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Monday, 6 August 2007

Sunmart Holdings Limited

(IPO booth in Raffles Place, why is everyone turning their backs to me? A sign on how the share price will perform? :P)

Sunmart Holdings Limited manufacture and sell a wide range of spray products comprising primarily spray pumps, aluminimum cans and plastic bottles, which are used in the packaging of fast-moving consumer goods such as hair products, cosmetics, perfume, deodorant and detergentl pharmaceutical products such as disinfectants and antiseptic; and health-supplements. The prospectus is here.

Invitation for 102,000,000 New Shares comprising:
Public offer: 5,100,000 shares at $0.25
Placement offer: 96,900,000 shares
Manager: Mitsubishi UFJ Securities
Underwriter and Placement Agent: SBI E2-Capital
Closing Date: 13 August 2007 12pm

Sunmart has 402,000,000 shares post-ipo and based on the IPO price of 25cents, the market cap is around S100.5 million. For the FY2006, revenue is S$ 47.15m, net profit after tax is S$ 9.56m and EPS based on post-ipo shares is Singapore 2.38 cents. Net margins have been increasing from 8% in FY2004 to 20.3% in FY2006. Assuming a 30% growth in revenue in FY2007, the revenue will be S$ 61.3m and assuming the net margin of 20% is applied, net profit will be S$ 12.2m. Based on post-ipo outstanding shares, EPS for FY2007 will be Singapore 3.03 cents. Assuming FY08 grow by another 30%, EPS for FY2008 will be Singapore 3.94 cents.

The closest listed peer is Full Apex which makes PET bottles for the softdrink industry. As of 6 Aug, Full Apex is trading 8.53x historical (31 March 2007) and 6.78x forward PE (31 March 2008). While you can argue that the customers and products of Sunmart is more diversified, under current weak market sentiments, the investors may not give this stock much excess premium. At the IPO price of 25 cents, it is priced at 10.5x historical and 8.2x forward. In this regard, the peers valuation does not give much excitment to this counter (unlike the China Sports case).

Assuming i give it the most aggressive valuation of 7-9x FY08 PE, the fair value range will be between 27 cents to 35 cents. Under current weak sentiments, I will decide whether to apply for this IPO closer to the application date (see the performance of China Hong Cheng and ETLA first). Check back this blog again nearer to the IPO closing date :) I will give it a 2 Chillis for now.

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