Singapore IPOs: Why I No Longer Cover Every Listing
Some readers may have noticed that I have not been writing about every Singapore IPO since last year. The simple reason is that life has become busier. Between my day job, an increasingly packed travel schedule, family commitments and desire to play more golf, I have become much more selective about how I spend my time. Writing detailed IPO reviews takes time — reading prospectuses, analysing financials, comparing valuations and understanding the competitive landscape. While I still enjoy investing and writing, I no longer feel the need to cover every IPO that comes to market. Instead, going forward, I will probably focus only on IPOs where I am seriously considering investing my own money or where there is something particularly interesting that is worth discussing. I suspect this will make the blog more useful as well. Rather than writing about every deal, I can spend more time sharing my thoughts on the handful that I believe deserve attention. That bring...
Comments
I wanted to ask how you came up with the 8-10x forward PE for techs? Every company seems pretty unique even if they're in the same industry. Apart from the usual financial valuations, the company fundamentals seem really solid. I'm coming from an operations background and I've worked with ppl in this industry.
Avi-tech's had 20 yrs in the business. Closest competitor is another local company that ipo'd in '93, is currently twice Avi-tech's cap and sales, but makes only half the profits, so they've got to be doing something right. Avi-tech's seemed to have secured a pretty good niche in providing high-end burns and have an incredibly diverse set of customers. Their also close to completely depreciating their equipment in a few years (of course the equipment can prob carry on well after the accounting lifetime), their balance position will be even more incredible. The only concern is their high receivables exposure.
What I'm unsure is, if a company is fundamentally solid and will continue growing steadily in years to come, how high is too high? Is it really fair to put a matrix on it? What's to say it won't hit $1, $2, or more by next year? Or maybe we'll hafta wait and see if their China operations take-off.
Thank you for your posting and if i read you correctly, you are from the IT industry and somewhat very familiar with this Company. Your knowledge of this company will clearly put you in a 'clear advantage' compared to investors like me who rely on prospectus to 'guesstimate' future year earnings. Many companies try to 'boost' their earnings in the year of listing so as to acheieve a more attractive valuation and your concern for high AR is not unfounded. The valuation matrix of 8-10x is given by the market for a start. This valuation matrix can go up or down depending on whether the management is able to execute its plans. As such, you are right to point out that nothing will stop it from going to $1 or $2, but it will take time for the market to be familiar with them.