") Preview



This is a funny name which i don't really know how to pronounce it. Should be read with a "silent e"?

Anyway, i am looking at this now because i have to indicate whether i am interested in it but i am not going to do a detailed analysis until it is launched. 

CRT is the first Asia-Pacific retail trust that has its "initial portfolio" located in Japan and it is the second attempt in which it is trying to list on the SGX. Saizen is the other REIT that came to my mind, but it is focused on the residential segment. My IPO write up in 2007 was here and i must say, the write up last time is so....yucky. hahaha Saizen has since went through a lot of issues (based on my rough recollection) with difficulties in renting out its apartments in 2009. The current yield on Saizen REIT is around 6.6%.

I am not sure whether the initial portfolio are good quality properties, as such, i will appraise this purely from a yield perspective assuming it can continue to rent out 100% of its units and rental remained the same. In addition, CRT has the right of first refusal on 2 retail projects in China and some properties in Japan which they will only acquire if it is accretive. The tentative launch date for the public offer is next week. 

In addition, the assets will be injected at a "discount" to its valuation price (around $15.8m at current rate of $12.5/1000 Yen. 

According to the draft prospectus, the forecast yield is around 8%. CRT has used an exchange rate of around $1.263/Yen. This is a tad higher than the current rate of $1.25. However, having said that, this is the best time to visit Japan, ever. The yen is at a historical low and i have been stocking up on Yen recently. I have visited Japan at least once every year since 2007...and from my memories, the current rate is one of the best rate ever. :oP

Above is the 10 year chart on SGD/Yen. You see the Sgd/Yen rate and you know that now is the best time to buy Yen (in case you play forex). hahaha. I believe the yen will revert to its mean so over the longer period. Assuming a more "normal" forex rate of $0.0145, the implied yield is actually higher if the future distributions are converted at a better rate.The yield will improve to 9.18% if i use an average rate of $0.0.145 but of course, this will be the "upside" scenario. In addition, when crisis comes, the Yen will appreciate as it is perceived to be a safe haven currency.

I like the retail space as well so i have no issues with this "segment" vis-a-vis Saizen. In recent months, Abenomics is working its magic to lure investors back to Japan. Another article for your bedtime reading on Abenomics is from our Today's papers.

Conclusion: It is a Hoot for me based on my preliminary review.... ^_^

Happy IPOing.

Thursday, 18 April 2013

GDS Global Limited Balloting Results ("GDS")

Here you go, the balloting results for GDS. The issue (including the placement tranche) is about 13x oversubscribed. I have to support this since CIMB is so "brave" to let the public participate. More of a "moral support". :P


Those who applied for 100 lots will get a 20% chance and receive 4 lots. 

Mr IPO's result


5 lots for me. It will be a "hit and run" for me and hopefully, a profitable punt. :)

Saturday, 13 April 2013

GDS Global Limited

GDS Global Limited ("GDS") is offering 17.5m shares at $0.25 each, comprising 12m New Shares and 5.5m Vendor Shares for IPO on the Catalist. 1m shares will be for public offer and the balance 16.5m share via placement. The offer will close on 17 April 12pm and starts trading on 19 April. At least CIMB is doing something more "courageous" than some other boutique outlets. It is letting public investors have a "chance" to play in the Catalist field and i must applaud them for that.

According to the prospectus, GDS is one of the leading commercial and industrial door manufacturer in Singapore.It is also one of the few players who are able to supply steel insulated fire shutters.  

Financial Highlights


As you can see from the financial highlights, this is a truly small cap company with low revenue and profit levels. In my personal view, investing in such small companies can be very risky.

Dividends

The Company intends to pay dividends of not less than 30% of its net profits attributable to shareholders in each of FY2013, 2014 and 2015. While this is a good intention, somehow, may not be appropriate for a firm who is supposedly growing at a fast pace and needs the cash for expansion.

Vendor Sale

For such a small cap catalist listing, i don't like the owners to be seen as cashing out. They should issue more shares instead of selling out.

Valuation

Assuming the service agreement has been in place and based on the enlarged share of 112m, the listing PER will be 10.92x. This is not exactly good value and even if i factor in a 20% growth (just a guess) in 2013, the PER is around 9x. The market cap based on the IPO price is around $28m.

Peer comparison

There is a listed peer in KLW. The website is here. KLW is trading at a PER of 48x and has a market cap of $20m but this doesnt mean that GDS is a good buy. In fact, i wouldn't have invested in KLW in the first place.

Conclusion

The Company is listing on the back of positive market sentiments and at a low absolute price of $0.25, there will be no lack of punters and speculators. My prediction is that given the small float, it will probably open with a bang and the subsequent movements will depend greatly on whether the stock is cornered or not. You may want to try your luck but note that this is not for long term investing and remember to be thankful if you can stag it as there will probably be heartache for people who chase this stocks post listing. I will avoid for long term investment but may consider it for a quick punt. 



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