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Thursday, 16 July 2009

Singapore Medical Group Limited

Singapore Medical Group Limited is placing 25.6m shares (comprising 8.55m new shares and 17.05m vendor shares) at 21 cents each for a listing on Catalist. Once again, Primepartners have teamed up with DMG to launch this issue. Prime has also helped list its peers Healthway back in June 2008.

The Company is a healthcare industry and provides specialist healthcare services. It is established in the fields of LASIK procedures and sports medicine. Revenue has grown from $4.3m in FY2006 to $30.1m in FY2008 but net profit has been more "volatile", increasing from $1.3m in FY2006 to $8.1m in FY2007 before dropping to $5.0m in FY 2008. The offer will close on 21 July 2009 but is via placement only. The market cap post IPO will be $30.6m. EPS based on the enlarged share cap and FY2008 net profit assuming the Service Agreements have been effected will be Singapore 2.87 cents and that will translate into a PE of 7.3x historical.

There are not much IPO proceeds to talk of, the majority of the amount raised will be paid to the owners of the company and after deducting the IPO expenses of $1.063m, there will only be $0.7m. I feel that the IPO expenses should be borne on a "pro-rata"basis since the majority of the proceeds raised is going to the vendors. The company intends to pay an interim and final dividend approximately 20% of the consolidated net profits attributable to shareholders for FY2009 and FY2010. After the IPO. the public will hold 17.6% shares and is likely to be thinly traded. It is interesting to note that 3 directors will be paid more than $250,000 per annum for FY 2009 while only 1 received such remuneration previously in FY 2008. The company also has a few family members working in the firm but their pay will be reviewed annually to ensure it is "fair".....hmmm..

Anyway, while i like the way which the company is being positioned (to earn money from the "ai swee" people who goes for asthetic surgery), i think the company is fairly valued at its IPO price. However, it is trading at more attractive valuations then Healthway.

Thursday, 9 July 2009

JLJ Holdings Limited

JLJ Holdings Limited is a provider of precision mould design and fabrication, injection molding and value-added services. The Group provides design, fabrication and sale of precision plastic injection moulds (“MDF”), precision plastic injection molding (“PPIM”) services and other PPIM-related value added services at its production facilities in Singapore, Johor of Malaysia and Kunshan of the People’s Republic of China.

MDF Business

The Group produces plastic injection moulds for the consumer electronics, household appliances, automotive and computer peripherals industries. Such moulds are then used to manufacture different types of precision plastic components which are typically used as parts of its customers’ finished products, such as mobile phones, household appliances, computer peripherals, MP3 players and automotive components.

PPIM Business

The Group offers a variety of PPIM services including single-shot moulding, double-shot moulding, insert moulding and gas-assisted moulding. Each type of moulding allows different types of precision plastic components to be produced, allowing us to produce a wide range of precision plastic components which are typically used as parts of our customers’ finished products including mobile phones, computer peripherals and MP3 players.The Group also offers value added services, which entail sub-assembly, laser etching, ultrasonic welding, printing services and mechanical assembly services.

JLJ is going for a Catalist listing (not another catalist... !?) and is offering 19m shares (16m new and 3m vendor) at $0.27 each via placement. The offer will end on 9 July. The listing expenses is $1.55m and the total fund raised. Only $2.77m will be left for the company... sigh... what a waste of time!!!

The company sales and profit for FY 31 Dec 2008 are $50.8m and $4.8m respectively. Assuming the company is able to achieve similar levels of profit in FY 2009 and that the service agreement is in place, the net profit will be $4,728,221. Based on the post IPO shares of 123,551,245 shares, the EPS will be Singapore 3.8 cents. Based on the IPO price of 27c, the IPO is priced at a forward 7.1x PE. The market cap is $33.4m.

Considering that Meiban and Hi-P are trading at low single digit PEs of less than 5x, it makes JLJ Holdings looks expensive relatively to the more established companies with bigger market cap and profitability. I would avoid investing in this company and put my money into either Meiban or Hi-P instead if i really want exposure in this sector.

Global IPO Update


Q2 sees US$9.9bn in capital raised compared with US$1.4bn prior quarter, buoyed by Brazil’s largest ever IPO Global IPO activity increased in Q2 with 76 IPOs worldwide compared with 52 the prior quarter, according to Ernst & Young’s second quarter Global IPO update. Deal value increased seven-fold to US$9.9 billion from just US$1.4 billion. However activity remains sharply down on 2008 levels when the second quarter saw 269 IPOs raise US$38.2 billion in capital.

This quarter’s figures were bolstered by Brazil’s VisaNet deal (US$3.7 billion), which is the largest IPO worldwide so far this year and Brazil's biggest ever; metals company China Zhongwang Holdings Ltd (US$1.3 billion); and Vodafone Qatar (US$0.95 billion). Together these deals accounted for 60% capital raised worldwide. Reflecting these IPOs, Brazil and China accounted for two-thirds of global capital raised for Q2.

As in Q1, the most active country this quarter was South Korea with 17 IPOs (8 IPOs, Q1). China and Canada followed, with 13 and 9 IPOs respectively. China’s nine month ban on IPOs at the Shenzhen exchange came to end this quarter with an offering by Guilin Sanjin Pharmaceutical. The United States also saw an uptick in activity rising from 1 IPO in Q1 to 8 in Q2, of which 6 made the top 20 globally DigitalGlobe Inc; SolarWinds Inc; Bridgepoint Education Inc; Rosetta Stone Inc, LogMeIn Inc and MediData Solutions Inc. Emerging markets accounted for 53 of the 76 global IPOs.

The threshold values for the top ten global IPOs has improved dramatically this quarter up from US$12.0 million to US$171.3 million, but still radically down year on year (US$848.6 million).

Max Loh, Singapore IPO Leader and Assurance Partner, Ernst & Young LLP, comments: “We have seen an increase in global activity in the second quarter but capital raised is at a fraction of the prior year. Early signs are that the wider economy has bottomed out but recovery is likely to take time and will vary by region. In terms of number of IPOs, the Asia Pacific region has been relatively more active and accounted for 60% of the global IPOs, with the South Korea and China/HK markets leading the pack.”

Loh adds: “The IPO market generally trends the macro-economy albeit with a time lag. Historically, markets have taken at least four to six quarters to recover from an economic downturn. However, there are examples of highly successful IPOs that emerge from post recession periods. These companies, having survived the ultimate stress test, are often leaner and have demonstrated the resilience of their business model. It’s a good time for dynamic entrepreneurial companies. And the high performance of stock exchanges around the globe in the second quarter has resulted in renewed interest in companies around the world to go public.”

The leading sectors by number of deals were Industrials (16); Materials (14); Financials (10) and High Technology (10). Due to the low value of funds raised, the top three sectors by capital raised mirror the top three IPOs. Financials (US$3.8 billion), Materials (US$1.8 billion), and telecommunications (US$1.2 billion) accounted for 70% of total capital raised.

For the year to 30 June 2009, the top three exchanges by number of IPOs are South Korea’s KOSDAQ (24); Hong Kong Stock Exchange (14) and New York Stock Exchange (7). By funds raised, the top three exchanges over the same period are the BOVESPA in Brazil with the one IPO (VisaNet at US$3.7 billion); Hong Kong Stock Exchange (US$2.5 billion) and the New York Stock Exchange (US$1.7 billion).

Follow-on offerings

The completion of follow-on offerings in established public companies is sometimes regarded as an indicator of IPO market revival. Between Q1 and Q2 there has been more than a 100% increase in the number of deals (up from 612 to 1,361) and capital raised (US$101.1 billion to US$284.2 billion). However, in terms of value, this has mainly been driven by financial institutions seeking to recapitalize and repair balance sheets.

In addition to follow-on offerings, Ernst & Young’s Global IPO trends report 2009 notes that market analysts commonly cite the following indicators of an IPO market revival: positive fund flows into the equity market, investor appetite, brighter corporate earnings outlook, recovery in market valuations, evidence of liquidity to spur business and consumer spending, successful public-equity transactions involving carve-outs/spin-outs from existing large public companies and new VC/PE-backed IPOs.

Thursday, 2 July 2009

Heatec Jietong Holdings Ltd

Not another Catalist listing?!... Heatec Jietong is offering 18.5m New Shares at $0.275 each. The IPO is through placement and will close on 6 July 2009. Trading will start on 8 July 2009.

The Company is one of the leading piping and heat exchanger specialist in Singapore servicing the marine and oil & gas industries. The company made S$46.5m sales in 2008 with a net profit of $6.64m (net margin of 14%). The listing expenses is $1.44m and the net proceeds raised is $3.65m. (I can never understand why the listing fees is so high versus the amount raised... a real waste of time and money for the company...)

The company is issuing shares at around 5x PE and will have a market cap of $33.33m post listing. The company is fairly valued at the IPO price. Assuming the net profit for 2009 is slightly better and have a fair value PE of 6-8x, there could be some slight upside post IPO but for me, it is only a mediocre issue. Since this is a "placement only" issue, you will have to know someone from either DMG or Prime if you really want it..

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