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Thursday, 31 December 2009

Happy New Year

Here is wishing you and your loved ones a healthy, happy and wealthy year ahead.

May the new year continue to bring you joy and happiness and thank you for your support to this blog.


Sunday, 20 December 2009

Hock Lian Seng Holdings Limited

Hock Lian Seng Holdings Limited is issuing 110m New Shares comprising 2.2m Public Offer shares and 107.8m Placement shares at 25 cents each. The market cap is $127.5m.

The Company undertakes civil engineering projects and is a Grade A1 contractor (meaning it can tender for Singapore Public Sector civil engineering construction works of unlimited value.

The Company's revenue grew from $48.5m in FY06 to $194.5m in FY08 and net profit grew from $1m to $15.5m in the same period.  1H09 revenue is $109m (growth of 50%) and net profit also more than doubled to $9.4m. The ability to grow its revenue and profits will depend greatly on its ability to win contracts and "budget" for the projects accurately. Currently our construction sector is in a huge boom due to IR construction, major road projects but as it is, our land size is limited.

The company will be listed on 21 Dec 2009. At the IPO price of 25 cents, the Company is listed at 8.3x 2008 earnings based on fully diluted basis.

Assuming the current year earnings is $24m, the EPS is going to be 4.7 cents, the 2009 PER will be around 5.3x. The listing PE is cheap and on the low side but considering the "civil engineering" sector, a low PE might be warranted to attract potential investors to anchor this IPO.   However, competitors like OKP are trading at much higher premium. The Company intends to distribute 30% of its FY2009 profit as dividend and assuming its profit is 24m, the dividend will be $7.2m and the implied yield is 1.4cents or 5.6% yield. A fairly attractive yield for such a short holding period (assuming it pays out by June 2010).

Downside for this counter should be limited by the low IPO price and attractive yield and investors in OKP might want to consider this alternative if adding on to their existing portfolio or switched to this counter for higher yields (assuming you are able to get it at IPO price).

Wednesday, 16 December 2009

Hafary Holdings Limited

Hafary Holdings was established in 1980 and is a supplier of tiles to customers in the Singapore Market. The Company is offering 32.5m New Shares at $0.20 each for a Catalist listing and market cap is $32.5m post listing.

Personally i don't like the sector in which the Company is in as there are many competitors, low barriers of entry and cyclical in nature.  Revenue has remained stagnant from $29.9m in FY2008 to $30.8m in FY2009.  The net profit has declined from $3.4m to $3.0m.

The historical EPS (assuming service agreement in place and based on enlarged share cap) will be 2.16 cents and that translate into a historical listing PE of 9.3x (not cheap considering the sector it is in).


Hiap Tong Corporation

I had a week long vacation in December and this IPO (and the next) appeared for "completeness" purpose. 

Hiap Tong Corporation Ltd. and its subsidiaries (the “Company”) is a leading provider of hydraulic lifting and haulage services primarily to the marine, petrochemical, and construction industries in Singapore. 

The Group also derives income from the trading of lifting and haulage equipment and from its leasing business in cranes and haulage equipment. The Group’s trading business is undertaken through the trading of new and used cranes from countries such as Japan and Germany and selling the same directly or through brokers to customers in countries and regions such as India, Indonesia, the Middle East and Malaysia.

The Company is offering 38m New Shares at 26c each for a Catalist listing that is sponsored by CIMB. The company somewhat reminds me of Tat Hong listed on SGX. In FY2008, the Company had a revenue of $38.4m and a net profit of $10.2m. First half 2009 revenue is $19.4m and net profit is $7.4m.

NAV per share post IPO is 17.4c. Assuming the service agreement was in place in FY2008, based on the enlarged share cap, the EPS for FY2008 will be 3.98 cents and that translate into a listing PE of 6.5x historical. The market cap post IPO will be $64.5 million.

Assuming the EPS grow by 25% (looking at 1H2009 performance), the EPS will be around 4.975 cents. That translate into a forward PE of 5.2x. The Company appeared to be fairly priced at IPO price. CIMB will have to do more to attract investors to support the share price post listing.

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