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Tuesday, 24 November 2009

Q&M Dental Group (Singapore) Limited

Q&M Dental Group (Singapore) Limited (the "Company" or Q&M) is offering 74.075m shares at 27 Singapore cents. The offer is via placement only and the IPO will close on Nov 24 noon. Post IPO, the market cap is $74m . It is the first Dental pureplay to be listed on the mainboard of SGX and is one of the largest private dental healthcare group in Singapore.

Q&M plans to use close to 90% of IPO proceeds to fund new clinics and acqusitions.  It intends to make its foray into China first tier cities.  Revenue has grown from $24.3m in FY2006 to $29.6m in FY2008 and net profit has grown from $3.6m to $4.4m in the same period.  EPS for FY2008 is 1.6 cents based on the enlarged share cap and that represents 16.8x FY2009 earnings! Post IPO, the Company intends to distribute more than 50% of its net profit as dividend for 2H2009 and full year 2010. Assuming this year EPS is 1.6c (same as FY2008), the dividend payout will be 0.4 cents (2nd half only) and that translate into a yield of 3% (annualised) for FY2009.

The Company intends to expand aggressively ahead using the IPO proceeds and has injected a certain China play into this IPO and i guess that is what makes this IPO more 'interesting' than a pure Singapore dental play. As the IPO valuation is 'not cheap', investors will have to buy into the "story" that Q&M will be able to execute successfully in the fragmented China market. While the high "dividend" payout appears to be generous and attractive, it somewhat contradicts the cashflows needs of an "aggressive expansion plan".

Thursday, 19 November 2009

Capitamalls Asia

CapitaMalls Asia ("CMA") has priced its IPO at S$2.12 per share for a total deal size of S$2.47 billion. The final price was near the mid point during its bookrunning exercise at between $1.98 to $2.39.  The offer will end on Nov 23 at 12pm.

According to the Company, the demand from institutions was strong and the retail tranche was cut back from 12% to 8% of the total deal size but even at 8%, the retail offering of $197m will make it as one of the largest retail offering in Singapore since Singapore Telecom in 1993. 

Investors were "pitched" into buying CMA on the basis of being a consumer play with unique exposure to shopping mallss across Asia, including high growth assets in countries like India and China. If you have seen the advertisements in the papers during the book building period, you would have "bought" into the compelling growth story as well.

According to Finance Asia, at the final price, CMA is valued at 1.55x current book value (expensive!) and it is coming to market at a slight discount to HK-listed Hang Lung Properties, which trades at 1.8x.  However, if the two listed REITS were removed from CMA's portfolio, the other business are priced at 1.8x book! At the time of listing, CMA will have a portfolio of 86 retail properties across 48 cities in 5 Asian countries.  Of the 86 properties, 59 are already completed shopping malls in Singapore, China, Malaysia, Japan and India while the other 27 are at various stages of development. 

Personally, i think that the IPO is over-priced and that SGX is bending backwards to allow the Capitaland to "double dip", i.e. to eat from the honey pot twice.  Why should Capitaland, with no change in its business or operations, be allowed to "hive" off its shopping malls and then 'list its hived off unit" separately, at a premium to the parent company. Basically, it allows Capitaland to "make some money" from the IPO "out of nowhere". From an investors perspective, if you are an investor of Capitaland, CapitaMall Reit or CapitalRChina Reit, there will possibly be many situations where conflicts of interest may arise. Just to give you some examples, if CMA wants to divest a mall in China, should it sell to Capital Retail China REIT or to a third party; or after Capitaland has developed a mall in Singapore, should it sell to CapitaMall or to CMA? In addition, some of the directors of CMA are also the directors of the related listed companies.  After the IPO, Capitaland will hold 70% of CMA.

While positive sentiments from "overwhelming" institutional investors may help to boost its share price on the first few days, i would avoid this IPO for its pricy valuation and limited upside. There are cheaper alternatives around and to pay 1.8x book for the assets might not be an wise one, it is like paying $1.8m for an apartment that is worth only $1m. 

Monday, 16 November 2009

Sino Grandness Food Industry Group Limited

Sino Grandness Food Industry Group Limited is offering 85.52m shares (makes up of 70m new shares and 15.52m vendor shares) at 29 cents each.  2m shares will be offered to public and the rest via placement.  The offer will end on 19 Nov 2009 at 12pm.

The Company is a manufacturer and export-oriented supplier of quality canned fruits and vegetables. 

Revenue increased from RMB 95.824m in FY2006 to RMB 330.268m in FY2008 and net profit grew from RMB 11.018m to RMB 52.72m in the same period.  Based on the enlarged share cap of 245,172,414 shares, the EPS for FY2008 is RMB 21.5 cents or 4.07 Singapore cents. That will translate into a listing PE of 7.12x.  While Q1 financials were provided, it appeared that there are some seasonality in the financials of the Company where Q1 is the "lull" period. The market cap post listing will be S$71.1m 

Looking at the make up of the pre-ipo investors, this company went through 2 rounds where some of the first round pre-ipo investors were "bought out" by the 2nd round pre-ipo investors. The more prominent current pre-ipo investors will be Philip Ventures and Kim Sneg Holdings. The Company also disclosed some litigation issues with Elloitt Advisers in HK for US$300,000 in its prospectus.

Based on current sentiments, I believe that the Company will be worth a stag. I would not speculate on its long term prospects as Q1 results is not very indicative. This will be a sell on first day stock for me for now.

Friday, 13 November 2009

SBI Offshore Limited

Time to do some housekeeping. Sorry i missed this IPO because it is another Catalist listing and via placement only.

SBI Offshore Limited ("SBI") is a Singapore home-grown company supply equipment to shipyards and rig builders in Asia's offshore and marine industry.  The company is placing out 20m shares at 27 cents each and the market cap is $29.88 million and  the company's IPO was priced at 12.08x FY08 earnings

The company generated revenue of $11.72m for FY 2008 and net profit of $2.339m.
The company generated $6.3m revenue and $1.364m net profit for 4 months ending 30 April 2009.  

While the company has done well for the first 4 months, I  feel the company's revenue is still too low and need to be boosted further and  you can understand why this is still a Catalist listing.

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