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Tuesday, 18 September 2007

Fuxing China Group Limited

(IPO booth at Raffles Place...)

Fuxing China is a manufacturer of zipper slider and zipper chains in the PRC and the products are sold mainly to local manufacturers of apparel and footwear products, camping equipment, bags etc. It is one of the few vertifcally integrated players in the PRC zipper industry and has a diversifed customer base of over 900 customers. The prospectus is here.

It is the second zipper company to list here after CMZ. The details are:

Public offer: 5m shares
Placement shares: 170m shares.
Price: $0.46
Issue Manager: SAC Capital
Underwriter and Placement Agent: UOB Kay Hian
Closing Date: 20 Sep 2007

Sales for 2006 - RMB 716.412m
Net profit for 2006 - RMB 155.609m
EPS (based on post IPO shares) - RMB 20.1 cents
EPS (based on SGD/RMB 0.2) - Singapore 4.02 cents

The shares are priced at 11.44x historical FY2006 PE.

Sales for Q1 2007 increased by 22% while net profit for the same quarter increased by 130%.
Assuming sales for FY 2007 increased by 25% and net margin of 22% is achieved, the net profit and EPS for FY 2007 will be RMB 197.013m and RMB 25.4 cents or Singapore 5.08 cents. That will priced Fuxing at a forward PE of 9x.

Assume EPS grow by another 25% in FY2008, EPS for FY2008 willl be 6.35 Singapore cents. Currently CMZ is trading at low PE multiples of 7-10x but since Fuxing is a fundamentally better than CMZ , it deserves a better premium over CMZ. I will give it a fair value of 8-10x FY2008F EPS and based on that valuation, the implied fair value for Fuxing will between 50 cents to 63 cents. A stag to the IPO price and another hit and run IPO counter. 2 Chillis rating.

Thursday, 13 September 2007


(IPO booth at Raffles Place)

It has been such a long time! Parkway Life REIT was last listed on 23 August and the next IPO will only list on 26 September. Well, at least it is a good sign and indication that the IPO market could be reviving and thankfully they send a more decent looking one to test the market. I will come up with a more detailed analysis over the next few days (fingers getting too rusty already from the lack of writing). Check back here again for a more detailed update and the 'fair value'.

Just by looking at the industry and the pictures on the prospectus, i would give it an interim 'stag and 2 chillis rating'.

Public shares - 5m
Placement shares - 155.4m
Price - $0.38
Managers - Jointly by SBI E2 Capital and CIMB

The Company is one of the largest producers and suppliers of downstream petrochemical products and are engaged in the fractionation of raw LPG for the production and sale of propylene, polypropylene and LPG.

The profits for Sinostar ramped up spectacularly in FY 2006 where net income is S$19.321m on sales of S$199m. It is a pity that there is no 1H2007 figures in the prospectus. Sales and profits are likley to exceed 2006 figures. Assuming a 30% increase in net profit in FY 2007 and a 30% increase in net profit in FY 2008, the net income will be $32.6m. Based on the post capital shares of 640m shares, the EPS will be 5.1 cents. Based on a fair market PE multiple of 10x-15x, our fair value is approximately $0.51 to $0.76. Looks like a stag to me.

Good night.

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