Showing posts with label Malaysia. Show all posts
Showing posts with label Malaysia. Show all posts

Saturday, 26 July 2014

Terratech Group

Terratech Group ("Terratech" or the "Company") is placing out 108.7m shares at $0.23 each. 43.5m will be new shares and the rest will be vendor shares. The market cap based on the IPO price will be S$141m.

The IPO will close on 25 July at 12pm and starts trading on 30 July. There is no public tranche.

Principle activities

The Company is a resources company and produces marble blocks and marble slabs in Malaysia. They have 4 main sites in Kelantan with a term of 33 years.

The products of the Company include marble blocks, marble slabs, aggregates and calcium carbonate powder.

According to an independent valuer, the marble quarry is worth between $170m to $420m with a preferred value of $260m.

What I like about the Company 

• High proven reserves are easy to extract. One of the key issues of any mining company is the cost of extracting the resources from underground and then transporting them to a port. In this case, the quarry are located on hills, and are easy to mine. No expensive machinery is needed. 
• Top quality marbles enjoying a good premium, especially in China. 
• Clear identifiable growth strategies and production plans. 

My concerns 

• The pre-ipo investors are selling out to new investors. 
• Low production yield of 26%. 
• The company has been making losses for the last 3 years with zero revenue. 
• It is difficult to value this company as the license is for only 33 years. Can they fully max out the value of the quarry during this period?
• This company will be forgotten over time and the gold mining company CNMC from Malaysia listed here and didn't perform well thereafter.

Valuation and Ratings 

I will not attempt to do a valuation on this company. This company is a tad too early stage for me and had many milestones to achieve to reach profitability. The Company in its prospectus, mentioned that most of its order books will be recognized in FY2015. Assuming that is true, the revenue of the company will likely be around $17m. At this juncture, given that it has just started production, it is too early to know what the net margin is.

I understand from sources that demand is very hot but having said that, I can't see what so sexy about it. I will give it two chilli for the IPO debut but one chilli rating for the longer term. Don't be the last to hold the baby unless the Company can prove it's execution capabilities over time.

Happy marbling. 

Wednesday, 3 July 2013

International Healthway Corporation Limited

International Healthway Corporation ("IHC" or the "Company") is offering 104.35m Placement Shares comprising 58.517m New Shares and 45.833m Vendor Shares at $0.48 each for a listing on Catalist. The market cap post IPO will be around $770.33m. The prospectus is here. I have taken a quick glance at the prospectus and i have to say that it is not an easy read. Information are "all over the place".

The IPO will close on 4 July 12pm and there is no public tranche. I am also not getting any placement shares which really makes me lose the 'motivation' to do this write up. ^_^


IHC is an integrated healthcare services and facilities provider with an initial portfolio of 15 assets in PRC, Japan and Malaysia. It has 2 main business segments:
(1) Healthcare Services (Own manage and operate hospital and nursing facilities)
(2) Own medical and mix use developments (this is probably for rental income) 

You can see that one of their "stated" strategies is to establish listing vehicle as as REIT to enhance shareholder value.

Financial Highlights

The reason why i say the prospectus is not an easy read because it is rather confusing. On one hand you have nice revenue figures and net profit figures here on a colorful page, which show very impressive gains.But if you look at the footnote, it consist of "fair value gains" which is from the property revaluation.

Then on page 43 of the prospectus, you have another set of figures which differs from the "audited figures". Why didn't they have an "audited pro-forma" column? Don't they need one for the listing? (Is it because the listing criteria on Catalist is more lax?)

Assuming the unaudited pro-forma balance sheet can be relied upon, the post listing NTA is around 7.21 cents and the EPS adjusted for service agreement and new shares for FY2012 will be 3.285 cents. That will translate into a historical PER of around 14.6x.  If you refer to page 110 and strip out the investment gain of $49m, the company will make a profit of only $4.9m (versus the $52.934m you see above). If the profit is $4.9m, the historical PER will actually be around 158x (based on enlarged share cap and service agreement being in place).

Use of listing proceeds

The proceeds from the new shares will be used to develop existing and new projects.


The list of shareholders are pretty long and so is the list of pre-ipo investors. It also consist of a fund- Asia Growth II LP and listed company - HMC. The pre-ipo investors paid around 30.84c for their stake.If i were them, i wouldn't mind selling at 48c (it is a 55% increase from their 'entry' price).

Is this a developer or hospital operator?

It starts to get confusing when you see the projects in the pipeline. Some of the projects are pretty interesting, such as IHC Medical & Commerical Centre in KL and IHC Medical and Commercial Centre in Chengdu. (See pictures below). The targeted completion date will be 2016 for both projects (which is still a long way from here). There are some development risks which investors will take on and a lot will depend on whether the management is able to execute.

While i like the medical sector, i am not sure if IHC is a medical or property developer and I don't think dividends will be likely in the next few years as they will need cash to complete the development projects.

What i like about IHC
  • Healthcare sector
  • Aging population in Asia

My concerns
  • Rich valuation (huge premium to NTA)
  • High PE (if we strip out the property gains)
  • Property development risks
  • Share overhang from Pre-IPO and Fund investors.
  • Owners are selling out at the IPO price

If this is a pure hospital operator, i can use IHH or RMG as a benchmark but then again it is not exactly a hospital operator as the revenue is pretty low.
If they are developing property and mix used developments for healthcare related rental income, perhaps I can use Parkway REIT to benchmark them but their properties still have a long way to go. 
Can i consider IHC as somewhat similar to "Perenial China Retail Trust" where a lot of malls are still being developed? but then it is listing at a premium to NTA!  

No matter which angle i look at it from, the valuation is rich. 

Sentiments-wise, I must say to list under current market is pretty "courageous", we shall see if it is able to defy the current weak sentiments and start the IPO ball rolling.

I was just thinking if there is a public tranche, i would probably have given it a miss as well and the rating will probably range from 0 to 1.  

Happy watching from the sidelines.

Tuesday, 9 October 2012

Courts Asia Limited

Courts Asia Limited ("Courts" or the "Company") registered its prospectus today. The link is here.

This was a continuation of my earlier preview post.

Company Description

The Company is a leading electrical products, IT products and Furniture retailers in Singapore and Malaysia and is offering 178m shares (60m New Shares and 118m Vendor shares) at $0.77 each for its Initial Public Offer. The Company has a strong brand equity, with more than 25 years presence in both Singapore and Malaysia. The IPO will close on 11 Oct 12 at 12pm and starts trading on 15 Oct 12.

Vendor sale
The vendors selling the shares are primarily the PE Investors and the subscribers are:
77.92m - Cornerstone Investors (about 43.8% of the offering)
14.285m - Key Mgmt CEO and CFO (about 8% of the offering)
85.795m - the balance shares via placement and public tranche where 76.895m shares will be offered via placement and 8.9m shares via public offer. 

Courts has met the new IPO guideline for the retail tranche which SGX intends to adopt even though it is not effective yet. Kudos to Courts for the early adoption. I guess the next 'best thing' it can do is to allocate more to the retail tranche should the demand be overwhelming.

There is an over-allotment issue of 17.159m shares should the demand be overwhelming. If this is triggered, it will definitely bode well for the Company as the stabilizing manager will step in should the price drops below its IPO price of $0.77.

Good market dominance

As of 2011, Courts has a market share of 9.8% in Singapore and 7.0% share in Malaysia and the number of retail outlets have gradually increased over the last 3 years.

Improving Financial Performance

In terms of financial performance, the Company has also done well over the last 3 years with Sales growing from $580m to $724m in FY2012 and Net Profit from $18m to $39m in the same period.

Courts Price Promise

Haven't heard of the Courts' Price Promise? Here you go. 

Stable Management

The CEO, COO and CFO have been with the Company for more than 15 years each. Which is probably rare in today's context. What is even better is that the CEO and CFO will collectively subscribed to about 14.285m shares at the IPO price of S$0.77. This is probably the best 'vote of confidence' for the company which investors are seeking given the PE backers are selling out.

Cornerstone investors

The cornerstone investors are:
JF Asset Management
New Silk Road Investment
Target Asset Management
Value Partners

The cornerstone investors are reputable "value investors" and not your typical hedge funds. While they are not subject to moratorium, they are definitely not the flippers and are probably attracted by the value proposition of Courts Asia. I definitely view the list of Cornerstone investors which they have lined up as A+ kind of investors.

Use of Proceeds

The Company intends to use the proceeds raised from the 60m New Shares to expand into Indonesia and for working capital purpose. I thought that is the most logical sense due to the rising middle class and wealth in Indonesia. The growth story in Indonesia is a compelling one and the ability to offer in-house credit will probably help improve the margins further.


The Company intends to pay 30% of the Group's current year profit for the half year till 31 March 2013 and full year till 31 March 2014. Assuming the net profit remained the same at $39.4m for FY 2013 and FY2014 for simplicity sake, $11.82m will be paid out. The EPS will be 7.03 Singapore Cents and the Dividend Per Share will be 30% x 7.03 = Singapore 2.11 cents. Based on the IPO price of 77 cents, the yield works out to be 2.74%. There will be upside to the yield if you believe in the continued growth story and profitability trend of Courts Asia. My only wish was that they should have included the latest financial performance in the prospectus as well as those information they shared with Cornerstone Investors.

Key Competitors

The key competitors in Singapore are Best Denki, Pertama, Challenger and Ikano. In Malaysia, they are Senheng, Elitetrax, Ikano and Best Denki.


The Company is listed at a historical PER of 10.95x. The closest listed peer is probably Challenger Technologies. Challenger is trading at a historical PER of 8.7x. Pertama Holdings which run the Harvey Norman speciality retail shop is previously listed but has since been suspended as the owner tries to take the company private. In terms of historical PER, the Company may be fairly valued. However, the market is forward looking and the future definitely 'looked brighter'. Assuming EPS grows by 25% in FY13. (I am just guessing). The implied EPS will be 8.85 Singapore cents and the forward PE will drop to 8.7x. The implied yield will be around 3.4%. 

Assuming a fair value range of 9-11x, the probable trading range will be between 80c to 97c (I am guessing).


Courts Asia is probably worth a second look for both short and medium term. For short term punters, it probably deserve at least a 2 Chilli Rating. The over-allotment and dividend will provide some downside protection and the presence of value cornerstone investors and management buying in at the IPO price will definitely bode well for longer term investors. I may consider adding some of the shares for my SRS portfolio if the price is right. 

Happy IPOing.

Thursday, 4 October 2012

Courts Asia Limited (Preview)

Courts Asia Limited ("Courts" or the "Company") was previously listed in Singapore but was privatised in mid 2007 by both Baring Private Equity and Topaz Investment Worldwide. The article is here in case you need it. At that time, both the investors valued Courts at just over S$100m. 

The Company attempted to go IPO in 2010 but withdraw its listing eventually. At that time, the investors were seeking to raise $170m through the IPO.

Courts Asia lodged its prospectus with MAS recently for a listing. This time round, its has lined up a series of Cornerstone Investors such as JF Asset Management, New Silk Road Investment, Target Asset Management and Value Partners Hong Kong.

Again, this is just a preview with "off-the-cuff" comments and "back-of-envelope" kind of computations so please bear with me if there are inaccuracies as the pricing and final prospectus is not out yet. ^o^. 

Private Equity Backed-Deal

This is similar to Amtek, where the Company was de-listed and privatised again. There are 3 ways in which a PE firm can make money through such a move. 

(1) They managed to delist the firm at cheap valuation (say 6x PE) and relist it at a higher multiple some years later (say 12x PE). (Assuming all else remains equal)

(2) The PE Firm grew the company post delisting. Changing the CEO, streamlining processes, make further strategic acquisition such that earnings or EV/EBITDA improved over the years. (This is called value-adding by PE firms and multiple expansion)

(3) A combination of (1) and (2) above. :-P what else are you expecting.

Vendor sale

Don't be mistaken that a PE backed deal is always bad. A PE fund usually have a fixed term of life, so the Fund Manager needs to realise its investment for its investors and listing is one of the options available. The other will be trade sale. As such, you will see always see a vendor sale from a PE backed deal.

Cornerstone Investors

However, the Company has "cleverly" lined up a series of public market fund managers to act as cornerstone for its IPO to demonstrate confidence in its stock. Shrewd move! However, these are not fly by night cornerstone investors, so they must have seen certain merits to invest in Courts Asia.

PE investors will continue to hold a chunk of the Company post IPO and it really doesn't make much sense to list the company only to have its share price tanked.


In this tough retail business, you need scale and this is what you see in Courts Asia. Though i am not a fan of Courts Asia outlet, you can visit the mega store in Tampines to see for yourself whether you like the concept. I am sure you have bought at least one item from Courts before. 

In my view, the scale allows the Company to make cheap bulk purchases but part the "cream" is also from the interest earned through the "hire-purchase" plans which some customers like. 

Q&A time: Who prefer to pay by credit? Singaporeans or Malaysians?   


This seems to be a standard feature in IPOs nowadays. It was not common last time but i like it. Hahaha. The company intends to distribute about 30% of its profit for FY13 and FY14. I can't compute the yield as i don't have the pricing details, contrary to what some of you may believe. hahaha :P

Financial Performance

Actually i quite like what i am seeing. Increasing revenue and profit trends for the last 3 years!

The answer to the Q&A above is: Consumers in Malaysia.

Probably there are so many interest-free credit card installments plans here in just doesn't make sense for Courts Asia anyway.  

Conclusion: Without the final pricing, i don't know what the valuation is to compare it to Pertama Holdings (a smaller competitor listed here also better known as Harvey Norman) but the business model is simple and straightforward. So check back again when the prospectus is registered. Alternatively, if you have the offering statistics, you can email to Mr.IPO at 

Sunday, 15 July 2012

JB Foods Limited

JB Foods Limited ("JB Foods" or the "Company") was founded in 1980s and is today, one of the major cocoa ingredient producers in Malaysia with a production capacity of 60,000 tonnes each year. According to the prospectus, it has a 13.3% market share in terms of cocoa revenue in Malaysia.

Its main businesses are the sale of cocoa ingredients products and is majority driven by sale of Cocoa powder and Cocoa butter.

JB Foods is offering up to 100m shares for the IPO of which 84m are new shares and the rest vendor. 3m shares will be for the public and 97m shares via placement. The IPO price is $0.30 each. The IPO will close on 19 July 2012 at 12pm and starts trading on 23 July 2012. (For those still waiting for the IHH Healthcare IPO proceeds to come back, sorry... not in time for you).

The Company operated at 98.4% of its production capacity in FY2011 and intend to increase it production capacity over the next 2 years from 60,000 tonnes to 85,000 tonnes. It has also entered into a call option to purchase 2 facilities in Indonesia to be completed in second half of 2013.

Financials performance over the last 3 years.
For FY2012, the Directors intend to recommend and distribute not less than 30% of its audited combined net profit attributable to shareholders as dividends.

Revenue for the Company grew from MYR 386m in FY 2009 to MYR 690m in FY2011 and profit after tax grew from MYR 24.2m to MYR 51m in the same period. Based on post IPO share capital of 400m shares, the EPS grew from 6.1 sen to 12.8 sen. Based on today's exchange rate of 1 Ringgit to 0.3959 Singapore Dollar, the EPS for FY2011 was Singapore 5.06 cents.That translate into a historical PER of 5.92x. Very decently priced considering that the demand for "Malaysian companies"is currently basking in the limelight following the IPOs of FELDA and IHH.

The market cap for the Company post listing will be S$120m. The only thing you may want to note is that post-IPO, majority of the shares (75%) will be held by JBC Group and ECOM. As such,liquidity and interest may fall once the initial euphoria is over unless they are able to continue attracting investors into the company.

Other listed peers

One listed peer on SGX will be Petra Food Limited. For FY2011, Petra's revenue was S$2.1 billion and the net profit after tax was S$80.2m. Petra has a market cap of $1.497b versus $120m for JB Foods. Petra is trading at a historical PER of around 19.5x and a forward PE of 17x. Interestingly, when Petra Food was listed in 2004, its market cap was only S$262.8m. The 5 year share price chart of Petra below for interest sake.

Fair value

Personally, i think this company is priced to sell. Assuming the profits grow 20% (just guessing), the EPS will be 5.06 x 1.2 = Singapore 6.08 cents. Assuming a fair market value of 8-10x (big discount from Petra's 17x due to its smaller size), the fair value should be around Singapore 48 to 60 cents. The dividend payout of 30% will imply a dividend yield of 6.08% for FY2012.

Conclusion - Hoot Ah! 

Give that the IPO of the JB Foods is attractively priced with upside potential, dividend yield and positive market sentiments, i will give it a 3 chillis rating under the new rating system. As the float for the public is only 3m shares, it will only make economic sense if you managed to get at least 3 lots and that will usually be given to investors who apply for at least 50 lots (i am guessing). Happy IPOing.

Wednesday, 4 July 2012

IHH Healthcare Berhad

IHH Healthcare Berhad ("Company"or "IHH") will be one of the largest listed private healthcare providers in the world based on market capitalisation upon listing. It is a leading healthcare provider in Singapore, Malaysia and Turkey. It also have operations and investments in PRC, India, Hong Kong, Vietnam, Macedonia and Brunei. Based on the prospectus, it has over 4,900 licensed beds in 30 hospitals and over 3,300 new beds in the pipeline over the next 5 years.

IHH is going for a dual listing on both Singapore and KL stock exchanges but its primary listing will be on the main market of Bursa Securities and is subjected to Malaysian laws and regulations. You may want to take note that shareholders above 5% must report its shareholding within 7 days and as long as it holds above 5%, it must make a declaration whenever it deal in the securities (regardless of whether it is significant or not).

IHH is offering up to 2,234.65m shares of which 1,800m are new shares and 434.65m are vendor shares. There are 4 placement tranches, Institutional, Malaysia public offering, Singapore offering and Cornerstone offering. Singapore will get about 2% of the shares on offer.

27.17% of the company will be up for sale of which the cornerstone investors will take up 16.87%. The cornerstone investors are:

1. AIA Group Limited’s subsidiaries
2. Blackrock Investment Management, LLC
3. Capital Group International, Inc’s wholly-owned subsidiaries:
4. Capital Research Global Investors
5. CIMB-Principal Asset Management Berhad
6. CMY Capital Markets Sdn Bhd
7. Eastspring Investments Berhad
8. Employees Provident Fund Board
9. Fullerton Fund Management Company Ltd
10. The Government of Singapore Investment Corporation Pte Ltd
11. HPL Investers Pte Ltd and Como Holdings Inc.
12. Hwang Investment Management Berhad
13. International Finance Corporation
14. JF Asset Management Limited
15. Keck Seng (Malaysia) Berhad and Keck Seng Investments (Hong Kong)
16. Kencana Capital Sdn Bhd
17. Kuwait Investment Authority
18. Lembaga Tabung Haji
19. Mezzanine Equities N.V.
20. Newton Investment Management Limited
21. Och-Ziff Capital Management Group’s affiliates
22. Permodalan Nasional Berhad

The cornerstone investors must hold the shares for at least 6 months.

The shares are offered at $1.18 per share and 90% of the proceeds raised will be used to pay off bank loans.

For the year ended 31 Dec 2011, the company made a pro-forma profit of USD 41.4m from sales of over USD 1.6 billion. For the 3 months ended 31 March 12, the sales and net profit were USD 463m and USD 67.8m respectively.  Based on the prospectus, the EPS using the enlarged share capital was US 0.96 cents and US 0.64 cents for the year 2011 and 3 months to 2012 respectively. This translate into a historical listing PER of 93x for FY2011. Assuming a pro-rated EPS for FY2012, the EPS in MYR will be 8.16 cens and the PER will be around 35x. The net assets per share is around RM2.04 versus its listing price of RM2.85. The offer will close on July 11 at 5pm Singapore time and the final price determined on July 12. Balloting will be done on July 23 and trading will commence on July 25. I guess because it is not a straightfoward listing, hence the reasons for holding on to the cash for more than 12 days after IPO closes. IHH is expected to have a market cap of RM 23 billion or Singapore 9.5 billion. You may also be interested to know at the Company is still searching for their group CFO, hence you may submit your resume if you qualify for the post...  

It is interesting to note that the book building has yet to commence and the final price will be determined on July 12. If the FELDA IPO is anything to go by, it is probably that they will adopt the same method where they did not price at the upper end of the book building price but leave some 'meat' for retail investors. Probably the Malaysian election is approaching soon? FELDA made a strong debut last week. As of today, the share price of FELDA is 20% higher than its IPO price.

According to a CNA report, the shares will be fully fungible between the Singapore and Malaysian bourses and that IHH will be the number 1 healthcare service provider in 3-5 years, overtaking HCA listed on NYSE. 

Despite seeing merits in this IPO, I have to admit that the valuation at which the IPO is launched is very expensive and on the high side. Its pipeline of beds and penetration of the Turkish markets does somewhat suggest that the company is still growing at a rapid pace. Perhaps this is what attracted 22 cornerstone investors to this deal and the list do indicate that the sophisticated investors like this company and the story behind it. 

Investors here will remember the hostile takeover of Parkway between Khazanah and Fortis  just 2 years ago. In this regard, Khazanah will not be willing to list this at a loss. I found an interesting write up on IHH by another blogger here.

Anyway, my conclusion is this. This stock is expensive but you probably wont lose money if your intention is to buy and sell within the first 6 months. The election is too near for Malaysia government to risk this. hahaha. However, you may want to ask yourself why 22 reputable investors are wiling to be cornerstone investors. Perhaps they do see some value in this company with prospective information which retail investors are not privy to. I will give it a 2 chilli ratings as i like the sector and industry but not its expensive valuation. It is a hit and run for me unless the Company does deliver on its 'potential'. For your information, while i was writing this report, HCA is only priced at 8.4x FY2012 PE and a EV/EBITDA of 6.6x.... It really makes it tough to justify why IHH should be perceived differently, perhaps this is why its prospectus made this comment that IHH will be one of the largest healthcare provider in the world by "market cap".... good luck to all.

Monday, 31 October 2011

Parkson Retail Asia Limited

Parkson Retail Asia Limited ("PRA" or "the Company") is offering 147m shares at S$0.94 subject to further over-allotment option. Parkson was established in 1987 and today, operates about 50 stores across cities in Malaysia, Vietnam and Indonesia. The Company is scheduled to open 3 malls in FY2012 with one store each in Malaysia, Vietnam and Indonesia. The first "foreign" department store in Cambodia is expected to open in FY2013. The Company operates under the name Parkson in Malaysia and Vietnam and under the name "Centro" in Indonesia. The Indonesia malls were newly acquired in June 2011. In a nutshell, the Company operates departmental stores in South East Asia and is similar to companies such as Metro, Tangs, Isetan, Takashimaya etc.

Proforma sales has been growing steadily from S$301m from 30 Jun 2009 to S$408m in 30 Jun 2011 and net profit has also grown from S$11m in FY2009 to $35m in FY2011. PRA is offering 136.15m shares via placement and the remaining of 10.85m shares via public offering. The offer will end on 1 Nov 2011 at 12pm. The Company intends to use the majority of the proceeds raised for stores opening. The Company intends to distribute dividends between 40% to 50% of its distributable profits from next FY onwards. 

According to the Prospectus, the proforma EPS for the year ending 30 June 2011 adjusted for the IPO shares will be 5.17 Singapore cents. At the IPO price of $0.94, it translates into a listing PER of 18.18x. The NAV post IPO will be $0.29 (versus the $0.94 subscription price). Based on a DBS research report dated 28 Oct on Parkson Holdings Berhad ("PHB"), the IPO price Parkson Retail Asia at 13x of forecasted earnings of FY12PE of S$48m. The market cap at IPO price is $699.64m.

Basically this is a retail sector play in the South East Asia (ex Singapore). It is good that SGX can attract a Malaysian home brand to list in Singapore. What would be some of the risks investors should be aware of?

1. Foreign Currencies risk. Basically the underlying assets are in Malaysia, Indonesia and Vietnam. The "sales and profits" will be made in those underlying currencies and then translated to Singapore dollars for reporting purposes. If SGD strengthens against currencies in those countries, then it will have an adverse impact on the profitability. From the cash flow statement, the forex impact on cash was a whopping negative $10.13m 

2. Exchange Control. In addition to forex risks mentioned above, the repatriation of profits may be subjected to exchange controls in Malaysia and Vietnam. However, this may not be a significant risk factor as PRA will want to dividend out its earnings to its parent PHB.

It is interesting to note that while sales has been increasing over the last 3 years, the net cash generated from operating activities has actually been declining from $83m to $55m.  The net cash used in Financing activities has also surged to $70m in FY2011 (mainly due to dividends of $56.3m back to its parent company..)

This deal somewhat reminds it of Capitaland spinning out Capitamall Asia. Parkson Holdings Berhad is already listed in Malaysia. It then restructure itself and groups all the SEA department stores under a new Singapore holding company, including the recently acquired Centro stores in Indonesia. It then list the new Singapore holding company called Parkson Retail Asia Limited. (For your info, the parent company of Parkson Holdings Berhad is Lion Diversified Holdings Berhad). After the IPO, Parkson Holdings Berhad will still own about 67.6% of the Company. PHB also holds about 51.5% of Parkson Retail Group listed on HKSE.

In terms of Valuation, the IPO is fairly priced for historical and somewhat more attractively priced for FY2012. As of 1 Nov, Parkson Holdings Berhad is trading at 17.7x historical and 14.4x forward while Parkson Retail Group is trading at 19.8x historical and 16.4x forward. If the IPO rise to 15x forward, it will imply a price of $1.08 (15% upside from IPO price). Post IPO, there will be 744.3m shares. Assuming DBS's $48m earnings forecast is accurate and they pay out 40-50%, that will mean $19.2-24m of dividends or around 2.58-3.22 Singapore cents per share. The implied yield will be 2.74-3.42%. While there are no 'similar peers' listed here, OSIM is currently trading at 11.1x forward and Metro Holdings at single digit PE. I guess it can 'command' a premium due to its strong parentage and underwriters willing to price the IPO at a premium despite current market sentiments.

Conclusion:  This investment provides a good exposure to investors who are keen on the SEA department stores. I do like the outlook, proven track record and rising consumer income in Vietnam, Indonesia, Malaysia and possibly Cambodia going forward. While the pricing may not be cheap, it is priced close to its parent company and cheaper than its HK listed related company (reasonably so). The promised yield will provide some downside support while keeping enough cash for its future expansion. 

Tuesday, 25 October 2011

CNMC Goldmine Holdings Limited

CNMC Goldmine Holdings Limited ("CNMC" or "the Company") is placing out 41m Placement Shares in its IPO on Catalist. The Company is selling 23.9m New Shares and 17.2m Vendor Shares at $0.40 each. There is no public tranche and the offer will end on 25 Oct 2011 at 12pm. The Company is principally engaged in the business of exploration and mining of gold and processing of mined gold ore and owns the mining rights to a plot in Malaysia.

The Company has no revenue in FY2008 and FY2009. In FY2010, its revenue was US$530,169 but its loss was US$1.93m. In Q1 2011, the Company continued to incur a loss of US$668,655 and the loss per share was US$0.17. I thought it was somewhat confusing to state that the NAV per share was US$0.50 on page 31 and the another figure of Singapore 1.64 cents on page 48. Accordingly, the NAV per share is Singapore 3.61 cents post IPO placement.

There is no PER ratio to start with as the Company had been incurring losses. The market cap based on the 40c IPO price was S$162 million.

According to the prospectus, you might be interested to know that there is currently a pending law suit from Falmac against 2 of its ex-directors, Choo Chee Keong and Kuan Cheng Tuck for a breach of fiduciary duties. If they are found to be in breach, then it is likely they will be barred from any directorship for a few years. There were also other disclosure pertaining to directors Lin Xiang Xiong and Lim Kuoh Yang regarding bankruptcy petition and traffic offence... (first time i see such a long comprehensive list on pages 170-173)...but none of the directors look like a mining expert to me.

The whole shareholding structure looks like a typical Pre-IPO deal which Choo Chee Keong is very familiar with , with many BVI companies and individuals coming in prior to its IPO. From the way it is initially set up, my guess is that the Company wanted to list in HK but subsequently decide to list here instead.

The independent valuation states that the Fair Market Value is reasonably stated as between S$87m to $118m. Personally i am no mining expert and i have no idea how to read the independent valuer's report nor value its reserves and I am not sure whether the valuer is worth its salt or not... As such, i will not comment on the valuation of this company. I believe the current balance sheet does not reflect the value of the potential production of the mine...which is why the Company is able to list at a huge premium to its NAV.

Anyway the entire share is being placed out, thus there is no public tranche. I am not sure how to value it, i am no fan of the IPO king and i will not touch it. Only time will tell if this Company is worth its gold.

Friday, 14 October 2011

IEV Holdings Limited

IEV Holdings Limited ("IEV") launched its Catalist listing for 37m new shares at $0.30 each via placement through Collins Stewart. IEV is an acronym for "Innovative Engineering Ventures" and supports the offshore oil and gas industry in Asia Pacific. 

IEV claimed to have invented an "ocean-powered" marine growth control technology that prevents any marine life to grow on the offshore platforms. (Hmm... it is always interesting how these most environmentally unfriendly companies try to position themselves as clean and green).

I think in layman's terms, IEV provides "technology" that can extend the life of the platforms as marine life (i presume such as clams and mussels) are unable to 'stick' onto the metal railings.  Such a business has proven to be lucrative as the Company is able to carve a niche for itself. The audited revenue grew from RM 25.3m in FY2008 to RM 67.7m in FY2010 and the profit after tax grew from a loss of RM6.2m in FY2008 to a profit of RM16.8m in FY2010.

The Company has proposed that it intend to distribute at least 10% of its net profits for FY2011 as dividends.  The IPO will close on 21 Oct at 12pm. Based on the enlarged share capital of 135m shares, the NTA per share is about 15.3 cents and the listing PER is about 7.5x.  The market cap at its IPO price is $51.6m

At its IPO price, i think the company is priced fairly. I have not attempted to 'forecast' its 2011 profits but from the look of the graphs above, the earnings can be quite 'lumpy' and leaned towards the 2nd half of the year.  

It is quite 'heartening' to see  one IPO making a comeback after such a long lull period even though it is a Catalist listing. For the sake of our local bourse, I hope this Company will do well enough such that more companies dare to come forward. Unfortunately, the challenges faced continue to be the weak market sentiments and the recent weeks of steep price declines had make existing stocks valuations more attractive vis-a-vis this company.

Wednesday, 26 January 2011

Malaysia Smelting Corporation Berhad

My sincere apologies for this late posting as I have been extremely busy lately both with work and personal matters. 

Malaysia Smelting Corporation Berhad ("SMC" or "Company") is offering 25m shares at S$1.75 per share and each board is 100 shares.  SMC is one of the world's leading integrated producer of refined tin metal and is a subsidiary of The Straits Trading Company listed on the SGX. SMC is already listed in Bursa Malaysia since 1994 and has a market cap of about RM360m.

This is once again a dual-listing project, similar to Sri Trang from Thailand.

For the 9 months 2010, the company made an impairment on the non-tin assets and suffered a net loss of RM72.4m.  The financial performance has been rather erratic with FY2007 net profit at Rm75.8m only to suffer a loss of RM43.8m in FY2008 and to recover to RM65.4m in FY2009 and FY2010 is likely to suffer a loss. Maybe i should say that the results are rather consistent - one good year followed by a bad year and then good year again. :P

I will give this company's IPO a miss.  

Saturday, 23 August 2008

Qualitas Medical Group Limited

Qualitas Medical Group Limited ("Qualitas") is issuing 22m New shares at $0.25 per share comprising 1.1m shares via public offer and 20.9m shares via placement. The Company was established in 1997 and is a leading private healthcare services provider in Malaysia. The IPO will close on 28 August 2008 at 12pm.

Revenue for FY2007 is RM 57.7m and net profit is RM 6.3m. From FY2005 to FY2007, the revenue increased from RM 51.9m to RM57.7m but the net profit has actually declined over the same period from RM 6.7m to RM 6.3m. This somewhat indicated a trend of small, gradual growth with declining margins. Qualitas is listing at the historical PE of 12.9x based on the fully diluted no. of shares. Based on post-ipo shares of 134,684,221 shares, the market cap of Qualitas is S$33.7 million.

Qualitas must have studied the Healthway IPO very closely. Healthway is now trading at a more 'reasonable' valuation of 9.16x PE (historical) at current price of $0.12 (a drop of 66% from its IPO price of $0.36) and there is no vendor sale for Qualitas.

Unless you are very bullish about the Malaysia healthcare sector in the next 3 years, my view is to give this IPO a miss until there is a clearer picture of its expansion plans and execution in India and the region. 1 chilli for now.

Sunday, 16 December 2007

United Overseas Australia Limited

United Overseas Australia Limited is a property developer and property investment company based predominantly in Kuala Lumpur, Malaysia. (Why is it not called United Overseas Malaysia ?!?! The name is so misleading!).
2m Public Shares at $0.38
53m Placement shares at $0.38
Issue Manager: HL Bank.
I have not done any detailed analysis on this Company as i personally think the property cycle may be toppish. I will avoid this counter.
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