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Thursday, 6 March 2008

Roxy-Pacific Holdings Limited

(IPO booth in Raffles Place. Photo compliments from Fergus)

Roxy Pacific is basically a niche property developer and the owner of Mercure Roxy Hotel. In FY 2006, its revenue is $48.8m and net profit is $5.2m. The IPO details are:

7m shares for Public at $0.30 each.
126m private placement shares at $0.30 each.
Issue Manager: Hong Leong Finance
Closing date: 10 March 2008 12pm.

Revalued NAV per share as of Dec 31, 2006 = 45.39 cents. This is higher than the IPO price of 30 cents. I do have to caution that "Valuation" is a rather subjective matter as it depends greatly on many different factors. In this regard, the revalued NAV may not represent the actual value in a real transaction. Based on the IPO price of 30 cents and post-invitation shares of 636,560,000 the market cap is around S$190.97 million.

The 1H 2007 revenue is $42.4m and net profit is S$7.7m. Frankly it is not easy to do a forecast for a property developer cum hotel operator because the revenue of a property developer depends greatly on the projects on hand and the revenue recognition policy while the revenue from a hotel is fairly stable and depends on the occupancy and room rates. Assuming i do the lazy way of doubling the 1H profits for FY2007, the revenue for 2007 will be around $85m and the net profit will be $15.4 million. EPS will be 2.4 cents. Based on the IPO price of 30 cents, the 07PE is around 12.5x.

Listed competitors on SGX includes Fragrance and Fragrance is trading at a better valuation of 13x 2007 PE as well as a premium to its NAV. If we use Fragrance as a key comparison, it seemed that Roxy is undervalued and there will be further upside if it can trade towards its revised NAV of 46 cents.

Personally i dont really fancy the Singapore property market and will avoid the IPO market for now given the extremely volatile market conditions for both the stock and property markets.

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