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Monday, 23 April 2012

Starland Holdings Limited

Starland Holdings Limited ("Starland" or "Company") is placing out 22.2m shares at $0.22 each via placement for a Catalist listing. Starland is a property developer for quality integrated residential and commercial properties in the PRC. The IPO will end on 25 April at 12pm. The market cap will be $31.84 million based on the post placement share cap of 144.733m shares.

This will just be for records only and i will not attempt to find a 'fair value' for this counter since there are no public tranche and i have not attempted to dissect its past financial performances.

The properties being developed are concentrated around the city of Chong Qing which is currently under political spotlight due to downfall of Bo Xi Lai. 

I will avoid this counter for the following reasons:
1. China property market still in the doldrums;
2. The company is too small;
3.  The city of Chongqing is currently under political turmoil, not sure if any fallout will impact this company.
4. There are better and more established developers around. This company is just one of the many small ones.

Thursday, 19 April 2012

Global Premium Hotels Limited

Global Premium Hotels Limited ("GPH" or "Company") is offering 13m shares for the public and 437m via placement at $0.26 each. The IPO will close on 24 April at 12pm. The Company is a hotel operator and operates under the "Fragrance" or "Parc Sovereign" brands. 

Pro-forma revenue for FY2010 was $44.2m and net profit was $19.9m. For the 9 months in FY2011, the revenue was $38.9m and the net profit was $17.3m. The company intends to distribute at least 80% of its net profit after tax for FY2012. The Company intends to expand its rooms and into the Asia Pacific region in future under that 2 brands. My personal opinion for the Group will be for it to move up the value chain and create more Parc Sovereign hotels. 

The post IPO number of shares is 1 billion and the EPS using the enlarged share cap for 9 months FY2011 is Singapore 1.66 cents. Assuming the occupancy rate remains the same and we pro-rate it to the full year, the EPS will be around Singapore 2.21 cents. That translate into a listing PER of around 11.76x. The NAV per share is around 28.97c.  The market cap is $260m based on the IPO price.

With visitors rate continue to remain robust and assuming the average occupancy rates remain the same, the net profit after tax will be around $22m. The dividend payout will be 80% x $22m = $17.6m. Dividend per share = Singapore 1.76 cents for FY2012. That translate into a yield of 6.7%. This will definitely be attractive to investors who wants a decent return for their cash. It is a pity this 80% payout is only for FY2012. The intent after FY2012 was not stated. 

The Company is basically a spin-off of the hotel operations from the Fragrance Group. The closest comparable listed on SGX are probably Amara, HPL, OUE, Hotel Properties Ltd etc but they are trading at very wide ranging PE multiples. Looking at the current IPO market sentiment, investors who want to stag this counter could probably do so. I will give it a 2 chilli rating for its high yield for 2012 and a fair trading range of between 29 cents to 35 cents based on 13-16x FY2011 EPS. 

The two things that i don't really like is the "spin-off story" and that OCBC being the placement/underwriter. The track record by OCBC for IPO isn't great.  Just for the records, the 26c price was at the lower end of the 25-28c book building by OCBC a few weeks back. Happy IPOing.

Sunday, 8 April 2012

Civmec Limited

Civmec Limited ("Civmec" or "Company") is offering 101m shares (51m new shares and 50m vendor shares) at $0.40 each. 99m shares will be via placement and 2m shares will be for the public. The offer will close on 11 April at 12 pm and starts trading on 13 April.

Civmec is an Australian-based integrated multi-disciplinary construction and heavy engineering services provider to the oil and gas, mining and other industries. The Company is raising IPO proceeds to build a bigger premises and for working capital. It is interesting to note that an Australian company has chose to list here instead of ASX.

For the Financial Year 2011, Civmec generated revenue of S$61m and a net profit of S$7.523m. There is a translation gain of S$1.334m and that resulted in a higher profit of $8.856m. Excluding the translation gain and based on the enlarged share capital of 501m shares, the EPS is 1.5 Singapore cents and that translate into a historical PE of 26.6x. Assuming the service agreements are in place, the listing PE ratio will increase to around 28x. (wow!).

Unaudited Q1 2012 showed a significant increase in revenue of $43.699m (increase of 40%) and net profit of $5.189m (increase of 431%). As you can see, the revenue and earnings can be very lumpy and without being privy to additional information, it will be tough to forecast what the 2012 earnings will look like. I will attempt to "smoothen" the earnings from another angle. The net margins for FP2010 is about 14% and FY2011 is 12.3%. It is about 11.9% for Q1 2012. According to the prospectus page 136, the FY2012 is expected to derive $102m worth of orders. If i used a net margin of 12%, that means the net profit for FY12 will be around S$12.24m. If i assume FY2011 profit will double, the net profit will be $15m. 

With the net profit range of $12-15m (i am just guessing) for FY2012, the EPS will range from 2.4 to 3 Singapore cents. That translate into a forward PE of 13-16x which in my view, will be more than fairly valued. At the IPO price of 40 cents, it is issued at a large premium to its NAV of 12.7 cents. The market cap is approximately S$200.4 million.

There are 2 batches of pre-IPO investors. The first batch (Ang Kong Hua and Foo Siang Guan) got in at 11.8 cents (3.3x return at IPO price) and the second batch got in at 23.4 cents (1.7x return at IPO price). Most of the pre-IPO investors are the "who's who"on the Singapore corporate scene. Just need to google it and you can find out who they are. As usual, what i do not like to see are pre-IPO investors cashing out at the IPO price. 

Conclusion:  While the construction and engineering firm is in a more resilient sector of serving the Oil and Gas companies, my gut feel is that it is already more than fairly priced at the IPO price. However, with the current good sentiments and low public tranche, the share price could possibly shoot up in the near term but it is a hit and run counter for me. I will probably give it a miss given the high valuation and save my $1 application fee given the low probability of getting it. 

Saturday, 7 April 2012

Bumitama Agri Ltd

Bumitama Agri Ltd ("Bumitama" or "Company") is offering 297.57m shares at $0.745 each in a Global Offering with 124.8m shares for Cornerstone, 157.7m for placement and 15m shares for the public. The IPO will close on 10 April 2012 at 12pm and trading will start on 12 April.

The Company has significant palm oil plantations in Indonesia. Revenue grew from US$138m in FY2009 to US$320m in FY2011 while adjusted net profit to shareholders rose from US$24m to US$67m over the same period.  Based on the prospectus, the trees that it currently have are pretty young and only 28% has reached its peak production age. This means that in the coming years, as the existing palm trees mature and coupled with its cultivation plan of existing land bank, the production capacity will increase. This will bode well for its future growth as long as the prices of CPO and the demand for it continues to remain healthy.

 IOI corporation, one of the world's largest palm oil players with its plantations in Malaysia is a controlling shareholder in Bumi. IOI is listed in Malaysia and has a market cap of around US$11 billion. Bumi's market cap is approximately US$1 billion.

It is interesting to note that the cornerstone investors made up of mainly fund managers (Hwang, Target Asset Management, Value Partners) and Wii Pte Ltd (wholly owned by Wilmar International, another palm oil player listed in Singapore with a market cap of US$24.4 billion). Another cornerstone investor, Asdew Acquisitions is owned by Alan Wang (a deal maker previously from Kim Eng). Most of the cornerstone investors will subscribe for >5% of the global offering. It is comforting to note that Wilmar has also given its vote of confidence. However, do note that none of the cornerstone investors are subject to any lock up. The cornerstone investors will subscribe up to 124.833m shares or approximately 42% of the issue size.

Based on the enlarged share capital, the EPS for the year ended 31 Dec 2011 was US 4.94 cents and that translate to about Singapore 6.22 cents. This means at the IPO price, the Company is priced at 11.98x historical PER.  If assuming the EPS continues to grow at 25% (i didnt strip out the fair value change due to lack of information), the forward EPS will be Singapore 7.78 cents. h

Bumitama will be one of the smallest listed palm oil companies. The current comparable companies listed in Singapore and Malaysia are trading at a historical PE range of 6-16x, and a forward PE range of 10-17x. The median forward PE is 14.1x. IOI is trading at 16.8x historical and 14.8x forward. 

Assuming a lower range of 11-13x forward PE for Bumitama, the fair value will be between 86 cents to 101 cents and that represents a good upside for IPO investors. The larger public tranche of 12m shares will mean that small investors will get a better chance of getting this IPO. 

It was reported in the papers that the IPO was so well received here that its roadshow in London was cancelled.  We shall see if that is indeed true upon its listing. I will give it a 2 chilli rating. 

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