Nordic Group Limited ("the Company") is offering 110m New Shares (2m for public and 108m via placement) at $0.20 each. Established in 1998, the Company is an automation systems integration solutions provider serving mainly the marine and offshore oil & gas industries. The Company has an order book of $37.4m at the date of prospectus and intends to distribute up to 30% of its net profit after tax for FY2010 as dividends. The IPO will close on 8 Nov at 12pm.
Revenue grew from S$19.2m in FY2007 to S$41.9m in FY2009 and net profit after tax grew from $2.35m to $8.4m in the same period. Based on fully diluted basis, the EPS for FY2009 is Singapore 2.1 cents and that translate into a historical listing PER of 9.52x. For the 3 months ending 31 March 2010, the EPS is 0.5 Singapore cents, implying a growth of 66% over the same period last year. Assuming EPS for FY2010 grew by a moderate 30%, the EPS will be 2.73 Singapore cents and that translate into a forward PER of 7.3x. A fair value range of 7-10x will indicate a price of 19c to 27c.
The issue is more fairly priced this time round and for a company that is exposed to the oil and gas sector with 'generous dividend' being promised, i guess the downside at 20c is limited. However, as it is, the company is still a small cap company at $80m and has generous service agreements with its key management. In addition, we are not privy to who the shares are being placed out to. It will be difficult to get it from the public tranche and with IPO sentiments turning sour, I would give it a miss as the small lots you get from the public tranche may not cover your selling commission.
Comments
This is because the recent IPO all went below their offer price, no investors would "dare" to buy into new IPOs.
However, this company has good prospect and singaporeans are still flush with lotsa liquidities (just observe the prevailing interest rate and the speculation of small caps), I guess there might still be many people out there demanding such small caps
If u expect price to maintain n move upwards after openings, u need Temasek holdings as support.
If u feel Nordic is not worthy bidding, then u feels that it will open at a price lower than 0.20???
With 2m shares offer to the public, a rookie investors will definitely know it will be oversubscribe.
Does oversubscibe means will open at lower than 0.20 on wed???
Ans: ofcos not!(in case u still can't get it)
Secondly, there is "nothing for me to get it". Over-subscription in the public tranche doesnt always means that the share price will open above its IPO price and let you have enough time to get out. I have seen enough IPOs that open above its IPO price then tanked below its IPO price on the first day within minutes as there are no follow through buying and there are too many placement shareholders dying to cash out.
Perhaps, the phrase "IPO sentiments turning sour" is too strong a word for everyone? hahaha But assuming if you are a recent IPO player and you bought Anchun, Xin Ren and Mun Seong at the opening prices. Do you still dare to 'support' Nordic next week when it opens for trading? Well i am not too sure.
Anyway, good luck to all who are applying. :)
Dunno will be like kreuz or yamada
just saw on today's straits times that most investors were allocated only a few lots. maybe one/two/three.
there really isn't much hope of making much S$ from this trade. hmm.
mr 2Y Capital, your analysis is really rather accurate. :]
what are your thoughts about the pending sabana reit?
I am not sure how a "syariah-compliant real estate investment trust" works but i believe the downside should be limited given the yield is > 8% (but not sure if they pay out interest in units to holders instead of cash....)
Wilmar's palm oil business similar to mewah made more profit this quarter than the last year. They lost money in oilseeds business.
Their established brands, sales in 100 counties, strong africa and middle east sales are interesting.