Skip to main content

IPO Chilli Ratings

IPO Chilli Ratings
Click to understand how it works

Featured

Posted by

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...
1 comment
Read more
Labels
Posted by

Cacola Furniture International Limited


(IPO booth at Raffles Place. Unlike China Hongcheng, it never showcase its products)

Cacola Furniture International Limited ("Cacola") designs, manufactures and distributes a wide range of modern- style home and office furniture in the PRC. This is an interesting sector to be in right now in China as the 'middle-class' in China start to get more affluent and they want to invest in good apartments and decorate their homes with nice furnitures.

Public offer: 4.5m shares at $0.32
Placement: 114.5m shares
Manager: Boulton Capital Asia
Underwriter and Placement: CIMB



The Company has been growing at >25% annually in top and bottom line for the last 3 years. Based on the Q107 growth over Q106, it is likely that the revenue for this year will likely cross the S$100m and net profit will cross the $20m mark. My forecast is that sales for 2007 will range between $107m to $120m and net profit will range between $18m to $22m (may surprise on the upside). Based on the post-IPO share cap of 345m shares, the EPS will range from 5.2 cents to 6.4 cents.

The peers listed in Singapore includes: HTL (not exactly similar space) trading at 6x historical, Man Wah (more similar) trading at 13x historical and Koda (not exactly similiar) trading at 10x historical. I will give it a fair value of 8x-10x PE conservatively for China Play and that will give Cacola a fair value of between 42 cents to 64 cents based on 2007 EPS estimates. At 42 cents, it represents a upside which is more than 30% from the IPO price.

What may possibly derail the "IPO stag" will be:
(1) Large placement float of 114.5m shares
(2) Lack of support from CIMB and investors post listing (see share price of China Hongcheng today which is below its IPO price)
(3) Sentiments turning sour on the stock market.
Email Post
Labels:

Comments

Anonymous said…
Your analysis is right...
We must wonder how to make money from furniture??
6 November 2007 at 20:58
Post a Comment