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Saturday, 22 December 2012

Happy Holidays

To all Singapore IPOs blog readers,

It has been a pleasure having you. Hope all of you have a good rest during this festive seasons... and Happy Holidays!

Take this time to reflect on your pursuit for financial freedom and goals for 2013!

I will share mine in my other blogs when I "straighten" my thoughts. :)

Saturday, 8 December 2012

Kori Holdings Limited

For Records only

Kori Holdings Limited ("Kori" or "the Company") is placing out 28.2m shares of which 25.6m are New Shares and the balance of 2.6m are vendor shares at $0.25 each. The Company is basically a sub-contractor for construction projects.

Financial Highlights

Kori generated a revenue of S$34.7m in FY 2011 and made a net profit of $6m. For the first half of FY2012, the revenue was $26.6m and the net profit was $5.1m. At the date of issuing the prospectus, it has an order book of approximately $82.8m. 

The offer has ended on 7 Dec 2012 and there will be no public tranche.

The offer price of 25c is at a discount to its NAV of around 31.93 cents and at very low single digit PE. The market cap at IPO price is around S$24.8m

The company will be majority controlled by Messrs Kori Nobuaki and Hooi Yu Koh (61.7%). A group pre-IPO investors came in at around 12.5 to 15 cents.

Fair Value

I will not attempt to derive a fair value but i believe the downside is limited with potential upside as it is being listed below its NAV and at a very low PE multiple. In fact, maybe the owners have been "short-changed" by the financial adviser but personally will not buy this at the open market due to its industry and small cap status.

Thursday, 29 November 2012

A Festive Famine

It has been a while since i update this blog. Once again, we are having a famine on the IPO scene in Singapore and i don't think there will be any more IPOs till end of the year. As such, i am going to give myself a long break :-P

Religare Health Trust had a bumper week with 4 initiation report ever since its debut. The IPO write was here and the reports are here

Friends of Mr. IPO

I don't think i am going to hit the 1,000 mark by end of the year unless Santa Clause is giving me a big surprise.

Since my last update, the number of friends has increased from 549 to 651.

The majority are still guys! Come on gals... do something. hahaha.

I will give a final update closer to Christmas :)

Happy Festive Seasons to all. It's gonna be a hungry one. hahaha 

Wednesday, 24 October 2012

Gaylin Holdings Limited - Balloting Results

Gaylin Holdings Limited announced its balloting results. The press release is here, the balloting announcement is here and my IPO write up on Gaylin is here.

The public tranche is more than 100x oversubscribed. As such it is very difficult to be allocated shares.

You can see that majority of the shares were allocated to investors who applied between 10 to 100 lots. Investors who applied for 100 lots will have a 26% chance of getting the shares of 5 lots.

The "over-allotment" of 22m shares were exercised. In this regard, CIMB will help to stabilize the market should the price falls below the IPO price. 

No "anchor" placement investors were announced (how come they never announce my name? :P), thus will be interesting to see if the shares are well supported tomorrow.  I am one of the 173 after they cut back my application quite significantly. Let's see if can make any money tomorrow... just hope that uncle Sam cooperate tonight...

Happy IPOing. 

Saturday, 20 October 2012

After thoughts on Geo and Religare and the upcoming IPOs

Yesterday was an interesting day.

You had Geo Energy listing at 9am and Religare at 2pm.

Geo Energy

From a fundamental angle, after i gave Geo Energy a chopped chilli, there was a kind reader who emailed me to tell me that Geo is actually a 3 Chilli. Obviously, he knew of things that i don't. In fact, he also told me the subscription rate and the opening price one day before the listing. hahaha... Power. I call it the power of placement and i have shared that conversation with you prior to its close.

Some underwriters have the ability to place it to 'strong hands' and 'syndicate group'and you can actually get some hints from the prospectus when you see who the placement agents or underwriters are.

To have such a successful debut, you need to have a smaller size issue and limit the number of shares issued to the public, hence the number of shares will be low and it will be very difficult to get. Read the balloting post here. It is interesting the Geo Energy came out with a news release to boast about its robust debut. hahaha quite rare to see such announcements. The announcement is here. Geo closed at $0.435 (up 33.85%)

Religare Health Trust

On the other hand, Religare has been flip-flopping on its news. First it priced its shares at the lower end of the book building and at the same time, moved its debut from 22 Oct 9am to 19 Oct 2pm. I am not sure if they know the US market will crash on Friday night but thankfully they did that! Otherwise i will suffer a big loss on its debut. I have shared with you my thoughts on Religare. The thing about big issue is that it is very difficult to control the placement. 

Some readers asked me why i have IPO shares that are forced down my throat. This is because i have signed an agreement to take all the IPOs which they underwrite subject to a certain limit and for a time period. It is like doing National Service. You can't pick and choose. One 'naughty' reader asked me to write a post about my losses from Religare and I will kindly oblige her.

I have 25 lots from the placement tranche, hence i have to pay 1% extra placement commission but the thing about me as i have shared with you is that i know when to move on. I cut it within 15 mins of the opening since i don't like the counter in the first place. My loss will be about $500, will report the actual loss next time if i decide to do a report card on my IPO tikams like previous time. Religare closed at 10% down to 81c.

Gaylin Holdings Limited

The next IPO to debut will be Gaylin which will debut on 25 Oct. I really don't understand why they have to close the IPO on 23 Oct at 10am instead of the usual 12pm. Two sharp readers have pointed out the error to me and i have amended my post accordingly. Can someone enlighten me? Is it due to Fengshui?!?!

My biggest worry about Gaylin is actually the sentiments. Sentiments can flip flop very easily. I don't like what i am seeing on the US side with a bad closing on Friday and the Volatility Index spiking up 13%. I just hope that CIMB, as the main placement agent, has placed out the issue to strong hands. In case you are wondering where i sourced my shares from, it was from the same placement agent as Geo Energy. It may be a good thing that my exposure was cut by 65% due to good demand.

Dynasty REIT

The next IPO i don't want to get Dynasty REIT and hopefully i won't have too many shares forced down my throat.

The Naughty Reader

The same 'naughty' reader said that since I 'saved' her from Religare, she will 'not blame' me for not applying for Geo Energy... hmm... let's count the probability of that earnout. 

Assuming i have $100,000, since i can't apply for both IPOs at the same time, i will split $50,000 Geo and $50,000 Religare and that i sold both at the closing price. Based on the balloting ratio, the probability earnout will look something like that.

Religare  = $(0.81-0.90) x 23/50 (probability) x 9,000 shares = $372.60 (loss)

Geo Energy = $(0.435 - 0.325) x 8/99 (probability) x 8,000 shares = $71.10 (gain).

So in the end, i still managed to help saved the naughty reader $300 before commission using the probability earnout model. :-P

Happy IPOing and have a good weekend.

Friday, 19 October 2012

Religare Health Trust - Balloting Results

Religare Health Trust announced two things:

Listing date will be brought forward from 9am on 22 Oct 2012 9 am to 2pm on 19 Oct 2012 (today). Not sure which Fengshui Master advised them to change the date and time for an auspicious start but we shall see if it works. :P My other guess is that they probably want to confuse the sellers who may want to sell on the first day.

Balloting results for the public tranche:

The public tranche was 14.5x subscribed and investors will have around 50% chance. They have skewed the distribution to investors who apply for less shares this time. 

Placement Tranche

It is interesting to note that Henderson Global Investors was allocated 30m shares but was only mentioned in a "small paragraph" while Temasek who subscribed for only 15m shares were given a "nice placeholder"?  Probably they want to make sure the "Temasek" name is well publicized but don't read too much into it as such stakes are probably too small for Mr. T.

Happy IPOing.

Gaylin Holdings Limited

Gaylin Holdings Limited ("Gaylin" or the "Company") is offering 110m New Shares at $0.35 each. 5m shares will be for the public and the balance via placement. CIMB can choose to issue an additional over-allotment of 22m shares and they will use the shares to perform price stabilisation post IPO. The market cap is S$143.5m. The IPO will close on 23 Oct 2012 at 10am and commence trading on 25 Oct 2012.

The prospectus is here and the preview is here.

With an operating history since 1974, Gaylin is one of Singapore's largest multi-disciplinary specialists providers of rigging and lifting solutions to the global oil & gas industry.

Financial Highlights

Assuming the service agreement is in place, the EPS for FY2012 using the enlarged share capital of 410m shares is 3 Singapore cents and that translate to a historical PER of 11.6x

Use of Proceeds 

The use of proceeds is stated above and based on the prospectus, it is for acquisition of a South Korean company but not much information was provided.


The Company intends to distribute not less than 30% of its FY2013 and FY2014 net profits as dividends. Assuming EPS remain the same at Singapore 3 cents (assuming service agreement in place), the dividend per share will be Singapore 0.9 cents. That works out to be a yield of around 2.6%. This should provide some downside protection but I didn't see it working in Courts Asia recent decline. 

Pre-IPO Investors

Pre-IPO investors came in at around 12% to 15% discount to the IPO Price and they are not cashing out at the IPO. The major owners will continue to own around 61% of the Company post IPO through investment holding company, Keh Swee. All of them have agreed to be lock up for a period of 6 months.

Family business

With the 4 brothers and the many relatives, Gaylin most likely still look and smell like a family business... not sure if this is good optically. Sounds like a Qian Hu where all the siblings are working together? 


Luckily they changed their auditor to Deloitte & Touche to create a better image and was given a clean bill of health. The previous auditor has received some shares from his investment in the Exchangeable Bonds under the name of Rhodus. Most likely he is also advising them on the listing as his conversion is based on a certain % of the issue size. 

Oil & Gas Industry

I like the Oil & Gas sector in which the Company operates in. You have seen Ezra and Ezion doing well lately and based on my investigations, this sector will continue to drive demand in this region.

Placement in hot demand?

Please note that i am heavily vested in this counter through the placement tranche. However, the demand was apparently quite hot as my initial allocation was reduced by 65%.My guess is that the over-allotment shares will be issued.

I am guessing

Assuming the EPS grow by 20%, the implied EPS will be around Singapore 3.84 cents. Many companies in this Oil & Gas sector is trading at PEs between 10-15x. A fair trading range could be between Singapore 38.5 to 57.5 cents.

Chilli ratings

Given my vested interest, my views is definitely biased and i will give it a 2 Chilli rating to support my vested interest and my intention is to hit and run if the market allows. At least i tell you in advance ah... :oP

Happy IPOing.

Thursday, 18 October 2012

Geo Energy Resources Limited - Balloting Results

Geo Energy Resources Limited annouced that its small tranche of 3m public shares were 183x oversubscribed but including the placement tranche, it was only about 2.9x oversubscribed. The results announcement is here.

The balloting results is as follows:

Extremely very difficult to get. :) Again, those who applied for 100 lots has the best "chance".

Placement holders

Let's see who they have placed out the shares to.

The only identifiable shareholder is "Credit Suisse". Let's see if they can perform some magic on the counter tomorrow. 

Good luck to those who have the shares.

Dynasty REIT

Dynasty REIT is offering 893,162,000 to 900,832,000 units at an offering price of between RMB 4.40 to RMB 4.70 or S$0.855 to S$0.915. The offer will close on 24 Oct 2012 at 12pm and start trading on 30 Oct 2012 (Mark this date for the "LKS" effect). Between 839.274m to 846.944m units will be offered to the Placement and 53.888 units will be offered to the public.

The prospectus is here and my previous preview is here.

Dynasty REIT invests into commercial real estate in China. The initial portfolio comprise Nanjing International Financial Center, Shanghai International Capital Plaza and Tianxing Roosevelt Center. The pictures below for your ease of reference.

Distribution Forecast

The annualized yield is between 6.8% to 7.1% for FY 2012 and 7.0% to 7.3% for FY2013. Please note the following "unique" financial engineering features.

There is a DPU support arrangement where RMB 491m of the proceeds raised from the offering will be utilized for payment of distributions and the Sponsor has waived its pro-rata distributions till 31 Dec 2017. In the absence of the above, the yield will drop to 3.2% and 4.1% respectively. What is this ah?! Sheep Skin come from the Sheep? Investors pay upfront and then receive it back later - sounds like a recent gold scheme? :-P hahaha.

According to the prospectus, the current rental market is higher than the "expiring rent", thus there will be some upside going forward.

The real yield is too low!

After stripping out the DPU support and the Sponsor Waiver, the yield is really too low for my liking and i don't like such financial engineering stuff. Maybe they pick this up from Perennial China Retail Trust?

Why can't they fix the price first?

It is funny why they couldn't fix the price before launching the public offer. Are they still doing book building with institutional investors at the same time?

Twice bitten thrice shy

Mr. LKS is a very shrewd businessman and based on my past experiences, he doesn't leave anything on the table and will even take away the table cloth. So this is a no-no deal for me personally but again, like the Religare Health Trust, i will probably be allocated some units... 

I will give it a chopped chilli rating and officially declare the end of the Singapore IPO market for 2012. hahaha

Happy IPOing....

Wednesday, 17 October 2012

Declout Limited

Declout Limited ("Declout" or the "Company") is offering 31m placement shares at $0.25 each for a Catalist listing. The market cap based on the IPO price will be S$51m. The website is here and the prospectus is here.

Declout is a IT solutions provider mainly targeting "Vertical Domain Clouds", starting with the online gaming sector. While online gaming has huge potential, it has unfortunately, in my view, failed to take off in a significant way in the Southeast Asia region even though IAH was one of the pioneers here. I believe IAH is one of the clients of declout. 

Financial Highlights

The revenue has increased from $833k in FY2009 to $38m in FY2011 and the profit increased from $59k to $1m during the same period.  The 1Q2012 revenue continued to show a nice traction over the same period last year.

Based on the EPS of Singapore 0.52 cents, the Company is valued at the historical PER of 48x.

I am guessing

I am not privy to 2012 sales and profit projections. Assuming the EPS grow by 25% in FY2012, the implied EPS will be Singapore 0.65 cents. The implied forward PE will be 38x, which in my view is expensive. Even if EPS doubled to 1.04 Singapore cents, the valuation is still very rich at 24x.


The listing is probably a "friends and family" round where they helped to list the Company on the Catalist. Since this offer is not open to retail investors, i will not attempt to dissect it further but would have probably avoided it in any case as the company is too early stage for me and is selling at very rich valuation. At the IPO price, it is priced at more than 1x to its FY2011 revenue and 50x its FY2011 earnings. 

Tuesday, 16 October 2012

Friends of Mr. IPO Update

As promised, i will do an update on my post on 2 Sep 12 where i set a target of 1,000 friends by end of the year.

The number of friends have increased from 372 to 549. An increase of 47% over 1.5 months. This time round, i will attribute the increase in friends to the sudden influx of companies seeking IPO on SGX. These companies just have to do this don't they?! Can they just queue up in an orderly fashion!

My readers continue to be predominantly male! In fact, the number of female readers have dropped by a 2% but the number of younger readers in the 18-24 age group has increased from 11.7% to 16%. It is good to see that because the readers from the 18-34 age groups will be the ones that will benefit the most due to their longer runway.

I am only at the halfway mark to the 1,000 friends. It needs to grow by another 82% from now till 31 Dec 2012... wow... seems like a tough target to achieve? 

Happy "like"ing. :)

Monday, 15 October 2012

Relgare Health Trust

Religare Health Trust ("Religare" or "RHT" or the "Company") registered its prospectus today. The link is here and my IPO preview is here.

RHT is offering 567,455,000 common units at $0.90 each. It has priced its offer at the lower end of the indicative range. RHT offers investors an exposure into Indian healthcare centre. Based on the offering price, the projected yield for FY2013 (annualised) is 8.9% and 9.1% for FY2014. 12m shares will be offered to the public and the rest will be via placement. The offer will end at 12pm on 18 Oct 2012 and starts trading on 22 Oct 2012. Considering that it is open to the public for such a short period of time, you can probably guess that the placement tranche has already been fully placed out. While there are claims that the placement is 2.5x subscribed, i do have my doubts. :P

Initial Portfolio

The picture above shows you the initial assets which is valued at S$748m.

Sponsor is cashing out
There is no doubt in my mind that Fortis is 'cashing out' its assets. By recycling this into a Trust, it can then receive proceeds which can then be used to make fund new healthcare assets at the Fortis level.

Distribution Waiver

One key thing which you may want to take note is that the Sponsor has 'waived' its entitlement to the cashflows for FY2013 and FY2014 (ending 31 March 2014). In other words, the yield is inflated and once the period expire, the Sponsor will be paid its pro-rata share of the cashflow. This has inevitably created the impression that the yield is high but it is not 'sustainable' as the yield will drop once the waiver period is over assuming all things remain equal. 

Attractive Sector?

I like the Healthcare Sector. The demand is pretty inelastic and seemed to have a lot of headroom to move upwards in a growing economy like India. However, i don't like the operating environment in India. There seemed to be a lot of uncertainties with regards to operations, licensing, regulations etc. 

Use of proceeds

The proceeds from IPO will be mainly used to acquire the portfolio.

The sponsor will hold only 28% of RHT post IPO with the balance of 72% held by public and institutions. The IPO is offered to investors at 90c.

Depreciating INR

As mentioned in my preview post, the depreciating INR is a constant worry as the revenue will primarily be derived by the hospitals in India.


It is a 'mixed' bag for me with some plus and many minuses. I will give it a 1 Chilli rating, i.e buy only if you like it.The float is pretty big, thus there should be enough supply to satisfy all the demand for the units. Thus don't expect too much of a fireworks and it may even be difficult to stag this. 

Happy IPOing

Friday, 12 October 2012

Courts Asia Limited Balloting Results

Courts Asia Limited ("Courts") released its IPO balloting results tonight.

The press release is here and the balloting results is here.

The demand seemed pretty hot with institutional demand more than 3.4x oversubscribed and the retail tranche was 24.4x oversubscribed.  

The Public Tranche Balloting Ratio

Seemed like people who applied for 100 lots have the best chance as 40.9% of the public tranche was allocated to them...sigh... seems like i should have stuck to my conviction and not have cut back my application for each account!  

My Balloting Results

Only one of out two accounts was successful. I also applied 50 lots for the other account.

Good luck to all who is successful. You should be able to stag out if US market cooperate tonight and dua cheong... otherwise just cross your fingers and hope US markets don't create trouble... :)

Happy IPOing.

Thursday, 11 October 2012

Dynasty REIT (Preview)

Issuer: Dynasty REIT - first RMB denominated REIT on SGX
Sponsor: ARA Asset Management Ltd
Issue size: 893,872,000 to 901,292,000 shares
Distribution Yield 2013E :7.0% to 7.2%

Price range (based on RMB5.115 = SGD1.00) : RMB4.40 (SGD0.86) - RMB4.70 (SGD0.92)

Expected Allocation: 24 Oct
Expected Listing Date : 30 Oct

Preliminary prospectus is here.

I received the above from my broker today. It always gives me "bad feeling" when Li Ka-Shing wants to cash out of the market. You can see that he always cash out at the market top. You can see it in Suntec, you can see it in Hutchison Port and you can see it in Hui Xian REIT. Sounds similar to the Ding Xie effect which i was talking about? hahaha

Dynasty REIT is established with the investment strategy of investing in income producing assets in PRC that is used for commercial purposes. The initial portfolio is Nanjing IFC, Dalian TRC and Shanghai ICP.

I don't wish to comment further until i see the final prospectus and the implied yield. At the end of the day, it is a play on the outlook of the economy of China and whether the offices can be fully leased out to generate the passive income to you.

The 3 buildings are:

Track Record of Superman LKS in a similar REIT

Hui Xian REIT was launched at RMB 5.24 in 2011. It is currently languishing at RMB 4.02. The information is here. Share price chart attached below for your information.

Mr. Li is a genius and i am indeed "wary" whenever he comes to the IPO market. hahaha.

Happy IPOing.

Geo Energy Group

Geo Energy Group ("Geo" or the "Company") is offering 289,264,000 shares at $0.325 each. 3m shares will be via public offer and the balance 286.264m via private placement. 258.348m New Shares will be issued and the Vendors are selling 30.9m shares. The market cap will be $376m.

My initial preview is here and the final registered prospectus is here. The IPO will close on 17 Oct 2012 at 12pm and starts trading on 19 Oct 2012.

Geo is a coal mining group in Indonesia. Its main business will be to own and operate its own coal mines as well as offer contracting services to 3rd party mine owners. They sell the coal to coal traders and coal export companies.The mines are located in Kalimantan.

Pro Forma Financial Results

Revenue has been increasing "dramatically" from US$13.6m in FY2009 to US$69.2m in FY2011. The profit attributable to owners also increased dramatically from US$1.24m to US$14.3m during the same period.

Using the post-invitation EPS of US 1.24 cents (convert at 1.22) = Singapore 1.51 cents. That translate into a listing PER of 21.5x. (expensive!).

I am guessing

Assuming the FP2012 results are indicative of the profit trend which shows an improvement of 80% (which i cannot understand why because the coal prices are on a declining trend and coal sales increased by only 16%).... but nevertheless, i will assume the EPS increase by 50% for FY2012, the EPS will be 1.51 cents x 1.5 times = Singapore 2,265 cents. This translate into a forward PER of 14.3x

Just to recap, Sakari is in the process of being delisted at a PE of around 13-15x PER. It has been trading at cheap single digit valuations prior to the buyout offer. 

Thus on one hand, we see Sakari trying to delist from our market due to its cheap valuation and was offered 14x PE to delist itself, on the other hand, we see another coal company trying to list on our market at 21x historical PER. Is there a disconnect somewhere?

Peer Valuations

Goldman issued a Coal report on 9 Oct 2012. 

Given that most coal miners are current trading at 10.4x 2012PE and 10.5x 2013 PE, i think there are enough cheaper options out there for investors to pick on. The easily availability of coal supply and softening coal mine prices offer no comfort.

Coal price

Big share float

The large share float is also a concern for me as it will flood the market with shares and the fact that the vendors are cashing out only $10m also makes me wonder why they even bother to do that as it creates a bad "signalling" effect and it is due to the pre-IPO investors.

Pre-IPO investors

There are many pre-ipo investors who bought at different prices of 16.25c, 19.50c, 22.75c and IPO investors are coming in at 32.5c. These pre-IPO investors will have a wider margin to play with and will also exit profitably even if share price moved below 32.5c after 6 months. These pre-IPO investors are currently cashing out at the IPO price to hedge their risk.


I will give it a miss and a chopped chilli rating. Of course, that is my personal opinion.  

Happy IPOing.

Tuesday, 9 October 2012

Courts Asia Limited

Courts Asia Limited ("Courts" or the "Company") registered its prospectus today. The link is here.

This was a continuation of my earlier preview post.

Company Description

The Company is a leading electrical products, IT products and Furniture retailers in Singapore and Malaysia and is offering 178m shares (60m New Shares and 118m Vendor shares) at $0.77 each for its Initial Public Offer. The Company has a strong brand equity, with more than 25 years presence in both Singapore and Malaysia. The IPO will close on 11 Oct 12 at 12pm and starts trading on 15 Oct 12.

Vendor sale
The vendors selling the shares are primarily the PE Investors and the subscribers are:
77.92m - Cornerstone Investors (about 43.8% of the offering)
14.285m - Key Mgmt CEO and CFO (about 8% of the offering)
85.795m - the balance shares via placement and public tranche where 76.895m shares will be offered via placement and 8.9m shares via public offer. 

Courts has met the new IPO guideline for the retail tranche which SGX intends to adopt even though it is not effective yet. Kudos to Courts for the early adoption. I guess the next 'best thing' it can do is to allocate more to the retail tranche should the demand be overwhelming.

There is an over-allotment issue of 17.159m shares should the demand be overwhelming. If this is triggered, it will definitely bode well for the Company as the stabilizing manager will step in should the price drops below its IPO price of $0.77.

Good market dominance

As of 2011, Courts has a market share of 9.8% in Singapore and 7.0% share in Malaysia and the number of retail outlets have gradually increased over the last 3 years.

Improving Financial Performance

In terms of financial performance, the Company has also done well over the last 3 years with Sales growing from $580m to $724m in FY2012 and Net Profit from $18m to $39m in the same period.

Courts Price Promise

Haven't heard of the Courts' Price Promise? Here you go. 

Stable Management

The CEO, COO and CFO have been with the Company for more than 15 years each. Which is probably rare in today's context. What is even better is that the CEO and CFO will collectively subscribed to about 14.285m shares at the IPO price of S$0.77. This is probably the best 'vote of confidence' for the company which investors are seeking given the PE backers are selling out.

Cornerstone investors

The cornerstone investors are:
JF Asset Management
New Silk Road Investment
Target Asset Management
Value Partners

The cornerstone investors are reputable "value investors" and not your typical hedge funds. While they are not subject to moratorium, they are definitely not the flippers and are probably attracted by the value proposition of Courts Asia. I definitely view the list of Cornerstone investors which they have lined up as A+ kind of investors.

Use of Proceeds

The Company intends to use the proceeds raised from the 60m New Shares to expand into Indonesia and for working capital purpose. I thought that is the most logical sense due to the rising middle class and wealth in Indonesia. The growth story in Indonesia is a compelling one and the ability to offer in-house credit will probably help improve the margins further.


The Company intends to pay 30% of the Group's current year profit for the half year till 31 March 2013 and full year till 31 March 2014. Assuming the net profit remained the same at $39.4m for FY 2013 and FY2014 for simplicity sake, $11.82m will be paid out. The EPS will be 7.03 Singapore Cents and the Dividend Per Share will be 30% x 7.03 = Singapore 2.11 cents. Based on the IPO price of 77 cents, the yield works out to be 2.74%. There will be upside to the yield if you believe in the continued growth story and profitability trend of Courts Asia. My only wish was that they should have included the latest financial performance in the prospectus as well as those information they shared with Cornerstone Investors.

Key Competitors

The key competitors in Singapore are Best Denki, Pertama, Challenger and Ikano. In Malaysia, they are Senheng, Elitetrax, Ikano and Best Denki.


The Company is listed at a historical PER of 10.95x. The closest listed peer is probably Challenger Technologies. Challenger is trading at a historical PER of 8.7x. Pertama Holdings which run the Harvey Norman speciality retail shop is previously listed but has since been suspended as the owner tries to take the company private. In terms of historical PER, the Company may be fairly valued. However, the market is forward looking and the future definitely 'looked brighter'. Assuming EPS grows by 25% in FY13. (I am just guessing). The implied EPS will be 8.85 Singapore cents and the forward PE will drop to 8.7x. The implied yield will be around 3.4%. 

Assuming a fair value range of 9-11x, the probable trading range will be between 80c to 97c (I am guessing).


Courts Asia is probably worth a second look for both short and medium term. For short term punters, it probably deserve at least a 2 Chilli Rating. The over-allotment and dividend will provide some downside protection and the presence of value cornerstone investors and management buying in at the IPO price will definitely bode well for longer term investors. I may consider adding some of the shares for my SRS portfolio if the price is right. 

Happy IPOing.

Sunday, 7 October 2012

Geo Energy Group (Preview)

Geo Energy Group ("Geo" or the "Company") is a coal mining specialist company based on Kalimantan, Indonesia.

Geo own and operate coal mine and sell coal and as of 31 Dec 2011 it has proven reserves of 4.2m tonnes and probable reserves of 8.3m tonnes. The Company recorded revenue of US$69m and profit of US$14.3m in FY2011 based on its audited figures.

It is interesting to know while Sakari is in the midst of being delisted, there is another coal company trying to get listed back on SGX.

I am not going to do a detailed analysis, so once again, this is a "off-the-cuff" kind of comments.

Many Coal Companies in Indonesia?

There are many coal companies in Indonesia and I have seen quite a number trying to get listed here. However, the issue about coal in Indonesia is not about its availability but the cost of extracting the coal and transporting it. Many coal pits are basically not 'viable' because it is just too costly to transport it. If the coal price moved up significantly, i think the supply of coal will also move up in tandem due to the abundance of coal supply in Indonesia and elsewhere in the region.

Declining Coal Prices?

I goggle and found this chart. Not a chart that will excite or instill a lot of investors' confidence. This article seemed to indicate that all is not well for the coal industry in Asia.

Price seemed to be trending downwards and this will not bode well for the Company. It is interesting the company choose to present a chart below from 2009 instead of a 5 year chart :P

Vendors are selling

Not exactly very exciting to see insiders cashing out at the IPO. Are they expecting IPO investors to provide a liquidity event or exit for them?

"No dividend" policy

The current trend right now is for IPO companies to pay a certain % of its profit as dividends to shareholders for current and next year. I don't think there is any intention for GEO to pay any dividends. Company seemed to be profitable but are not willing to share the profits?

Here you go. My off the cuff preview. You decide for yourself if it is worth subscribing to and i will provide a more detailed update when the prospectus is out (if it is registered).

Happy IPOing.

Thursday, 4 October 2012

Courts Asia Limited (Preview)

Courts Asia Limited ("Courts" or the "Company") was previously listed in Singapore but was privatised in mid 2007 by both Baring Private Equity and Topaz Investment Worldwide. The article is here in case you need it. At that time, both the investors valued Courts at just over S$100m. 

The Company attempted to go IPO in 2010 but withdraw its listing eventually. At that time, the investors were seeking to raise $170m through the IPO.

Courts Asia lodged its prospectus with MAS recently for a listing. This time round, its has lined up a series of Cornerstone Investors such as JF Asset Management, New Silk Road Investment, Target Asset Management and Value Partners Hong Kong.

Again, this is just a preview with "off-the-cuff" comments and "back-of-envelope" kind of computations so please bear with me if there are inaccuracies as the pricing and final prospectus is not out yet. ^o^. 

Private Equity Backed-Deal

This is similar to Amtek, where the Company was de-listed and privatised again. There are 3 ways in which a PE firm can make money through such a move. 

(1) They managed to delist the firm at cheap valuation (say 6x PE) and relist it at a higher multiple some years later (say 12x PE). (Assuming all else remains equal)

(2) The PE Firm grew the company post delisting. Changing the CEO, streamlining processes, make further strategic acquisition such that earnings or EV/EBITDA improved over the years. (This is called value-adding by PE firms and multiple expansion)

(3) A combination of (1) and (2) above. :-P what else are you expecting.

Vendor sale

Don't be mistaken that a PE backed deal is always bad. A PE fund usually have a fixed term of life, so the Fund Manager needs to realise its investment for its investors and listing is one of the options available. The other will be trade sale. As such, you will see always see a vendor sale from a PE backed deal.

Cornerstone Investors

However, the Company has "cleverly" lined up a series of public market fund managers to act as cornerstone for its IPO to demonstrate confidence in its stock. Shrewd move! However, these are not fly by night cornerstone investors, so they must have seen certain merits to invest in Courts Asia.

PE investors will continue to hold a chunk of the Company post IPO and it really doesn't make much sense to list the company only to have its share price tanked.


In this tough retail business, you need scale and this is what you see in Courts Asia. Though i am not a fan of Courts Asia outlet, you can visit the mega store in Tampines to see for yourself whether you like the concept. I am sure you have bought at least one item from Courts before. 

In my view, the scale allows the Company to make cheap bulk purchases but part the "cream" is also from the interest earned through the "hire-purchase" plans which some customers like. 

Q&A time: Who prefer to pay by credit? Singaporeans or Malaysians?   


This seems to be a standard feature in IPOs nowadays. It was not common last time but i like it. Hahaha. The company intends to distribute about 30% of its profit for FY13 and FY14. I can't compute the yield as i don't have the pricing details, contrary to what some of you may believe. hahaha :P

Financial Performance

Actually i quite like what i am seeing. Increasing revenue and profit trends for the last 3 years!

The answer to the Q&A above is: Consumers in Malaysia.

Probably there are so many interest-free credit card installments plans here in just doesn't make sense for Courts Asia anyway.  

Conclusion: Without the final pricing, i don't know what the valuation is to compare it to Pertama Holdings (a smaller competitor listed here also better known as Harvey Norman) but the business model is simple and straightforward. So check back again when the prospectus is registered. Alternatively, if you have the offering statistics, you can email to Mr.IPO at 

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