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Tuesday, 31 July 2012

IPO Performance Table

Dear readers,

I am pretty heartened to receive email queries on why my 'calculations' on the performance table seemed to be wrong and asked if i have either received special commission rates or have calculated wrongly. Let me just clarify that:

  1. The commission i pay is minimum $40 or 0.4%. The reason why i pay $40 commission is because i prefer to maintain some goodwill with some brokers and route some IPO trades through them. 
  2. For other times when i trade online, the commision may be minimum $28 or 0.275% etc. 
  3. Rather than tracking the commission separately, my table records cost that includes commission and proceeds that excludes commission. As such, the cost price per share and sale price per share are derived figures. Cost price per share = (Investment cost plus placement commission if any)/no. of shares. Sale price per share = (Gross proceeds less commission)/no. of shares.
Hope the above clarifies.

I am pleasantly surprised how detailed readers have been. :) and thanks for the feedback.

Just for completeness sake, Saxo is charging 0.15% but they don't amalgamate trades and cannot trade pre-open and pre-close. Standard Chartered Bank has no minimum commission and charges quite a low commission.

Pick one that meets your needs. :)

Sunday, 29 July 2012

Streamlining of Blogs

Dear readers,

I am going to streamline my blogs so that it will be easier for everyone to follow.

As such, with effect from today, the previous 2y capital fund will be redesignate as a Real Estate Fund where i will share my thoughts, views and experiences on real estate investments in Singapore.

Let me summarise the various blogs and its purposes:

Singapore IPOs blog - views on new listings in Singapore.

Starfish SRS Fund - views on long term investments to create a portfolio generating passive income for retirement.

Ninja Master Fund - views on the stock markets and on specific stocks and shares listed in Singapore and elsewhere. May also include views on forex, M&A and any other trivial matters. It's a catch all blog :-P

2Y Real Estate Fund - views on the real estate market market and how to generate passive income and pursue financial freedom from it. I will share some personal experiences here. :-)

SQ travelogue - snippets of the places which i have been

If any of the blogs interest you, please subscribe to the emails or feeds directly so that you are only informed of topics that interest you. Hope that by sharing my experiences, it will help both you and me in our pursuit of financial freedom.

Yours truly.

Saturday, 28 July 2012

Sysma Holdings Limited

Sysma Holdings Limited ("Sysma" or "Company") is engaged in providing building construction services to the private sector in Singapore. The Company believes it is one of the leader in high-end landed property construction business.

Sysma is offering 18m shares at $0.28 each 
via Placement for a Catalist listing. There is no public tranche. The offer will end on 1 August 5pm and starts trading on 3 Aug.

Revenue for the Company hovers between $43m and $54m for FY2009 to FY2011 and net profit after tax is between $3.6m to $5.3m during the same period. The Company intends to distribute at least 30% of its net profit for FY2012 and FY2013 as dividends. As of 30 April 2012, the order book stands at $59.5m

The Company is listing at a historical PER of 5.51 (based on enlarged share cap and assuming service agreement is in place). The market cap is $26.6m

I have no further comments on this company. It is a small cap company and in a very niche market in land scarce Singapore. While the valuation is cheap, i am not sure if the business is scalable. I would have given it a one chilli rating - apply only if you like it but since there is no public tranche, the ratings would not have made any difference. 

Performance of my IPO tikams in 2012

Since this is an IPO blog, let me share the "performance" for my IPO "tikams" in 2012 just for fun and my thinking behind IPOs plus some "lessons"on it. hahaha.

I started playing IPOs during my university days and on the day i turn 21, i went to the brokerage firm to open an account. It was more tedious back then. Need to first open a CDP account then to your brokerage firm.

During this period, I had my fair share of lessons, paid the school fees for the wrong picks but reaping the rewards when lady luck shines on me with a "$1"bet. When i was much younger, i even had 4 accounts just to play "tikam" at the ATM machines.... .

My 'worst' ever IPO loss was in March last year when the tsunami hit and i was allocated a lot of Hutchinson Port Shares by the underwriting bank and from the ATM machine. It was a combination of bad luck because you have to indicate your orders very early on for placement shares (way before the Tsunami struck), and when the company and underwriter decided to proceed, you know you are being "screwed" (pardon my language) as they unload whatever shares you have indicated on you. Similarly for the ATM tranche, you get what you applied for! In addition, a weakening USD against SGD meant i had a triple whammy. 


I was allocated 87 lots from both the placement and public tranche and you know that's it! Look at the share price performance above. The thing about me is when i know i have made a mistake, i cut my losses and move on. I cut my losses within the first week and realised a 5 figure loss. Imagine if i had not done that, my losses will be 5x of it when share price dropped 50%.

Lesson 1 - Don't ever think the underwriter or broker is on your side.

When times are good, they give you 5 lots when you indicate 50 lots. When times are bad, they give you 50 lots and ask if you want some more. You should be concerned if your broker suddenly asked if you want placement shares one day if he doesn't have that habit of asking you. Similarly for the ATM, they give you a pathetic few lots when the IPO is hot. I am quite glad that SGX is looking at way to increase the retail tranche for IPOs that are hot. Its time they do something!

Lesson 2 - Pay the school fees and move on

When you know you have made a mistake either due to bad luck or analysis, pay the school fees and move on. Don't hope the share price will come back up above water.

Lesson 3 - Always be wary of IPO companies.

You may find it contradicting when i asked you to be wary. The reason is because i have seen too many tricks that companies and underwriters do to boost the IPO valuation. The whole reason why Companies issue prospectus in the first place is to cover their backside. They list out tons of risk factors and assumptions such that you cannot sue them if the companies failed to perform after listing because you are expected to read the prospectus and the risk factors listed in it! Why do you think listing prospectus are getting thicker and thicker such that you can carry weights with them. They are also basically useless because they do not tell you about future projections and profit estimates. The reasons why they play tricks is because they will want to report the most profits in the year prior to listing so that they can achieve the highest IPO valuation. Some of the common tricks will be to defer prior year sale into current year to show an increasing profit trend for listing or not recognising or capitalizing the expenses incurred etc etc! There are 101 tricks to help boost profits, so always read prospectus with a huge pinch of salt.

For many such reasons, i usually will not consider IPOs for long term investments as I need them to prove to me their credibility and track record. As you can see, many Chinese IPOs in Singapore flunk post listing because the accounting holes are getting too big to cover over time!

Lesson 4 - IPOs depend a lot on sentiments and institutional demand

IPOs depend greatly on sentiments. Hence you can see why there is a drought of IPOs this year until July. Where visits to my blog suddenly revived as well. So be aware as sentiments can quickly turn sour!

Lesson 5 - Keep a good records of all your investments.

If you want to be a serious investor or trading, it is essential you starting keeping a good records.

Ok so much for now. My IPO performances this year as promised net of fees and expenses. Not really a lot. $3,223. A 4-D number for you perhaps? hahaha. Happy IPOing.

2012 IPOs todate

Thursday, 26 July 2012

CLSA report on IHH Berhad

Dear readers,

I have signed up for dropbox and created a link so that you can download research reports.

Please find the CLSA report on IHH. (please tell me if the link works).

In addition, if you want to support this website, there are a few things you can do.

1. Like the Singapore facebook page

2.  Sign up for dropbox using this link. (in case the link doesn't work so that i can have more free public storage space.

Thanks in advance.

Tuesday, 24 July 2012

Sincap Group Limited

This is for information only. No public tranche was offered.

Sincap Group Limited ("Sincap" or "Company") is in the trading of alumina and thermal coal, as well as in the mining and sale of gypsum in China.

The Company is selling 32.5m placement shares at $0.20 each of which 25.5m are new shares and 7m are vendor shares. The listing will be on the Catalist. The offer closed on 23 July and will be listed on 25 July 2012.

Based on the enlarged share capital and IPO price and assuming the service agreement was in place, the company will be listing at a historical PER of 58x. wow... and the market cap will be $35.1m. Since i am not privy to the 2012 projections, i will not attempt to determine its fair value. The company will be tightly controlled with a free float of 18.5%.

The directors intend to propose a dividend of at least 50% of its net profit for FY2012. Assuming the profit level remained the same, the profit in SGD will be around $810,000. Since they have raised SGD5.1m from the public, they should have the means to pay out $810k of which 81.5% will go to the founders of the company. Investors better hope the profit for 2012 remain low?!!?

I don't really fancy the IPO for the following biased reasons:

1. Small cap China-based mining firm.
2. Audited by non big 4 audit firm.
3. Expensive valuation.

My rating: Chopped Chilli.

Monday, 23 July 2012

Reliance's GTI Trust withdraws $1 billion Singapore IPO

     July 20 (Bloomberg) -- Global Telecommunications Infrastructure Trust, the undersea cable unit of Reliance Communications Ltd., said it postponed a planned $1 billion initial share sale in Singapore.
     The company will "await supportive market conditions and easing of prevailing global uncertainties to proceed with the offering at an appropriate time in the future," it said in a statement. The trust was planning to sell as many as 758 million shares at $1.09 to $1.32 apiece, two people familiar with the matter had told Bloomberg earlier.
     The initial public offering is the largest to be scrapped in Singapore since Manchester United delayed its plans to raise as much as $1 billion there last year. Manchester United this month filed an application for listing in the U.S. instead. GTI Trust had offered a yield of as much as 11.5 percent as it sought to attract investors in Singapore's weakest IPO market since 2009.
     Reliance Communications, controlled by Indian billionaire Anil Ambani, is attempting to sell assets to reduce net debt that stood at 358 billion rupees ($6.5 billion) in March. GTI Trust owns four subsea cable systems that carry Internet traffic and data around the globe, according to a prospectus filed in Singapore on July 5.
     Companies have raised $824 million in IPOs in Singapore this year, compared with almost $7 billion in the first half of
2011 alone, data compiled by Bloomberg show. In April, M&L Hospitality Trusts scrapped a plan to raise as much as $368 million in Singapore because of weak demand. The next month, Samvardhana Motherson Finance Ltd., an auto parts company, withdrew a $309 million IPO in India.
     Reliance Communications shares fell 0.3 percent to 63.75 rupees at close in Mumbai today. They've declined 9 percent this year, compared with an 11 percent gain in the benchmark Sensitive Index.
     Deutsche Bank AG, DBS Group Holdings Ltd., Industrial & Commercial Bank of China Ltd. and Standard Chartered Plc are arrangers to the GTI Trust offering.

Sunday, 22 July 2012

Ascendas Hospitality Trust

Ascendas Hospitality Trust ("AHT" or "Company") is offering 437,325,000 stapled securities in its IPO at $0.88. 355.143m stapled securities will be via placement and 82.182m via public offering. The market cap of AHT will be around S$994.699m. The reason why it is called "stapled" is because it consists of 2 components, a REIT and a Business Trust. It is important to note the difference between a REIT and a Business Trust. You can read some of the differences here or there

To me, the most important reason why I prefer REIT over Business Trust is because a REIT needs to payout 90% of its income as distributions to its unitholders whereas a Business Trust has no such requirement. As such, a Business Trust can cut its payout ratio drastically after its IPO. In addition, a REIT has certain gearing limit to protect unitholders whereas there are no such limit being imposed on a Business Trust to safeguard the interest of unitholders.  However, it is interesting to note on page 7 of the prospectus that the distribution policy of AHT is to distribute 100% of its distributable income up till 31 March 2014 and at least 90% thereafter. The distributions will be made on a semi-annual basis for the periods ending 31 March and 30 Sep.  

Business Trust is able to pay "distributable cash" out of its operations and does not need to be 'profitable'. As such you can see on page 47-48 of the prospectus that while AHT is expected to make a net loss of 31.5m for FY2013 and a net income of only 11.38m in FY2014, it has forecasted distributable income of $32m and $57m for FY 2013 and FY 2014 respectively as it adds back all the non-cash items such as depreciation and amortization.

The portfolio of income producing real estate is predominantly for hospitality purposes across Asia (China, Japan), Australia and New Zealand. The size of the IPO was reduced after it removed a property in Korea due to legal issues. According to the prospectus, the projected annualised yield for FY2013 is 7.9% and 8.0% for FY 2014. The IPO will close at 12pm on 24 July and starts trading on 27 July at 2pm.

The Company has a strategic collaboration with Accor for technical expertise and subject to the terms of the agreement, Accor will grant AHT the first right of refusal for any properties put up for sale that are wholly owned by Accor.

Structure of AHT

Not sure if i am reading this correctly but i definitely don't like the current structure where most hotels are parked under the "business trust" although if i am the Manager, i will also try to do that as it will give me more flexibility. In addition, at least 40% of the management fee can be paid in the form of Stapled Securities....hmmm... another tool to play with in case the yield target cannot be met?

 There will be an over-allotment option of up till 73.403m stapled securities which will be used for stabilisation exercise post IPO.

Cornerstone investors

One hedge fund called Splendid Asia Macro Fund ($10m), Singapore Press Holdings ($15m) and Accor ($49.5m). What a weird combination as i don't think the hedge fund will be long term investor, of course i may be wrong.

Other listed peers and Fair value

Ascendas REIT is trading at 6.1%, Ascendas India Trust at 7.5%.  Ascott REIT is trading at 7.2% and CDL Hospitality Trust at 5.8%. Since AHT is more a business trust than a REIT, i will try to call a spade a spade. It shouldn't be trading at the yields of a REIT but more at the yields of a Business Trust. Personally i am looking at exposure into Hospitality Trust but this is certainly not a structure that i like and the fact that the Sponsor is waiving its entitlement to price the deal at a higher yield doesn't help. In addition, most business trusts in Singapore have also not performed well post listing.

At 7.9%, i think AHT is fairly valued with limited upside. Assuming a fair value trading range of between 7.5% to 8.5% yield, the counter will trade between 82-93 cents.  I will give it a one chilli rating and probably would have given it a miss....but unfortunately i am already allocated some under the placement tranche. I certainly hope AHT will not be the culprit that "closed" the IPO window.

My rating for Ascendas Hospitality Trust

IHH Healthcare Berhad and JB Foods Limited Balloting Results

IHH Healthcare Berhad announced that its balloting would take place on 19 July 2012 instead of 21 July 2012 instead of on 23 July 2012. The balloting results for the public tranche was as follows:

The probability of getting this is pretty high (more than 50% chance if you apply). The company will start trading on 25 July 2012.

The balloting results for JB Foods Limited are as follows below and will start trading on 23 July 2012:

My IPO luck is pretty good this July but we shall see if that is a good or bad thing next week considering the weakness in US and European markets. Good luck to all who have gotten the shares.

Wednesday, 18 July 2012

Guang Chong Berhad and JB Foods Limited

You may have read the article on Monday Straits Times that Guan Chong Berhad is seeking a dual listing on SGX. Interestingly, Guan Chong is related to JB Foods Limited through its patriarch. Guan Chong is currently the market leader that is mentioned in JB Foods Limited prospectus. Accordingly to CapitalIQ, Guan Chong is trading at 7.4x FY2012 PE.  If we apply the same matrix to JB Foods Limited, JB Foods should have a fair market value of $0.45. An upside of 50%! The share price of Guan Chong over the last 5 years somewhat indicate that JB Foods Limited may have a good future ahead! Happy IPOing!

Sunday, 15 July 2012

JB Foods Limited

JB Foods Limited ("JB Foods" or the "Company") was founded in 1980s and is today, one of the major cocoa ingredient producers in Malaysia with a production capacity of 60,000 tonnes each year. According to the prospectus, it has a 13.3% market share in terms of cocoa revenue in Malaysia.

Its main businesses are the sale of cocoa ingredients products and is majority driven by sale of Cocoa powder and Cocoa butter.

JB Foods is offering up to 100m shares for the IPO of which 84m are new shares and the rest vendor. 3m shares will be for the public and 97m shares via placement. The IPO price is $0.30 each. The IPO will close on 19 July 2012 at 12pm and starts trading on 23 July 2012. (For those still waiting for the IHH Healthcare IPO proceeds to come back, sorry... not in time for you).

The Company operated at 98.4% of its production capacity in FY2011 and intend to increase it production capacity over the next 2 years from 60,000 tonnes to 85,000 tonnes. It has also entered into a call option to purchase 2 facilities in Indonesia to be completed in second half of 2013.

Financials performance over the last 3 years.
For FY2012, the Directors intend to recommend and distribute not less than 30% of its audited combined net profit attributable to shareholders as dividends.

Revenue for the Company grew from MYR 386m in FY 2009 to MYR 690m in FY2011 and profit after tax grew from MYR 24.2m to MYR 51m in the same period. Based on post IPO share capital of 400m shares, the EPS grew from 6.1 sen to 12.8 sen. Based on today's exchange rate of 1 Ringgit to 0.3959 Singapore Dollar, the EPS for FY2011 was Singapore 5.06 cents.That translate into a historical PER of 5.92x. Very decently priced considering that the demand for "Malaysian companies"is currently basking in the limelight following the IPOs of FELDA and IHH.

The market cap for the Company post listing will be S$120m. The only thing you may want to note is that post-IPO, majority of the shares (75%) will be held by JBC Group and ECOM. As such,liquidity and interest may fall once the initial euphoria is over unless they are able to continue attracting investors into the company.

Other listed peers

One listed peer on SGX will be Petra Food Limited. For FY2011, Petra's revenue was S$2.1 billion and the net profit after tax was S$80.2m. Petra has a market cap of $1.497b versus $120m for JB Foods. Petra is trading at a historical PER of around 19.5x and a forward PE of 17x. Interestingly, when Petra Food was listed in 2004, its market cap was only S$262.8m. The 5 year share price chart of Petra below for interest sake.

Fair value

Personally, i think this company is priced to sell. Assuming the profits grow 20% (just guessing), the EPS will be 5.06 x 1.2 = Singapore 6.08 cents. Assuming a fair market value of 8-10x (big discount from Petra's 17x due to its smaller size), the fair value should be around Singapore 48 to 60 cents. The dividend payout of 30% will imply a dividend yield of 6.08% for FY2012.

Conclusion - Hoot Ah! 

Give that the IPO of the JB Foods is attractively priced with upside potential, dividend yield and positive market sentiments, i will give it a 3 chillis rating under the new rating system. As the float for the public is only 3m shares, it will only make economic sense if you managed to get at least 3 lots and that will usually be given to investors who apply for at least 50 lots (i am guessing). Happy IPOing.

Saturday, 14 July 2012

New IPO chillis ratings

To celebrate the launch of the facebook page, the chilly ratings for IPOs is  revised as follows for IPOs launched after today:

The ratings above is just a tongue-in-cheek and is meant for short term indication only.  How IPOs perform in the short run depends greatly on market sentiments and perceived prospects. In the long run, many events post listing render the ratings useless. I have refreshed the definitions on 21 April 2018 to include the likely opening price on the first day.

Chopped Chilli  - Save your $2 for a good cup of coffee or a plate of chicken rice if you can still find it. Likely opening price: Around or below IPO price

1 Chilli -  You are in the mood for love or adventure and feel like donating $2 to the bank or buy a big sweep ticket. Likely opening price: 0% to 10% upside

2 Chillis - Hit and run. Your $2 can probably buy you a month's worth of mee pok with chilli.  Likely opening price: 10% to 20% upside

3 Chillis - This IPO is hot. Your $2 is probably going to buy you a romantic dinner for 2 with a bottle of red wine included. Likely opening price: More than 20% upside

Singapore IPOs facebook page is up!

To keep up with time, Singapore IPOs blog has launched its Facebook page at

Please click "Like" to show your support if this blog has helped you in one way or another! 

A "like" will go a long way in keeping the momentum going. hahaha..

Friday, 13 July 2012

IHH Healthcare Berhad - Finalize its price.

IHH Healthcare Berhad finalized its IPO price at RM2.80 with strong demand from Institutions. With Ringgit at record lows against SGD, the IPO price in SGD is fixed at $1.113 per share. The company also over alloted 169m shares and these shares will be used to stablize the market should price fall below the IPO price. The manager usually deploy this tactic when the demand is 'extra hot' and this stabilization exercise will continue for the earlier of 30 days or when the 169,429,366 shares have been bought back.

This is a very interesting IPO as the shares are fully fungible and the Manager can perform stabilization on either the Bursa or the SGX. Let's see which 'side of the causeway' performs better on that day. The indicative time table is below. You can check your balloting results on 23 July and trading will commence on 25 July.

Tuesday, 10 July 2012

2012 IPOs performance to date.

Please find below the performances of the 7 IPOs in Singapore. Only a pathetic seven companies managed to list this year!
The results showed that as of todate, 5 are still above water and 2 have gone below its listing price.  In addition, the majority of the IPOs are "catalist" listings.

Neo Group IPO balloting results

Neo Group announced its balloting results.

Based on my past experience, the 'highest chances' usually fall between applicants who apply for between 50,000 to  100,000 shares.  In addition, it may not be worth the effort if you get only one lot. Imagine you get one lot and your minimum commission is $30. You will need to sell above $0.36 in order to make more than your broker! And 6 cents already represent a 20% increase from the IPO price. 

Hmm... today is be my lucky day :)

Sunday, 8 July 2012

Singapore IPOs blog is 5 years old!

How time flies! It has been 5 years since i started the Singapore IPOs blog to cover companies listing on the Singapore Exchange on 7 July 2007! I must say it takes a lot of time and effort for a part time blogger like me to cover all the listings but it has been fun journey. 

I hope to have some time to set up 2 more blogs in the coming weeks:

1. Starfish Retirement Fund at

This blog is about sharing my experience investing for retirement making use of the supplementary retirement scheme in Singapore. SRS fund will be investing for the long term (months/years) and some of the investment criteria will be companies offering good yield, fundamentals and long term prospects. 

2.  Ninja Master Fund at 

This blog is about trading the market with both long and/or short positions using stocks and futures. It is a short to medium term "hedge fund" that is using my personal money and hopefully share my lessons and mistakes with you along the way.

2ycapital will continue to blog about topics that doesn't fall into either categories. Hope you will find the blogs useful.

Happy investing & trading & punting (IPO?).

Wednesday, 4 July 2012

Neo Group Limited

Neo Group Limited ("Neo" or "Company) is offering 22m New Shares at $0.30 each comprising 1m shares for public and 21m shares via placement. The IPO closes on 9 July at 12pm.

The Company is basically a food caterer and was ranked by Euromonitor as the no.1 events caterer in Singapore. 

It has 3 brands, namely "Neo Garden Catering", "Orange Clove" and "Deli Hub". It also operates 16 food chain outlets as at 2 July 2012 under the "Umisushi" brand. Revenue grew from S$22.7m in FY 2010 to $38.4m in FY 2012 and net profit grew from $2.2m to $5.4m in the same period. EPS based on post-IPO shares and assuming the service agreement was in place will be around 3.10 Singapore cents. That translate into a historical PER of around 9.7x.  Based on the IPO price, the market cap is around $43.2m 

The Company intends to distribute not less than 60% of its net profits attributable to shareholders in each of FY2013, FY2014 and FY2015. (wow. that is a serious undertaking! first time i see a company provides "bao jiak" dividends for 3 years). It is also interesting to note that 84.72% of the company will be locked up for 1 years and with 'reducing balance' being locked up over 3 years. This is quite innovative indeed to demonstrate confidence in the company. I remember reading about the CEO's success story in the newspaper, quite an impressive story for a 'rags-to-riches' millionaire.  

Assuming the EPS remained the same and with a dividend payout of 60%, the dividend per share will be around 1.86 Singapore cents. An investment of 1,000 shares at $0.30 will imply a yield of around 6.2%. That is very decent indeed if the business remains "constant" for the next 3 years.

The listed competitors includes Select Group Limited (currently trading at 2011 PE of around 8.9x and unlisted Kriston Food and Beverage which has filed for bankruptcy recently. I would rate Neo Group as fairly valued and even though it is a small cap company, the 6.2% yield (assuming the company continues to generate the same level of profits) is indeed attractive. With limited number of shares being issued and with majority of it tightly controlled, this stock should do well on its debut and may attract long term investors seeking for good yields. A "buy" for me and 2 chillis rating despite its small cap status.  

IHH Healthcare Berhad

IHH Healthcare Berhad ("Company"or "IHH") will be one of the largest listed private healthcare providers in the world based on market capitalisation upon listing. It is a leading healthcare provider in Singapore, Malaysia and Turkey. It also have operations and investments in PRC, India, Hong Kong, Vietnam, Macedonia and Brunei. Based on the prospectus, it has over 4,900 licensed beds in 30 hospitals and over 3,300 new beds in the pipeline over the next 5 years.

IHH is going for a dual listing on both Singapore and KL stock exchanges but its primary listing will be on the main market of Bursa Securities and is subjected to Malaysian laws and regulations. You may want to take note that shareholders above 5% must report its shareholding within 7 days and as long as it holds above 5%, it must make a declaration whenever it deal in the securities (regardless of whether it is significant or not).

IHH is offering up to 2,234.65m shares of which 1,800m are new shares and 434.65m are vendor shares. There are 4 placement tranches, Institutional, Malaysia public offering, Singapore offering and Cornerstone offering. Singapore will get about 2% of the shares on offer.

27.17% of the company will be up for sale of which the cornerstone investors will take up 16.87%. The cornerstone investors are:

1. AIA Group Limited’s subsidiaries
2. Blackrock Investment Management, LLC
3. Capital Group International, Inc’s wholly-owned subsidiaries:
4. Capital Research Global Investors
5. CIMB-Principal Asset Management Berhad
6. CMY Capital Markets Sdn Bhd
7. Eastspring Investments Berhad
8. Employees Provident Fund Board
9. Fullerton Fund Management Company Ltd
10. The Government of Singapore Investment Corporation Pte Ltd
11. HPL Investers Pte Ltd and Como Holdings Inc.
12. Hwang Investment Management Berhad
13. International Finance Corporation
14. JF Asset Management Limited
15. Keck Seng (Malaysia) Berhad and Keck Seng Investments (Hong Kong)
16. Kencana Capital Sdn Bhd
17. Kuwait Investment Authority
18. Lembaga Tabung Haji
19. Mezzanine Equities N.V.
20. Newton Investment Management Limited
21. Och-Ziff Capital Management Group’s affiliates
22. Permodalan Nasional Berhad

The cornerstone investors must hold the shares for at least 6 months.

The shares are offered at $1.18 per share and 90% of the proceeds raised will be used to pay off bank loans.

For the year ended 31 Dec 2011, the company made a pro-forma profit of USD 41.4m from sales of over USD 1.6 billion. For the 3 months ended 31 March 12, the sales and net profit were USD 463m and USD 67.8m respectively.  Based on the prospectus, the EPS using the enlarged share capital was US 0.96 cents and US 0.64 cents for the year 2011 and 3 months to 2012 respectively. This translate into a historical listing PER of 93x for FY2011. Assuming a pro-rated EPS for FY2012, the EPS in MYR will be 8.16 cens and the PER will be around 35x. The net assets per share is around RM2.04 versus its listing price of RM2.85. The offer will close on July 11 at 5pm Singapore time and the final price determined on July 12. Balloting will be done on July 23 and trading will commence on July 25. I guess because it is not a straightfoward listing, hence the reasons for holding on to the cash for more than 12 days after IPO closes. IHH is expected to have a market cap of RM 23 billion or Singapore 9.5 billion. You may also be interested to know at the Company is still searching for their group CFO, hence you may submit your resume if you qualify for the post...  

It is interesting to note that the book building has yet to commence and the final price will be determined on July 12. If the FELDA IPO is anything to go by, it is probably that they will adopt the same method where they did not price at the upper end of the book building price but leave some 'meat' for retail investors. Probably the Malaysian election is approaching soon? FELDA made a strong debut last week. As of today, the share price of FELDA is 20% higher than its IPO price.

According to a CNA report, the shares will be fully fungible between the Singapore and Malaysian bourses and that IHH will be the number 1 healthcare service provider in 3-5 years, overtaking HCA listed on NYSE. 

Despite seeing merits in this IPO, I have to admit that the valuation at which the IPO is launched is very expensive and on the high side. Its pipeline of beds and penetration of the Turkish markets does somewhat suggest that the company is still growing at a rapid pace. Perhaps this is what attracted 22 cornerstone investors to this deal and the list do indicate that the sophisticated investors like this company and the story behind it. 

Investors here will remember the hostile takeover of Parkway between Khazanah and Fortis  just 2 years ago. In this regard, Khazanah will not be willing to list this at a loss. I found an interesting write up on IHH by another blogger here.

Anyway, my conclusion is this. This stock is expensive but you probably wont lose money if your intention is to buy and sell within the first 6 months. The election is too near for Malaysia government to risk this. hahaha. However, you may want to ask yourself why 22 reputable investors are wiling to be cornerstone investors. Perhaps they do see some value in this company with prospective information which retail investors are not privy to. I will give it a 2 chilli ratings as i like the sector and industry but not its expensive valuation. It is a hit and run for me unless the Company does deliver on its 'potential'. For your information, while i was writing this report, HCA is only priced at 8.4x FY2012 PE and a EV/EBITDA of 6.6x.... It really makes it tough to justify why IHH should be perceived differently, perhaps this is why its prospectus made this comment that IHH will be one of the largest healthcare provider in the world by "market cap".... good luck to all.

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