Tiong Seng Holdings Limited ("TSH") is offering 189m New Shares (finally i see someone that is not selling vendor shares!) with 15m shares for the public and 174m shares via placement at 28c each. TSH is principally engaged in building construction and civil engineering in Singapore as well as property development in PRC. As of 17 Feb 2010, its order book for construction and civil engineering projects is estimated at S$953 million.
Its revenue grew from $132.8m in FY2006 to $272.3m in FY2008. For the first 9 months to 30 Sep 2009, its revenue was $301.7m versus $200.8m in the same period till 30 Sep 2008. The net profit somewhat fluctuates from $9.7m in FY2006 to $10.3m in FY2007 and $9.3m in FY2008. However, for the first nine months till 30 Sep 2009, the net profit stands at a staggering $29.2m. It seemed that most of that profit is driven by the more profitable property development projects which can be lumpy at times. Assuming Q4 show a conservative profit of $5m, the full year net profit will be $34.2m. That translate into an EPS of Singapore 4.53 cents based on the enlarged share cap. At the IPO price of 28cents, it is equivalent to a PER of 6.18x. Without doing any due diligence on my numbers, assuming the company is able to sustain its profit growth by 25% for FY2010, that will translate into an EPS of Singapore 5.66 cents and at a PE range of 5-7x, the fair value will be $0.28 to $0.40. At the IPO price, its market cap is $211.1m.
The offer will end on 14 April 2010 at 12pm and starts trading on 16 April 2010 9am. There are over-allotment and stablisation action allowed for this company. Which is good if the demand is good. So far, the track record of DBS for the last 12 months have been fairly impressive as they are more selective Ãn terms of IPO mandates and less aggressive in terms of IPO pricing, leaving some meat for retail investors. Usually you will be able to get out on the first day at a profit. Even the 'worst performing IPO by DBS'', Sin Heng is only down 6% as of Friday's closing and most IPO punters would have been able to 'get out' safely on the first few weeks. (Tiger Air and PEC are doing well and Cache Logistics likely to do well too). I can't say the same about recent IPOs mandated by UOB Kay Hian though (lets see how Debao versus Cache debuts on monday. The Qingmei IPO was a huge disappointment).
While personally I dont really like the construction sector stocks, i think traders/investors who are in for a punting mood can still try their luck on this counter, especially when you know that there are no pre-ipo investors cashing out on you and that your IPO proceeds is not being used to enrich them.Its future plans include increasing construction business in core markets, establish a pre-cast factory and expaning buisiness in China.
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