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Wednesday, 16 December 2009

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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