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Singapore IPOs: Why I No Longer Cover Every Listing

Some readers may have noticed that I have not been writing about every Singapore IPO since last year. The simple reason is that life has become busier. Between my day job, an increasingly packed travel schedule, family commitments and desire to play more golf, I have become much more selective about how I spend my time.  Writing detailed IPO reviews takes time — reading prospectuses, analysing financials, comparing valuations and understanding the competitive landscape. While I still enjoy investing and writing, I no longer feel the need to cover every IPO that comes to market. Instead, going forward, I will probably focus only on IPOs where I am seriously considering investing my own money or where there is something particularly interesting that is worth discussing. I suspect this will make the blog more useful as well. Rather than writing about every deal, I can spend more time sharing my thoughts on the handful that I believe deserve attention. That bring...
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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.
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Dennis The Menance said…
I would like to comment about public offering. New issues are almost always bad investments the vast majority of these stocks are way way over priced on purpose in many cases. I always recommend that investors stay away from these stocks
7 December 2011 at 03:45
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