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Wednesday, 28 July 2010

Consciencefood Holding Limited

Consciencefood, an Indonesian maker of instant noodles, launched an initial public offer to raise $18.8m.

It is selling 104m shares at 22 cents apiece. The placement of 96m new shares and almost 8m vendor shares represents 26.3% of the company’s enlarged share capital.

Two million shares are available for public subscription, while the remaining 102m will be placed out.

The invitation opened yesterday and will close at noon next Tuesday (3 Aug 2010). Listing and trading of the shares on the Singapore Exchange is expected to start at 9am next Thursday. Collins Stewart is the manager, underwriter and placement agent for the public offer.

This is the "instant noodle food" play primarily in Indonesia. Hence if you are bullish on this sector and country, you should be 'exposed' here. Do note that the barriers to entry is low and there are many "competing brands" in the market.

The bulk of the fund raising is to establish a new manufacturing plant in Jarkarta.

Financially, the company has grown pretty fast over the last few years. Assuming the Service Agreement is in place since 1 Jan 2009 and based on the post-IPO number of shares, the EPS of 2009 will be 2.96 Singapore cents.  Based on the IPO price of 22 cents, it is listing at a historical PE of 7.43x.  The market cap post listing will be $87.2 million.

The pre-ipo investors are Phillip Ventures, Asean China, UVM Venture and Aventures and they are the main vendors in this IPO. They received their shares based on a 45% discount to the IPO price. (overhang in shares post moratorium 6 months later?)

While it is good to see more regional companies coming to list in Singapore, it is hard to be bullish where most of the IPOs tanked below its issue price post listing in recent weeks.

Friday, 23 July 2010

Kreuz Holdings Limited

Kreuz and its subsidiaries (collectively, the “Group”) is principally engaged in the provision of subsea services which includes activities supporting new offshore installation and construction projects, as well as inspection, repair and maintenance (“IRM”) of existing offshore production and pipeline facilities.

The subsea services offered by the Group are mainly performed through air diving (up to depths of 165 feet), saturation diving (depths of between 60 to 1,000 feet) and remotely operated vehicles (“ROVs”). The key operating assets to be owned by the Group include two work accommodation/dive support vessels Swiber Supporter and Swiber Glorious, one 12-man saturation diving system (K-SAT 02) and six air diving systems. The Group also has a stable pool of experienced offshore skilled personnel whom it can deploy to work on offshore projects.

The Group is offering 80m New Shares at $0.27 each with 4.5m shares for the public and the rest via placement. This is basically a "PIPE" deal where a listed company "spun out" its profitable subsidiary to raise more funds for expansion. In this case, the listed company is Swiber. Revenue for FY2009 is US$56.4m and net profit is US$11.9m. Post IPO, Swiber will own aboout 63.2% of Kreuz. The offer will end on 27 July 2010 at 12pm. The EPS based on audited 2009 figures and adjusted for service agreement as well as enlarged share cap is 3.54 Singapore cents and that translate into a listing historical PER of 7.63x. The share cap based on the IPO price will be S$136.89m and this means it is one of the "bigger' Catalist listed company. I guess Kreuz headed for Catalist is because it doesnt have the 3 year track record and the Catalist allows it to raise funds quickly.

I am not sure why but it seemed that new investors are getting in at 27 cents while the original shareholders have paid between 31.92c to 52.90c per share. Quite unusual to see that. Public will hold around 15.8% of the company. The order book as of the prospectus was approximately US$ 133.2m. The order will be completed between 5 to 60 months.

Business wise, i think the company is well positioned and the sector is attractive but may be overly dependent on Swiber as well as too "concentrated" on the "sub-sea" segment of the oil & gas industry. Overall, i like this company and could be a 'gem' in the making if they can get their business strategies right.

The IPO is fairly priced with possibly upside potential as Ezra and Swiber are trading at 10-12x PE multiples. Assuming EPS is 'unchanged' for FY2010, the fair value will be between 35c to 42c. It is always good if the prospectus can give you an idea of what the FY2010 EPS is likely to be but unfortunately, we can never tell from the prospectus. These are figures which only cornerstone investors or the underwriters will know but they will only share with you 'verbally'.
The Group generally works through main contractors (including the Swiber Group) to provide services to end-customers who are major oil and gas companies such as British Gas India Pvt Ltd, Brunei Shell Petroleum Co Sdn Bhd (“Brunei Shell”), Reliance Industries Limited, Conoco Philips Inc, Alam Maritime Resources Berhad and Petroliam Nasional Berhard. The offshore projects that the Group has supported are located in India, Malaysia, Brunei, Myanmar, Indonesia and Thailand.

Tuesday, 13 July 2010

Smartflex Holdings Ltd

Smartflex Holdings Ltd is a provider of IC module assembly and testing sevices for contact and dual interface smart cards based in Singapore.

The Company is offering 13m New shares at $0.22 each where 1.5m shares is via public offering and the rest via placement. Offer will close on 15 July at 12pm. The market cap is S$18.1m.

Revenue grew from US$14.6min FY 2007 to US$18.1m in FY2009. Profit after tax grew from US$1.2m to US$1.9 during the same period. EPS based on post IPO shares will be 2.33 US cents for FY2009. Based on post IPO shares and assuming service level agreement is in place in FY2009, the company is being listed at a PER of 6.65x.  The company intends to pay out 20% of its net profit attributable to sharesholders as dividend for FY2010.

The IPO is fairly priced and the market cap is too small. I personally dont favour such tech counters for long term investing and would avoid this IPO.

Leader Environmental Technologies Limited

Leader Environmental Technologies Limited ("LET" or the "Company") is offering 116.5m shares (2 m public shares, 114.5m placement shares) at $0.21 each. The Company is an environmental protection solutions provider in China and is engaged in the R&D, manufacturing, assembly, installation and support services of environmental protection systems. It services include dust elimination, desulphurization.

Revenue grew from RMB 100.7m in FY2007 to RMB 181.7 in FY2009. Net profit grew from RMB 39.7m to 64.3m during the same period. Net margin is hovering above a healthy 28% for the 3 years. The IPO will close on 14 July 2010 and 12 pm.

The company is listing at a historical FY2009 PER of 7x based on enlarged share cap and assuming service level agreements were already in place and based on the IPO price, the market cap will be $92.74 million.

While i do like this industry, this company actually bring up old memories of a former S-chip that was a market favourite but has since come under judicial management - Sino Environment. Sino used to be a market darling, rising to more than $3.50 at its peak but is now languishing at 13.5 cents. Many people lost their fortune in that company.

There is always a huge risk investing in Chinese companies, especially with regards to the quality (or even existence) of the earnings in the accounts. The fact that this is a S-Chip audited by Ernst & Young, one of the remaining big 4 accounting firms, may bring a little more comfort than usual. The company will also declare at least 10% of its FY2010 earnings as dividends.

As mentioned in my earlier part, i like this industry. China will have to focus more on enviromental protection in the coming years. The only concern i have is more management specific, i.e, can the management be trusted. Will the company go bust a few years after listing?

Assuming EPS grow by 25% in FY2010 and EPS will be 3.75 Singapore cents. Based on the 21 cents IPO price, company is listing at prospective PE of 5.60x. A fair value of 8-10x will imply a price of 30c to 37.5c. The low public float will mean that it will be quite difficult to get it from the public tranche.

Tuesday, 6 July 2010

ES Group (Holdings) Limited

ES Group (Holdings) Limited (the "Company" or "Group") is a marine and offshore group engaged or involved in new building, conversion and repair of ocean-going vessels. Their customers are primarily shipyard operators in Singapore involved in the construction and repair of seaborne vessels, offshore rigs and semi-submersibles. They build, convert and repair a wide range of vessels, such as tugs, barges, rigs, offshore support vessels, oil tankers and cargo ships.
The Group's business can be categorised into two main segments as follows:
New Building and Conversion

They fabricate steel structures for new buildings and vessel conversions for customers whom are reputable shipyard operators in the marine and offshore oil and gas industries, such as Sembawang Shipyard, Keppel FELS and ST Marine. They also have experience and technical expertise in (i) building a wide range of specialised and customised vessels such as tugs, barges, jack-up rigs, offshore support vessels, oil tankers and cargo ships, as well as (ii) carrying out FPSO, FSO and FSU conversions.

They also have the capability to undertake repairs for a wide range of offshore vessels and barges, both afloat and drydocked.

Financial Highlights

Revenue for the Group grem from S$40.8m in FY2007 to $52.7m in FY2009. The profit also grew from $3.9m to $8.3m during the same period. Based on the post-ipo shares, the EPS was 4.5 cents for FY2009 and that translate into a historical PE of 5.3x.

The Company is placing 21.2m New Shares at $0.24 each to raise funds for ex pansion. The market cap post listing is $33.9m. The offer will be via placement and will close on 7 July 2010 at 12pm. The Company also intends to pay out 30% of its net profit as dividends for FY2010.

Personally I think this company has much better prospects than several other Catlist listings which we have seen so far. The fact that it is prepared to pay a 30% dividend despite being a "Catalist" listing also indicate that the management is confident of its 2010 prospects and cash position. I would have given this stock a better rating but unfortunately, it is not for public subscription. Whilst the prospectus doesnt shed much light with regards to 2010 performances or budget, assuming the company will perform credibly or much better than FY2009, a fair value of 6-8x PE will indicate a fair value of 27 cents to 36 cents.

Friday, 2 July 2010

CCM Group Limited

I was travelling for a while and frankly, i didn't miss much action in Singapore. The IPO market remains to be 'dead' with no IPOs. Even the distribution of K-Green Trust by Keppel Corporation was via "distribution in specie" to its shareholders with no new funds being raised.

CCM Group Limited ("the Company") is placing out 25m New Shares via placement at $0.20 each for a Catalist listing.  The Company is a general contractor and aims to be a 'one-stop' shop for its customers.  The order book as of May 2010 stands at $92m. Revenue for the Company grew from $11.4m in FY2007 to $27.97m in FY2009. Net profit was $3.1m in FY2009. The EPS for FY2009 on a fully diluted basis is 3.39 cents. Based on the IPO price of 20 cents, the Company is listing at the valuation of 5.9x, which to me, is a fairly valued IPO. The market cap is $18m based on its IPO price.

This is an ultra small cap company in a sector which i dont like. So avoid this counter unless you have reasons to be bullish or vested. Zzzz...

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