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Thursday, 30 August 2012

Mr. IPO?

One of the Facebook users called me Mr. IPO... hmmm... I thought it sounds funny but why not create an avatar and maybe next time, i can sell comic books on IPOs, stock investments and trading like Mr. Kiasu below. hahaha

Mr Kiasu

Here you go, Mr. IPO's avatar (the picture is definite more "saleable" than the real person)...


Click "like" on Singapore IPO's facebook page today to receive a free copy of Mr. IPO's first ebook! (to  be launched one day when the postings can be compiled into a book. After all, this is how a Singapore food blog evolved into a book and iphone app!).

Monday, 27 August 2012

IPOing 101 - how to read a balloting table

Further to my posting, I received some queries from readers on why they never get a single share when they apply for the recent IPO.

The answers to your question .... 

(1) It is not guaranteed that you will get what your applied for, in fact, there is a very high chance that you will get nothing and your $2 ATM fee is "wasted".

(2) Even if you are successful in your application, you will probably get less than what you applied for.

The IPO balloting results will usually be announced the day after the IPO closes on the sgx website. So look out for it or you can check this blog, if I am not lazy, i will most likely post the results.

The picture below shows you how to read a balloting table. 

Step 1 - Look for the red column to find what where your application falls into based on the number of shares you applied for.

Step 2 - After you find the correct row that correspond to the number of shares you applied, read it across the table.

The example in the picture below illustrates how a person who applied for 35,000 shares at the most recent Far East Hospitality Trust IPO should read the table.

Hope this helps. Happy IPOing.

Part 1 - How to apply for IPO shares 

Sunday, 26 August 2012

Singapore IPOs is tweeting!

Singapore IPOs has started tweeting.

You can now follow Singapore IPOs via twitter as well.

Happy IPO tweets

Friday, 24 August 2012

Far East Hospitality Trust Balloting Results

Far East Hospitality Trust released its balloting results this evening. The response was pretty good with the public tranche 14.6x oversubscribed and even the over-allotment of 65.9m shares were exercised, which means the stabilizing manager will step in should share price falls below 93c.

The balloting table are presented below for your convenience.

The probability of getting the shares are pretty good at 40% or better.

My balloting results

I have another 4 lots from placement tranche, looks like a good IPO year for me?

Happy IPOing

Saturday, 18 August 2012

Far East Hospitality Trust

Far East Hospitality Trust ("FEHT") is a Singapore-Focused Hotel and Service Residence Hospitality Trust. An update from an earlier blog posting, FEHT has priced its offering at the highest end of the range of 93 Singapore cents.The final prospectus is here if you need it. The initial portfolio will consist of 11 properties of seven hotels and 4 service apartments. The Sponsor is part of the Far East Organization.

FEHT's Market share
It is interesting to see the diagram on the left where it declares itself as having a leading market share for both service residences and mid tier hotels.

I think it is pretty important for REITs to have a good sponsor because it will be the source of 'future properties' to be injected into FEHT.

The key concern will of course to ensure that everything is done at arm's length between the related entities. They are keeping some interesting properties in the pipeline such as Orchard Parksuites, Orchard Scotts Residences and Oasis Downtown. mmm...wonder why aren't transferring those completed ones now... :-P

The annualized yield for FY2012 is 6% and that of FY2013 is 6.3%. The hotels are running at 85% occupancy rate and the service residence at 90% rate. I believe the tourism arrivals and business growth of Singapore will be key to ensure the rates continue to remain high. So it will be good for FEHT if Singapore continues to host the F1 and that the 2 Integrated resorts continue to pull in the tourist dollars.

The offer will close on 23 Aug 2012 at 12pm and commence trading on 27 Aug at 2pm. There will be over-allotment option and this allows for price "stablizing" action post IPO. In this regard, you can see that the share price being 'supported' if it drops below the IPO price.

The portfolio of properties are presented below:
Current Portfolio
and you can see the list of pipeline properties where FEHT will have the right of first refusal. Very interesting list.
Future Pipeline

I like Far East's ability to convert a residential block into The Quincy Hotel. I thought the hotel looked pretty interesting and cool. The Quincy hotel is well located but i can't say the same about the location of Changi Village Hotel...... When i was young, i always wonder why out of the blue there is a Le Meridien Hotel at the far end of Changi Point... and the old story goes that Far East built the hotel at the wrong side of Changi Airport in anticipation of its opening...hahaha not sure if that is true but in any case, if i have a choice, i will kick this asset out but unfortunately we can't pick and choose here. There are no freehold hotel properties in the portfolio. All the properties are on less than 99 years leasehold.

Value add skills?

Let's try to understand why property companies like to set up 'REITs'. You can say that Far East has been 'slow' to the game as companies such as Capitaland and CDL have made significant progress in this area. The reorganization of Far East starts when Lucas Chow joined Far East to unlock value for shareholders of Orchard Parade Holdings.

The REIT structure is a good way for the company to retain control of the assets and yet recycle capital by releasing the cash stuck in those assets. From an investors point of view, it is good to have a Sponsor with good assets and pipeline but at the same time, you are also concern that they will inject under-performing assets into the trust. But looking at the upcoming pipeline, FEHT should benefit from them. The only question then will be how will FEHT pay for the assets. Will it be raising more cash from existing unit holders or issuing new units to the owner of these assets. If it is the former, means you have to get cash set aside for 'rights issue', if it is the later, then hopefully the assets are yield accretive so that you are not diluted.

Now back to the IPO details. A total of 329.366m stapled securities or units will be offered (subject to over-allotment option) and 61.8m units will be for public tranche. As such you will have a 'higher chance' of getting this via the ATM. As mentioned in my earlier post, it is encouraging to see quality cornerstone investors subscribing to this IPO such as Aberdeen Asia, APG, NTUC income etc. These are typically long term investors who invest for the yields but unfortunately, they have also pushed up demand so much that the IPO is now priced at 93c, the highest end of the offering range. The over-allotment option is 65.8m shares. I guess this will be triggered and it will provide support for the IPO in the initial weeks. The market cap of FEHT will be around $1.5 billion.

FEHT will pay out 100% of income for FY2012 and 90% thereafter. The distributions will be made every quarterly. I will consider FEHT to be a very good candidate for my SRS portfolio if you want to receive stable distributions every 3 months.

Out of the 4 bookrunners, DBS has the lion's share and OCBC the least. No wonder OCBC cannot give me the placement securities i want... perhaps will hear good new from DBS?

Fair value

At 93c and FY2012 annualised yield of 6%, rising to 6.3% the following year, FEHT in my view, is fairly valued for this IPO. Its 2 listed competitors, CDL Hospitality Trust is currently trading at around 5.9% and Ascott Residence Trust at 7.2%. However, it may get a slight premium for being a 'leader' in this segment and with an interesting pipeline of assets being injected, the yield can probably go up going forward. The counter will probably trade between 85-100c assuming it trades between the bands of 5.5%-6.5% yields. Given the current good demand for yield stocks, in my view, a more likely trading range in the first week will be 95-100c. With Goldman Sachs in the picture, the prices should be well supported.

Chilli Ratings

Don't expect fireworks. This is a yield play after all. I would have given it a 2 Chilli ratings if it was priced below 90c but to give it a 1 Chilli rating wouldn't sound right either. As such, this is the first time i am giving a 1.5 chilli rating considering that it is fairly value with some upside bias. It can also be considered a candidate for a long term yield play if you believe that Singapore will continue to attract tourist $ in the foreseeable future.

Happy IPOing. If you want to punt this IPO, probably you can but may not be worth the effort unless you get 5 lots or more to make it worth the effort. I will most likely be allocated a small placement tranche and may consider it for my SRS portfolio together with some Ascott REIT.

Research Report (Post subsequently updated on 25 Aug 2012)

CIMB issued a report on 23 Aug 2012 with no rating. Attached here for your reading pleasure.

Wednesday, 8 August 2012

IPOing 101 - How to apply for IPO shares?

I received enough emails from 'new comers' asking how to apply for IPO shares and how to sell them that it may be timely to write a post on this. For seasoned IPO old birds, please bear with this even though it creates new 'competition' for the limited public shares. hahaha. This post only covers applying for the "public tranche" of the IPO shares.

Step 1: Open a CDP account with SGX.  Without a CDP account, you will not be able to apply for the IPO shares as you need to key in your CDP account number the first time you apply for the shares. For your convenience, you may want to open a CDP account with any brokerage firms.

Step 2: Ensure you have an account with our local banks here and the ATM card.

 Whenever a company wants to go for listing, it has to choose an underwriter or placement agent. Which placement agent do you always see on the IPO prospectus? It is none other than DBS Bank. You may wonder why DBS bank is always the "first port of call'? The reason is simple. DBS (together with POSB) owns the widest network of ATM machines in Singapore.

If you ask around, almost everyone here has either a DBS or POSB account or both! This is why if you have a DBS or POSB account, you can probably apply for all the IPOs via their ATMs. This will include applying via their internet banking platform as well. (I will apply for the IPOs via DBS's internet banking if they are available). If there are sufficient time to launch the IPO, the underwriters may then expand this offer to other banking networks such as UOB or OCBC.

Step 3: Apply for the shares at the IPO tranche via ATM or Internet Banking before the closing date and time. Usually before 12pm on a chosen date. The IPO fee is currently $2 per transaction and you will need to have sufficient cash to debit for all the shares you applied.

Step 4: Check the results to see if your application is successful. If you are successful, the shares will be credited to your CDP account. You may start checking for the results from 6pm onwards the next evening after the IPO closed. (You can learn how to read a balloting table here)

Step 5: You may then sell the allocated IPO shares through the "normal cash accounts" of any brokerage firms that you have linked the CDP account with either on-line or with a broker. Some of local brokers are listed below:
  1. DBS Vickers Securities
  2. OCBC Securities
  3. UOB Kay Hian
  4. CIMB
  5. Maybank Kim Eng
  6. Lim and Tan
  7. Phillips Securities
You will not be able to sell the shares through Saxo, IG or Standard Chartered as these accounts are not linked to CDP.

Two very old articles which may interest you.

Happy IPOing. 

Sunday, 5 August 2012

Far East Hospitality Trust (Preview)

I took a quick glance at the draft IPO prospectus.

Just the structure alone, its is much better than the Ascendas Hospitality Trust where all the hotels are parked under the Hotel Reit and not under the business trust.

According to the email, the price will range from 86c (6% annualised yield) and 93c (6.5% annualised yield) for FY 12E.

The presence of reputable cornerstone investors are also very reassuring and it will be them who will dictate the pricing.

CDL H-Trust is trading at 5.7% yield and Ascott Residence Trust is trading at 7.2% yield. In this regard, my only complaint is that the yields are on the 'low side'. It will be good if Far East can leave some meat on the table by pricing the issue at the mid to lower end of 86 cents. If it prices it at 93c, i am afraid the upside is probably limited. My guess is 88c ? :-P

Anyway, with regards to this email, probably i will ask for some allocation and hope that it will be priced at the lower end. The hotels are mid-scale but well-located (mostly) within the Orchard area except for one Changi Village Hotel... :-P

Happy IPOing. I will give the chilly ratings when the final pricing is out but it will likely be either 1 or 2 chillis rating.

Subsequent update to this post

Please find a fact sheet about this IPO from OCBC.

Saturday, 4 August 2012

Heads up - Far East Hospitality Trust

Received this email from my OCBC broker yesterday. Need to do some homework this weekend. 

Dear All

We are pleased to announce the Initial Public Offering of Far East Hospitality Trust on SGX-ST (the "IPO").    OCBC Bank is one of the four Joint Bookrunners and Underwriters for the IPO. The other Joint Bookrunners and Underwriters are Goldman Sachs, HSBC and DBS.

Do contact me if you are keen in indicating your interest in the IPO of Far East Hospitality Trust on SGX-ST.

The order books for Far East Hospitality Trust placement tranche are now open. Indicative book closure time/date is 5pm on Tuesday, 14 August 2012 (subject to earlier closure). The final price for this IPO has not been determined but will be within the range of S$0.86 to S$0.93 per stapled security.  We are only taking orders at strike price, ie S$0.93 per stapled security. 

For your information, the 10 cornerstone investors for this IPO are:
-  Aberdeen Asset Management Asia Limited, AIA, APG Strategic Real Estate Pool, Havenport Asset Management Pte. Ltd., Hwang Investment Management Berhad, Indus, JF Asset Management Limited, Lion Global Investors Limited, Myriad Asset Management Limited and NTUC Income Co-operative Limited.

The draft prospectus of Far East H-Trust has been lodged with the MAS, URL as follows:-$File/Far%20East%20H-Trust%20%20Preliminary%20Prospectus%20(Main%20Text).pdf

Please see issue statistics as follows:

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