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Tuesday, 13 December 2011

Keong Hong Holdings Limited

Keong Hong Holdings Limited ("KHH" or "the Company") is offering 27m New Shares at S$0.24 each for a listing on Catalist. The Company is a provider of a broad range of building construction services. As of 30 Sep 2011, the order book was S$541m.

The timing couldn't  been "better". Right smack in between the new property measures (additional stamp duties) and the European crisis. 

The revenue grew from $78m in FY2008 to $125m in FY2010. Net profit grew from $1.4m to $8.1m and net margin improved from 1.9% to 6.5% during the same period.

There are no public tranche in this IPO. The NTA after considering the new shares issues is $0.2094. The fully diluted EPS based on the enlarged share cap and assuming the service agreements were in place is Singapore 4.94 cents and that translate into a historical listing PER of around 4.85x. Based on the IPO issue price, the market cap is around S$38.4m.

This is the second 'construction' related company to list in recent weeks after TA Corporation.  As company is not issuing shares for the general public, i will not attempt to determine its fair value.  However, looking at the historical listing PER, the Company is definitely fairly valued. Any upside will be considered a bonus.

Saturday, 19 November 2011

TA Corporation

For records only

TA Corporation ("TA" or "the Company") is an established property and construction company in Singapore. It is offering 122m shares (113m new and 9m vendor) at a price of $0.28 each. The no. of shares for public amounted to only 2m, which is not unexpected given the current market conditions. The IPO closed on 17 Nov 2011.

At the date of the prospectus, the order book was approximately $316m. Revenue hit $235.5m and net profit to shareholders was $30.1m in FY2010. Adjusted EPS for FY2010 based on the enlarged share cap was Singapore 6.5 cents. The listing PER is about 4.3x. The NAV per share post listing was 30.1 cents, higher than the IPO price of $0.28. The market cap is $130.2m based on the IPO price. First half results showed a revenue of $45.5m and a net profit of $5.8m (to shareholders). Adjusted EPS for first half is 1.2 Singapore cents. As illustrated, the results can be very lumpy in nature, indicating how cyclical the industry can be.

Let's take a look at its listed peers here:
Lian Beng is currently trading at historical PER of 3.4x and an EPS of 9.1 Singapore cents for year ended 31 May 2011.
Chip Eng Seng is trading at historical PER of 2.4x and an EPS of 16.6 Singapore cents for year ended 31 Dec 2010.
Yongnam is trading at historical PER of 6.0x and an EPS of 4.1 Singapore cents for year ended 31 Dec 2010.

In terms of valuation, TA Corporation is valued at a higher valuation than Lian Beng and Chip Eng Seng but lower than Yongnam.  The current "IPO" bull run may provide some upside in the opening hours but don't expect the euphoria to last for too long. The "bigger" float of 122m shares means that there will be active sellers should the price run too far ahead of its rivals and traders might as well switch from TA to other construction companies.

JK Tech Holdings Limited

For records purpose only

JK Tech Holdings Limited ("JK Tech" or "the Company") placed out 10m new shares at $0.20 each for a listing on Catalist.  The offer closed on 10 Nov 2011. 

The Company is a one stop provider of IT products, services and solutions to companies. It reported a revenue of $19.8m for FY2011 with a net profit of $2.7m. The EPS based on the enlarged post IPO share cap was 4.08 Singapore cents. That translate into a listing PER of 4.9x. The market cap post listing is only $13.27m, ultra small cap company.

Just a note of caution: For ultra small cap company like JK Tech or Libra, the free float is actually very small. Imagine the number of shares for free float is 66.4m x 30% = 19.9m shares. At 20 cents, the free float translate into $3.98m value. In other words, the founders just need to find 10 friends to take about $400k each to absorb the free float and push up the price thereafter. That is why you see wild swings in prices of such stocks if they are being targeted by speculators. The name of the game is 'dont be the last one holding the baby'. 

Monday, 7 November 2011

Libra Group Limited

Libra Group Limited ("Libra" or "the Company") is in the air-conditioning and mechanical ventilation business. The Company is placing out 31m Placement Shares (26m New and 5m Vendor) at $0.205 each. The IPO will close on 10 Nov 2011 at 12pm. The market cap of this company is $20.44m.

The Company's revenue was $6.3m in FY2008 and grew to $29.8m in FY2010. Profit grew from $0.8m to $3.7m during the same period. Based on the adjusted EPS of 3.71 cents for FY2010, the Company is listing at a historical PER of 5.5x. The first half performance is not very encouraging with revenue dropping from $17.7m to $11.7m for the same period last year and profit before tax dropping from $2.65m to $1.162m. Looking at the current trend, it seemed the FY2011 will not be as good as FY2010. As such, the company could possibly be listing at a high single digit forward PE.

One pre-IPO investor came in at around $0.15 per share and subject her "profit-portion" number of shares to be locked up for a year. (sounds like an equitable way). 

This is an ultra small cap company and is 'by invitation' only. In this regard, no analysis is done on the 'fair value' of this company and personally, this industry and sector is not my cup of tea and I leave it to investors who knows how to 'appreciate' it better.

Monday, 31 October 2011

Parkson Retail Asia Limited

Parkson Retail Asia Limited ("PRA" or "the Company") is offering 147m shares at S$0.94 subject to further over-allotment option. Parkson was established in 1987 and today, operates about 50 stores across cities in Malaysia, Vietnam and Indonesia. The Company is scheduled to open 3 malls in FY2012 with one store each in Malaysia, Vietnam and Indonesia. The first "foreign" department store in Cambodia is expected to open in FY2013. The Company operates under the name Parkson in Malaysia and Vietnam and under the name "Centro" in Indonesia. The Indonesia malls were newly acquired in June 2011. In a nutshell, the Company operates departmental stores in South East Asia and is similar to companies such as Metro, Tangs, Isetan, Takashimaya etc.

Proforma sales has been growing steadily from S$301m from 30 Jun 2009 to S$408m in 30 Jun 2011 and net profit has also grown from S$11m in FY2009 to $35m in FY2011. PRA is offering 136.15m shares via placement and the remaining of 10.85m shares via public offering. The offer will end on 1 Nov 2011 at 12pm. The Company intends to use the majority of the proceeds raised for stores opening. The Company intends to distribute dividends between 40% to 50% of its distributable profits from next FY onwards. 

According to the Prospectus, the proforma EPS for the year ending 30 June 2011 adjusted for the IPO shares will be 5.17 Singapore cents. At the IPO price of $0.94, it translates into a listing PER of 18.18x. The NAV post IPO will be $0.29 (versus the $0.94 subscription price). Based on a DBS research report dated 28 Oct on Parkson Holdings Berhad ("PHB"), the IPO price Parkson Retail Asia at 13x of forecasted earnings of FY12PE of S$48m. The market cap at IPO price is $699.64m.

Basically this is a retail sector play in the South East Asia (ex Singapore). It is good that SGX can attract a Malaysian home brand to list in Singapore. What would be some of the risks investors should be aware of?

1. Foreign Currencies risk. Basically the underlying assets are in Malaysia, Indonesia and Vietnam. The "sales and profits" will be made in those underlying currencies and then translated to Singapore dollars for reporting purposes. If SGD strengthens against currencies in those countries, then it will have an adverse impact on the profitability. From the cash flow statement, the forex impact on cash was a whopping negative $10.13m 

2. Exchange Control. In addition to forex risks mentioned above, the repatriation of profits may be subjected to exchange controls in Malaysia and Vietnam. However, this may not be a significant risk factor as PRA will want to dividend out its earnings to its parent PHB.

It is interesting to note that while sales has been increasing over the last 3 years, the net cash generated from operating activities has actually been declining from $83m to $55m.  The net cash used in Financing activities has also surged to $70m in FY2011 (mainly due to dividends of $56.3m back to its parent company..)

This deal somewhat reminds it of Capitaland spinning out Capitamall Asia. Parkson Holdings Berhad is already listed in Malaysia. It then restructure itself and groups all the SEA department stores under a new Singapore holding company, including the recently acquired Centro stores in Indonesia. It then list the new Singapore holding company called Parkson Retail Asia Limited. (For your info, the parent company of Parkson Holdings Berhad is Lion Diversified Holdings Berhad). After the IPO, Parkson Holdings Berhad will still own about 67.6% of the Company. PHB also holds about 51.5% of Parkson Retail Group listed on HKSE.

In terms of Valuation, the IPO is fairly priced for historical and somewhat more attractively priced for FY2012. As of 1 Nov, Parkson Holdings Berhad is trading at 17.7x historical and 14.4x forward while Parkson Retail Group is trading at 19.8x historical and 16.4x forward. If the IPO rise to 15x forward, it will imply a price of $1.08 (15% upside from IPO price). Post IPO, there will be 744.3m shares. Assuming DBS's $48m earnings forecast is accurate and they pay out 40-50%, that will mean $19.2-24m of dividends or around 2.58-3.22 Singapore cents per share. The implied yield will be 2.74-3.42%. While there are no 'similar peers' listed here, OSIM is currently trading at 11.1x forward and Metro Holdings at single digit PE. I guess it can 'command' a premium due to its strong parentage and underwriters willing to price the IPO at a premium despite current market sentiments.

Conclusion:  This investment provides a good exposure to investors who are keen on the SEA department stores. I do like the outlook, proven track record and rising consumer income in Vietnam, Indonesia, Malaysia and possibly Cambodia going forward. While the pricing may not be cheap, it is priced close to its parent company and cheaper than its HK listed related company (reasonably so). The promised yield will provide some downside support while keeping enough cash for its future expansion. 

Tuesday, 25 October 2011

CNMC Goldmine Holdings Limited

CNMC Goldmine Holdings Limited ("CNMC" or "the Company") is placing out 41m Placement Shares in its IPO on Catalist. The Company is selling 23.9m New Shares and 17.2m Vendor Shares at $0.40 each. There is no public tranche and the offer will end on 25 Oct 2011 at 12pm. The Company is principally engaged in the business of exploration and mining of gold and processing of mined gold ore and owns the mining rights to a plot in Malaysia.

The Company has no revenue in FY2008 and FY2009. In FY2010, its revenue was US$530,169 but its loss was US$1.93m. In Q1 2011, the Company continued to incur a loss of US$668,655 and the loss per share was US$0.17. I thought it was somewhat confusing to state that the NAV per share was US$0.50 on page 31 and the another figure of Singapore 1.64 cents on page 48. Accordingly, the NAV per share is Singapore 3.61 cents post IPO placement.

There is no PER ratio to start with as the Company had been incurring losses. The market cap based on the 40c IPO price was S$162 million.

According to the prospectus, you might be interested to know that there is currently a pending law suit from Falmac against 2 of its ex-directors, Choo Chee Keong and Kuan Cheng Tuck for a breach of fiduciary duties. If they are found to be in breach, then it is likely they will be barred from any directorship for a few years. There were also other disclosure pertaining to directors Lin Xiang Xiong and Lim Kuoh Yang regarding bankruptcy petition and traffic offence... (first time i see such a long comprehensive list on pages 170-173)...but none of the directors look like a mining expert to me.

The whole shareholding structure looks like a typical Pre-IPO deal which Choo Chee Keong is very familiar with , with many BVI companies and individuals coming in prior to its IPO. From the way it is initially set up, my guess is that the Company wanted to list in HK but subsequently decide to list here instead.

The independent valuation states that the Fair Market Value is reasonably stated as between S$87m to $118m. Personally i am no mining expert and i have no idea how to read the independent valuer's report nor value its reserves and I am not sure whether the valuer is worth its salt or not... As such, i will not comment on the valuation of this company. I believe the current balance sheet does not reflect the value of the potential production of the mine...which is why the Company is able to list at a huge premium to its NAV.

Anyway the entire share is being placed out, thus there is no public tranche. I am not sure how to value it, i am no fan of the IPO king and i will not touch it. Only time will tell if this Company is worth its gold.

Friday, 14 October 2011

IEV Holdings Limited

IEV Holdings Limited ("IEV") launched its Catalist listing for 37m new shares at $0.30 each via placement through Collins Stewart. IEV is an acronym for "Innovative Engineering Ventures" and supports the offshore oil and gas industry in Asia Pacific. 

IEV claimed to have invented an "ocean-powered" marine growth control technology that prevents any marine life to grow on the offshore platforms. (Hmm... it is always interesting how these most environmentally unfriendly companies try to position themselves as clean and green).

I think in layman's terms, IEV provides "technology" that can extend the life of the platforms as marine life (i presume such as clams and mussels) are unable to 'stick' onto the metal railings.  Such a business has proven to be lucrative as the Company is able to carve a niche for itself. The audited revenue grew from RM 25.3m in FY2008 to RM 67.7m in FY2010 and the profit after tax grew from a loss of RM6.2m in FY2008 to a profit of RM16.8m in FY2010.

The Company has proposed that it intend to distribute at least 10% of its net profits for FY2011 as dividends.  The IPO will close on 21 Oct at 12pm. Based on the enlarged share capital of 135m shares, the NTA per share is about 15.3 cents and the listing PER is about 7.5x.  The market cap at its IPO price is $51.6m

At its IPO price, i think the company is priced fairly. I have not attempted to 'forecast' its 2011 profits but from the look of the graphs above, the earnings can be quite 'lumpy' and leaned towards the 2nd half of the year.  

It is quite 'heartening' to see  one IPO making a comeback after such a long lull period even though it is a Catalist listing. For the sake of our local bourse, I hope this Company will do well enough such that more companies dare to come forward. Unfortunately, the challenges faced continue to be the weak market sentiments and the recent weeks of steep price declines had make existing stocks valuations more attractive vis-a-vis this company.

Saturday, 6 August 2011

Sheng Siong Group Ltd

Sheng Siong Group Ltd ("the Company") is selling 201.5m New Shares and 150m Vendor shares in the upcoming IPO. Out of the 351.5m shares, 15m will be for the public and the rest via placement at $0.33 each.

The Company is one of Singapore's largest retailers and operates the Sheng Siong chain of supermarkets and groceries outlets. At the date of prospectus, there is 1 hypermarket, 22 supermarkets and 3 wet market stalls.  The Company also operates a new warehouse at Mandai Link to improve its economies of scale.

It is "heart-warming"to see a local household brand that is able to take on the competition from NTUC Fairprice, Cold Storage/Giant/ShopNSave (under SGX-listed Dairy Farm) on its local turf. You have to give it to the owners who build the company up from scratch a midst such tough operating environment.

Revenue grew from $610m in FY2008 to $628m in FY2010 and net profit also grew from $20.6m to $42.7m during the same period.  This is the results of improvement in operating margins (rather than revenue growth) from 3.4% to 6.8% during this period.

In my personal view, the Company has reached a 'saturation' point in Singapore in terms of operating efficiency or market potential.  It is likely to pitch itself as a stable business with strong cash flows that pays good dividend. The Company has "promised" to pay up to 90% of 
net profit for FY2011 and FY2012. I believe this 'promise'was inserted to "boost" investors' interest in this counter. From my market sources, the initial demand for the IPO was rather weak, thus it came as a surprise to me that it was finally able to 'launch' the IPO when Dow Jones had its biggest drop that week. 

Based on the post-invitation no. of shares, the EPS grew from Singapore 1.53 cents to 3.18 cents. At the listing price of 33 cents, the listing PER is 10.4x. It is interesting to note that there will be 'stabilization' manager if there is over-allotment, which in my view, will be tough to achieve. The market cap will be about $442.7m. The IPO will close on 15 Aug and starts trading on the 17 Aug. The founders will be 'richer' by $49m as they will be cashing in at the IPO but it is also interesting to note that they will be taking a huge pay-cut from FY2011 onwards in terms of basic pay but this excludes the 'service bonus' which they may get if the Company continues to perform. Tan Ling San, who founded PSC was brought on in 2006 and he is actually more highly paid than the 2 Lim Founders and head the expansion of the Company. Amazingly, Tan Ling San is not holding any shares but his two "associates"will be subscribing for up to 6.5m shares. That is worth $2.145m and it is hard to imagine that they are not holding in trust for him.

Dairy Farm, which is a listed giant with forecasted revenue of US$9 billion and a net profit of US$492m is trading at a 2011 forward PER of 24x. The net profit margin for Dairy Farm for FY2010 was around 5.2%.  Another comparable PSC (that operates Econ Minimart stores) is trading at around 9.1x PER but has a lower net profit of $14.2m for FY2010.

In my view, the IPO is launched during a challenging period, hence there is unlikely to be significant upside in the near term. The fact that Company is paying up to 90% of its net profit for the next 2 years may provide some downside protection but come to think of it, the founders still own 60% of the Company, thus it doesn't really hurt too much for the founders.  For investors who want to hedge against a rising cost of living, buying the shares may not be a bad idea as it provides a 'natural hedge'.  Should it fare badly during the initial period, it may not be a bad idea to buy some of the shares. Assuming a similar EPS of 3.18 cents for FY 2011 and a payout of 80%, the projected DPS is about 2.5 cents and that translate into a respectable yield of 7.6% per year for the next two years. That could prove to be very attractive for pension and insurance fund managers to buy into the firm. I would give it a 2 Chilli ratings based on "cheaper-than-peer"valuation and the decent yield it is projected to give out.

PS:  In case you are wondering if the rumour that the Sheng Shiong family is related to the Lee HL family is true, according to the independent director whom i spoke to recently, there is absolutely no basis in that rumor....

Thursday, 28 July 2011

Far East Group Limited

Far East Group Limited ("the Company") is offering 18.8m new shares at $0.27 via placement for a listing on Catalist. The offer will close on 4 Aug at 12pm. Founded in 1953, the Company is one of the pioneers in the refrigeration and air-conditioning business in Singapore. 

The Company's revenue grew from $29.2m in FY2008 to $32.6m in FY2010 and net profit rose from $1m to $4.6m during the same period. The adjusted EPS on fully diluted basis on the post IPO share cap is Singapore 4.8 cents. That translate into a historical listing PER of 5.6x. The market cap at IPO is $19.5m.

This company is really 'cheap' in terms of valuation. It has one of the lowest 'dilution' to NTA at only 2.2 cents and the PE valuation is really on the cheap side as well. Not sure why the owners of this company would want to list at such a low valuation. However, one interesting point to note that the Company has outstanding liability from the FY2011 declared dividends of about S$2m of which 50% will be settled in current year and the balance the following year.  The Company also intends to distribute at least 20% of its net profit attributable to shareholders for FY2011 and FY2012.

One of the more closely related listed peers in Singapore, Natural Cool, has revenues of $148.5m and net income of $6.7m in FY2010. It is trading at a PE of only 2.8x and price-to-book of 0.5x.

Basically the Company is already very cheap but there is even a 'cheaper' that has better revenues and valuation. My gut feel is that downside is somewhat limited but unfortunately there isn't much upside either in the near term.

Thursday, 21 July 2011

Malacca Trust Limited

Malacca Trust Company ("the Company") is offering 85m new shares at $0.22 each for a Catalist listing. (2m via public and 83m via placement). The Company is an established Indonesia-based financial services group. The Company specializes in consumer financing, asset management and securities brokerage. The IPO will close on 22 July at 12pm.

From FY2008 to FY2010, the operating income grew from IDR 107.1 billion to 186.1 billion and the profit attributable to shareholders grew from IDR 20.7 billion to IDR 52.3 billion.  Assume and exchange rate of S$1 to IDR 7000, the revenue for FY2010 was S$26.6m and the profit was S$7.47m.

After the IPO, the NTA of the company is worth about 14.37 cents. Assuming the service agreement was in place and based on the enlarged share capital, the company listed at an historical PER of 12.7x.  The market cap at IPO price is S$76.3 million and the Company intends to use the net proceeds of $16.7m to repay bank borrowings.

The directors intend to recommend and distribute cash dividends not less than 10% of its net profit attributable to shareholders for FY2011.  Investors who are keen in the financial sector of Indonesia may want to have an exposure in this counter. Given the low price of 22 cents and the small float and with increased investors interest in the bullish Indonesian economy, my personal view is that the downside is most probably limited. However, the low public float of 2m shares probably mean it will be tough to get any allocation from the ATM.

Wednesday, 20 July 2011

Kitchen Culture Holdings Ltd

Kitchen Culture Holdings Ltd is offering 17m new shares at $0.30 each via placement for a listing on Catalist. There will be no public offering and the offer will close on 20 July 12pm.

The Company specializes in the sale and distribution of a wide range of premium imported kitchen systems, appliances, wardrobes systems, household furnishings and accessories from Europe and USA. The company works closely with developer to market "higher-end" residential projects. 

Revenue for FY10 reaches $31.2m with a net profit after tax of $4.3m. The Company intends to distribute at least 20% of its net profit for FY2011 and FY2012 as dividends. EPS on fully diluted basis for FY2010 is 4.3 cents and if the payout is 20%, the DPS will be 0.86 cents and based on the IPO price of 30 cents, the yield is around 2-3%. Assuming the service agreement was in place, the listing PER based on historical 2010 results will be around 7.7x. The market cap at listing is around $30m. Prior to listing, the company has already 'distributed' its cash to its shareholders for FY2010 of approximately $4.6m...  (this is called milking it dry and then list it...which is not uncommon..).

Since there is no public offer, i have no further comments on the company. All the best to the two brothers who managed to list the company on Catalist. At IPO, the share price is fairly priced and the dividend yield may provide some attraction to investors seeking a better yield over the low bank rate.

Friday, 8 July 2011

800 Super Holdings Limited

800 Super Holdings Limited ("800" or the "Company") is offering placing out 32.214m shares at   $0.22 each. There will be 30.214m new shares and 2m vendor shares.  The IPO will end on 13 July at 12pm but there is no public tranche. The Company is basically a waste management company but somehow like to position themselves a leading "environmental solutions provider"...sigh!!!

The 3 key businesses are Waste Management and Recycling, Cleaning and Conservancy and Horticulture.  The Company is one of the four licensed public waste collectors and over 20 years of track record in the industry. 

The directors intend to recommend and distribute dividends of not less than 20% of its net profits attributable to shareholders for FY2011 and FY2012.

Revenue grew from S$55.4m in FY2008 to $69.6m in FY2010 and net profit after tax grew from $2.2m to $5.2m during the same period. From the prospectus, assuming the service agreement is in place in FY2010 and based on the enlarged share cap of 178.8m, the EPS will be around 2.54 cents and that translate into a listing PER of 8.7x. The market cap post listing is around $40m.

The Company intends to use the proceeds to expand its materials recovery capacity and the existing fleet of rubbish trucks, if i use plain English.  I dont have much feel about this IPO, think the company is fairly valued and future prospects will greatly depend on whether they win or lose the waste management contracts in Singapore. I would give this a miss.

Tuesday, 31 May 2011

Perennial China Retail Trust

Perennial China Retail Trust Management Pte. Ltd. ("Perennial" or the "Trust") is offering 563,579,000 units at $0.70 per unit.  According to the prospectus, it is Singapore's first pure play PRC retail development trust. Investors will need to differentiate a business trust from a REIT. This is not a REIT. In other words, it does not need to pay out dividends if it does not have the cash flow from its operations.  I guess one of the reason why this is structured as a business trust is to 'tap' into the fact that a business trust is able to distribute cash to its unit holders out of its cashflow and not necessarily out of its profits.

This is a pure-play on PRC retail owner and developer. The forecast and projected distribution yield for FY2011 is 5.3% and 5.51% for FY2012. The initial portfolio consists of 3 properties in Shenyang, China and one property in Foshan and Chengdu respectively. It is interesting to note that the Trust has secured the option to invest in commercial development sites which connect directly to high speed railway stations in Chengdu and Xi'an and a right of first refusal in similar site in Changsha. High speed train travel is likely to way to go in China and having secured the rights to these sites bode well for the Trust.

The IPO will close on 7 June at 10am.  Cornerstone investors will take up around 46% of the total issued units and the market cap will be around $785m.  The NAV per share is around $0.67 and based on the offering price of $0.70, it is at a slight price-to-book premium of 1.05x. With CNY likely to remain strong against major currencies in the coming years, forex exposure in this regard, will be of a lesser concern to Singapore based investors and will be attractive to investors who want a CNY exposure.

Overall, the revised offering seemed to be more palatable than the initial offering a few months back in March. It is likely due to the weak IPO sentiments, thus the yield has been boosted as well. While the yield is not exactly on the 'high side', it is more attractively priced now and this could be due to the demands from Cornerstone investors as well. I would regard the issue as fairly priced with a slight upside bias as it expose investors to high growth in China and strong CNY exposure.

Thursday, 21 April 2011

Mapletree Commercial Trust

Mapletree Commercial Trust ("MCT") is offering 712.894m units at $0.88 per unit subject to over-allotment. The IPO will close on 25 Apr at 9am.

MCT is a commercial REIT and offers 3 properties, namely Vivocity, Harbourfront and PSA building in its initial portfolio.  There is a strong pipeline likely to be injected into MCT, such as Mapletree Business City, Mapletree Anson, Mapletree Lighthouse etc.  The yield is projected at 5.7% for FY11/12 and growing to 6.2% for FY12/13.  

Basically this is a REIT and a yield play. The positive thing is that the properties are located in Singapore and hence not subject to significant forex exposure, however, investors should be aware that any properties being ïnjected" will also be made at current market value and will earn the manager some 'performance fees'.    

The market cap of MCT will be S$2.82 billion at IPO and it made a net income of $78m in FY March 2010.  The cornerstone investors are AIA, Itochu, NTUC Fairprice and Hillsboro.

My view:  This is one of the REITs which Mapletree is bringing to the market. The Mapletree Industrial trust being the most recent REIT launched by the them prior to this. The yields are decent and share price is likely to be well supported but dont expect too much of  a fireworks. However, considering the good location of Vivocity being close to the Resort Worlds and the upcoming pipeline, it will something which investors can consider adding to its long term portfolio.

Thursday, 10 March 2011

Hutchison Port Holdings Trust

Hutchison Port Holdings Trust ("HPHT") is the world's first publicly traded container port business trust. It is sponsored by the world's top port operator - Hutchison Port Holdings Limited. The IPO will end on 14 March 2011 at 10am and the price will be determined on that day. Trading will commence on 18 March 2011 at 2pm.

The port assets are mainly in HK and Shenzhen and with China being the world manufacturer, the prospects continue to look good as shipping continue to be a cheaper way of shipping bulk goods.

HPHT is offering public investors 185.185m and between 3.43 bln units to 3.71 units via placement. The offering price is between US$0.91 to US$1.08. The market cap will be between US$7.9 bln to US$9.4 bln. Cornerstone investors include : Capital Research -US$634 million, Paulson & Co - US$350 million stake and Lone Pine Capital LCC - US$186 million.
Jenkin Hui and family, Singapore’s Temasek Holdings Pte., Cathay Life Insurance Co. and Metropolitan Financial Services will each invest US$100 million, and Ally Holding will buy a US$50 million stake.

Based on the prospectus, the yield for FY11F will range from 5.5% to 6.5% (based on max and min offering price) and from 6.1% to 7.5% for FY12F. 

The IPO looks like a good buy to me with good dividend yield and with many strong cornerstone investors. It should be a good long term portfolio stock as well and would not have listed here had it been able to list on the Hong Kong bourse.

Sunday, 6 March 2011

Hutchison Port Holdings

SGX has its more "advanced" regulations in listing Business Trust to thank for that it is be able to attract Li Ka-Shing's Hutchison Port Holdings Trust ("HPT") to list here rather than in Hong Kong.  

It is the first listed container port business trust and the market leader in the world's largest trading hub - the Pearl River Delta. The investment mandate is to invest, develop, operate and manage container ports as well as other port assets. It is likely to take the honor of the largest IPO ever on SGX. The indicative price range is from US$0.91 to US$1.08 per unit and the yield is expected to be 5.5%-6.5% for FY2011 and 6.1%-7.2% for FY2012.

The yield is pretty attractive and with China likely to be leading the world's economy for the next decade, the assets should be worth much more as well in future. If i am forced to choose, I would definitely prefer this over the Perennial China. It is likely to be an attractive stag for me and the IPO has attracted key cornerstone investors including Temasek, Paulson & Co and Cathy Life Insurance.  

Multiple applications is allowed for placement and public offer tranche. I am sure PSA will be looking at this closely to see how they can monetise their assets by listing the port assets. I will update again on the yield once the pricing from the book building is finalized.

Perennial China Retail Trust

Latest update:  Reuters reported that Perennial China Retail Trust's IPO will be deferred. The posting below was made prior to that.

I will do a short preview on this and Hutchison business trust as there are many of you interested to know as many were offered placement shares and the book building will close this week. My analysis is preliminary and based on the term sheets which I received and will be updated when the IPO is launched.

Perennial China Retail Trust is launched by the former Capitaland retail head Pua Seck Guan.  I don't think the departure was that amicable as he was in a privileged position to know how Capitaland operates and how they manage their projects etc. It is like you owning a saloon and one of your key hair stylist opening a shop in the same shopping mall and he knows who your top customers are, how you make money, what kind of margins to charge etc. On the other hand, this is none of "my business"and you probably know this guy knows how to run his business and you are in good hands. 

The Business Trust listing will be on the main board of SGX and its focus is in China.  The trust is offering 1,092,000,000 units of which 55% is for international placement, 40% for cornerstone and up to 5% for the public. The indicative price is S$1 per unit and is priced at a 22% discount to analysts consensus NAV per unit. The distribution yield is projected at 3% for FY2011 and 3.1% for FY2012. Do note that this is not a REIT, it is a Business Trust. The difference between a business trust and reit can be found here.

Another "relative" peer will be Capmallasia. The entity is trading at 1.16x price to book and have a yield of 1.143%. In that regard, Perennial China Retail Trust is more attractively priced for investors who like to have an exposure to the China Retail sector. 

I will comment on whether the share is worth a stag and its "fair value" when the final prospectus is registered and the pricing finalized.

Tuesday, 22 February 2011

Dyna-Mac Holdings Ltd

Dyna-Mac Holdings Ltd ("Company") is issuing 436m shares (186m New shares and 250m Vendor shares) at $0.35 each. 5m shares will be via public offer and 431m shares via placement. The Company has also provided for up to 30m shares under  an over-allotment scheme.  The application will end on 28 Feb at 12pm.

The Company is a multi-disciplinary specialist provider of detailed engineering, procurement and construction services to the offshore oil & gas, marine construction and other industries. Revenue and net profit has been swinging from FY2008 to FY2010. I believe this is in tandem with the demand for oil & gas. Revenue for FY2010 comes in at $218.5m and net profit was $25.5m. HY2011 revenue and net profit came in at below HY2010 by more than 20%. Assuming the full year adjusted EPS comes in at Singapore 2.24 cents, the company is listing at a forward PER of 15.6x. The market cap at IPO price is $315.1m. Investors should also note that the NTA per share post IPO is 11.33c versus the 35c paid.

The Company is heavily dependent on SBM and Modec for its business and this risk was once again highlighted on the front cover of the prospectus. It is interesting to note that post listing, Lim Tze Jong and Keppel Shipyard will control 79.4% of the company. In addition, Keppel Shipyard will have the first right of refusal should Mr Lim decide to sell out. It is a good sign that Keppel Shipyard would like to acquire the company strategically as long as the 2 major customers have no issue with Keppel becoming a substantial shareholder. 

While i like the sector and the company, for the purpose of this listing, i believe it is already fairly priced. Keppel Shipyard coming in as a cornerstone investor will no doubt help to support its share price but the company is listing in a challenging environment where there are political unrest in the middle east. There isn't much public float to talk about and the share price is likely to be supported if the over-allotment option is activated.  My personal view is that there is not much 'meat' to stag but long term investors may want to consider buying this company should share price drop post its listing. 

Chew's Group Limited

Chew's Group Limited ("Company") is offering 12.79m Placement Shares at $0.25 each for a Catalist listing. The offer will close on 24 Feb at 12pm but there will not be any public tranche. The Company is one of the leading producers of fresh eggs in Singapore and specialize in the production and sale of designer eggs.

Sales grew from $14.5m to $19.2m over the last 3 years and net profit swing from $1.5m to $3.05m during the same period. The post IPO EPS for FY2010 will be 3.61 cents and that translate into a listing PER of 6.9x. The PE will be higher if you consider the service agreements that will likely be put in place. 

The market cap based on the listing price is $21.12m. This is a ultra small cap SME but the business is stable and eggs are always in demand here barring any bird or "chicken" flu breakout.  The company intends to distribute at least 20% of its net profit for the next 3 years as dividends. It is interesting to note that Prime always receive 'shares' as part of its fees for managing IPO, perhaps Prime should receive 'payment-in-kind'?

Since this is a 'placement' only IPO and has small float, it will likely be 'well supported' as majority of the shares are still with the Chew Family (68% post IPO). It is likely to be range bound post listing and the company would do well to expand outside Singapore as the market here is limited. The company is also exposed to a 'single product' risk and a bird flu breakout in Singapore will likely affect the company badly. I would give it a miss.

Wednesday, 16 February 2011

UE E&C Ltd

UE E&C Ltd ("Company") is offering 70m shares (subject to over-allotment) where 60m will be via placement and 10m via public at $0.48 each. The Company is an established mechanical and electrical engineering and construction company, capable of providing integrated solutions and in recent years, have participated in the HDB design, build and sell scheme and Executive Condo through minority JV stakes. According to the prospectus, it has order books worth $631.8m and the orders will be fulfilled over the next 12-36 months. The offer will close on 22 Feb at 12pm but it has been a long while since we last saw OCBC doing an IPO. I don't think the 'track record' for a stag is there even though OCBC has tried to structure an 'over-allotment' option of 10.5m shares to help stabilize the post IPO share price. The market cap based on post IPO shares of 270m stands at S$129.6m

Audited revenue from FY2007-FY2009 rose from $249.6m to $398.4 and the net profit attributable also rose from $7.4m to $29m. First half 2010 revenue showed a slight increase to $184.4m and net profit is 11.4% marginally higher than the previous 1H2009.  Assuming the company is able to achieve its 2010 results in the same proportion as 2009 where 2nd half turns in a better results than the first half, the EPS adjusted for the dilution will be 12.25 cents and that will translate into a listing PER of 3.91x. 

It is interesting to note that companies continue to be priced at such a low PE for an IPO, no wonder not many companies keen to be listed here, especially the cashflow rich companies. This is a critical issue that SGX should seek to address if it wants to attract better companies.

Personally while the IPO is cheaply priced, it is quite "garang" to go out into the market under such poor market sentiments. Perhaps it wants to rush its IPO before the Hutchinson business trust sucks up all the liquidity in our small market.  I would give it a miss based purely from the fact that i dont like the industry/sector which it is in. Perhaps a low PE is warranted.

Wednesday, 26 January 2011

Malaysia Smelting Corporation Berhad

My sincere apologies for this late posting as I have been extremely busy lately both with work and personal matters. 

Malaysia Smelting Corporation Berhad ("SMC" or "Company") is offering 25m shares at S$1.75 per share and each board is 100 shares.  SMC is one of the world's leading integrated producer of refined tin metal and is a subsidiary of The Straits Trading Company listed on the SGX. SMC is already listed in Bursa Malaysia since 1994 and has a market cap of about RM360m.

This is once again a dual-listing project, similar to Sri Trang from Thailand.

For the 9 months 2010, the company made an impairment on the non-tin assets and suffered a net loss of RM72.4m.  The financial performance has been rather erratic with FY2007 net profit at Rm75.8m only to suffer a loss of RM43.8m in FY2008 and to recover to RM65.4m in FY2009 and FY2010 is likely to suffer a loss. Maybe i should say that the results are rather consistent - one good year followed by a bad year and then good year again. :P

I will give this company's IPO a miss.  

Monday, 24 January 2011

Zhongmin BH

For records only (I am not even aware of this Catalist listing on 20 Jan 2011. There is no "public"tranche)

The Group is principally engaged in the ownership and operation of the “中闽百汇” department store in Xiamen City, which is one of the largest underground retail malls in Fujian Province, China. Spanning an estimated built-in area of 28,746 sqm, the Xiamen Store is located in the commercial centre of Xiamen City, strategically located at a transportation hub where bus terminals (to both within and outside of Xiamen City), bus rapid transit and the high speed train (to various major cities in China) are located.

The Xiamen Store offers a wide range of quality merchandise and customer-oriented services catering to middle to high level income bracket consumers. International brands featured in the Xiamen Store include BreadTalk, Nike, Adidas, Bossini and Baleno. The Group also manages six department stores under the “中闽百汇“ brand name in Quanzhou and Zhangzhou Cities in Fujian Province, China. These managed stores have an aggregate estimated built-in area of 59,638 sqm. In return for its management services and the use of the “中闽百汇“ brand name, the Group is paid management fees.

Saturday, 22 January 2011

Sri Trang Argo-Industry Public Company Limited

Sri Trang Argo-Industry Public Company Limited is offering 280m shares at a maximum offering price of $1.60.  The offer will close on 24 Jan at 6pm (interesting timing?). The company is already listed Stock Exchange of Thailand and is one of the largest processors of natural rubber.  It is encouraging to see such dual listings finally as we have been seeing a lot of SGX-listed companies going for dual listing elsewhere in the region.

Thailand was the world's largest natural rubber producer in 2009 (hmm...frankly i always thought it was Malaysia, i guess that is because we associated Thailand with Jasmine rice instead).  The company is involved in the entire natural rubber supply chain.

Revenue for FY2009 was 46m Baht but for the first 9 months of 2010, the revenue has reached 61.3m Baht. This is 104% higher than the same period in 2009. Profit for 9 months ending 30 Sep 2010 is 3,183m Baht.  In Singapore dollars terms, the audited revenue for 9M is $2.6 billion and net profit after tax is $136m.  The company's capacity will also increased from 755k tonnes in 2009 to 1.5m tonnes in FY2012.

Extracting the results and translating into SGD, the 'historical' results is presented on the left.  The Singapore issue of 280m shares will represent 21.9% of the issued and outstanding share capital post listing. 14m shares will be for public and the rest via placement.

The final offer price will depend on the demand for its shares during the book-building period but retail investors will have to subscribe at the maximum offering price of $1.60 The company also have a generous dividend policy of paying out 30% of net profit for each financial year.

Based on the enlarged share capital, the projected 2010 EPS is $0.14 and based on the IPO price of $1.60, that translate into a "dual-listing" PER of 11.4x. Assuming EPS grow by 25% in FY2011 due to increased rubber price, capacity and demand, the PER will drop to 9x. Assuming a fair value range of 12-15x, the fair value will range from $2.10 to $2.60. I quite like this company, sector and prospects. I will give it a 3 Chilli ratings.

24 Jan 2011 update:  I have given it a 3 Chillis rating based on a longer term perspective. For short term trading, a lot depends on its performance on the Thai market as well. I am not sure if Singapore markets will typically give it a higher valuation than the Thai market as there are not many similar 'dual listing' cases here. For investors who want to stag, I believe it should still be possible but the final pricing would be a key determinant and hopefully the underwriters and company will leave so food on the table.

Harry's Holdings Ltd

Harry's Holdings Ltd is placing out 24m new shares at $0.22 for a listing on Catalist. It managed to grow from a single bar in Boat Quay in 1992 to a leading F&B operator today.

Revenue grew from $27m in FY2007 to $37m in FY2009 and net profit is around $2m for that 2 years with a dip in FY2008. The offer will end on 24 Jan at 12pm.

The Company is listing at a PER of 11.4x assuming the service agreement is in place and based on post IPO number of shares. Market cap is $20.9m. Basically at $21m, it is a ultra small cap and you 'cant' apply for it. Don't see much prospects unless it can venture out of Singapore or create some ultra profitable F&B outlets. 

Wednesday, 19 January 2011

XMH Holdings Ltd

XMH Holdings Ltd is issuing 100.95m shares (85m New Shares and 15.95m Vendor) at 25 cents each. 1.5m shares will be for public and the bulk via placement.  

The Company is a diesel engine, propulsion and power generation solutions provider in the marine and industrial sectors. Revenue for FY2010 is S$74.5m and net profit is S$17.58m.  The offer will close on 24 Jan 2011 at 12pm.

The NAV per share is about 7 cents post listing and EPS for FY2010 assuming service agreement in place and based on enlarged share cap is 4.01 cents and that will translate into a listing PER of about 6.25x. The market cap based on offer price is S$100m.

Prior to the listing, the Company paid a generous dividend of $17m to its shareholders, which i think, is "common" among listing companies.

The company is priced to sell at such low PER. I think downside is limited but the problem for public investors will be to get the shares via the allotment. A PER range of 7-9x will mean a fair value of 28c to 36c. The only "worrying" part will be the huge placement tranche but i guess it could be well absorbed as all investment banks and securities firms will want it to succeed to start the IPO ball again.

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