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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...
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Changtian Plastic & Chemical Limited


(IPO booth at Raffles Place. A very crowded week at Raffles Place for IPO booths)

Changtian Plastic & Chemical Limited ("Changtian") is engaged in manufacture and sale of adhesive tapes, release papers, BOPA films.

Public - 5m shares at $0.47. closing on 6 Nov
Placement - 210m shares
Manager - Boulton Capital
Underwriter - UOB Kay Hian



FY 06:
Sales: $107.59m
Net profit: $29.676m
Net margin: 27.6%

FY07: Projections
Sales: $140m
Net profit: $40m

No. of shares = 660m. EPS 2007 projection = 6.06 cents
EPS 2008 projections x 30% growth = 7.88 cents

Personally i dont really like this company. It reminded me of Luxking and CHT. Luxing has a lousy net margin of 5% and is trading at around 5-6x PE and is still 25% below its IPO price. CHT is only 12% above its IPO price , trading at 5-6x PE with net margins around 20%. While at market cap of > S$300m verus $141m for CHT and $38m for Luxking.

If i used 2008F EPS projections and a slightly higher-than-peer valuation band of 8x-10x PER due to its better margins, the fair value range is 63 cents to 78 cents, thus giving this stock a more than 30% upside from its IPO price.

Although it will be tough to get the IPO shares from the public tranche, I will sell on the first day if i get this since i dont really like the industry. Good luck!
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hongjun said…
Suddenly the IPOs are back in waves.
3 November 2007 at 09:18
e968887 said…
My projection for FY2007 is almost identical to yours but I rate it 12x FY2007. TP around $0.72.
3 November 2007 at 15:25
Mr. IPO said…
Dear Loh and Nelson.. thanks for dropping by... Nelson do share more of your projections and views whenever you drop by. i.e. whether you like that particular counter etc. :)
3 November 2007 at 22:07
e968887 said…
I think the business itself is not that sexy at all. Nonetheless, the market cap should attract bigger institution holding. Some other quoted CNA, the fair value for this stock should be between 63 t0
78 cents, when compared against its peers like CHT. Anyway, I have got placement from this IPO.
5 November 2007 at 13:22
Mr. IPO said…
Nelson, you must be a UOB client... are you in the IPO club?
5 November 2007 at 22:13
e968887 said…
Yes, I am UOBKH client. What is IPO club? I don't know anything about it.
5 November 2007 at 23:26
hongjun said…
How to be selected to be the special UOBKH client to be placed for an IPO?

hongjun
5 November 2007 at 23:35
e968887 said…
you have to be an active trader as they would look at your commission to them.
7 November 2007 at 10:47
Mr. IPO said…
Hongjun, it really depends on your trading volume and the clout your dealer/remisier has. Anyway, if you want to know how to get placement shares, you can check my lessons here.

http://singapore-ipos.blogspot.com/2007/08/how-to-lay-your-hands-on-placement.html
7 November 2007 at 20:58
hongjun said…
thanks for the pointer :)
7 November 2007 at 21:00
Mr. IPO said…
The grey market is currently around 70-73 cents.
7 November 2007 at 21:08
e968887 said…
By any chance do you have any update on the grey market price? Thanks
8 November 2007 at 22:47
Mr. IPO said…
Hi Nelson.... today market closed no grey transactions ah... anyway i am vested as well. :)
8 November 2007 at 23:24
e968887 said…
Let's cross our fingers that the debut will perform as grey market indicated. Busy listening to Bernanke's testimony.
8 November 2007 at 23:31
e968887 said…
just to let you know that I sold both Changtain (at 0.60) and Marco Polo (at 0.405) on opening day. Market is too unstable; waiting to buy back later perhaps.
12 November 2007 at 12:15
hongjun said…
when you see all the put warrants are top gainers, and call warrants are top losers, something is really really bad.
12 November 2007 at 12:22
Mr. IPO said…
hi Nelson. I sold Changtian and Cacola on the first day as well but i wont be looking to buy them back :)
12 November 2007 at 14:05
e968887 said…
I would not buy so soon and I did not bother to get Sinotel either.I think the market panic may persist for another week or two. Until then, I will stay sideline.
12 November 2007 at 14:38
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