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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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Japan Foods Holding Limited



Japan Foods Holdings Limited is issuing 13.5m New Placement Shares at $0.20 each. The post share capital will be 88.17m shares and that translate into a market cap of $17.6m (ultra small cap). It is principally engaged in the operation of restaurants under various brands in Singapore and Malaysia. The offer will close on 19 Feb 2009 at 12pm.

For the FY2008, its revenue was S$26.8m and its profit after tax was S$2.85m. Its net margin was 10.6% for FY2008. Assuming the service agreement is in place and based on the enlarged share capital, the EPS for FY2008 will be 2.83 cents and that translate into a historical listing PE of 7x.

"Comparative" Companies listed on SGX

The closer comparable companies listed on SGX will be Apex Pal (operator of Sakae Sushi chain), Breadtalk, Food Junction, Old Chang Kee, Select, Soup Restaurant and Thai Village. They are trading at PE multiples ranging from 6 to 10x. In this aspect, the IPO is fairly priced with little upside and possibly more downside if there is little investors' interest for companies listed on Catalist.

I am not sure why a "Frachisee" is allowed to list as there is no guarantee that the Japan Foods will continue to be given the Franchise status. It is like asking Macdonald Singapore to list its operations on SGX. Anyway, avoid this IPO. There are better companies to put your $ in.
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