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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.

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