Halcyon Agri

Halcyon Agri (the "Company") is placing out 61m Placement Shares, comprising 44m New Shares and 17m Vendor shares at $0.36 each for a listing on the Catalist. The prospectus is here. It is disappointing that once again, there are no public tranche and the placement offer will end on 30 Jan and start trading on 1 Feb 2013. The market cap based on the IPO price is S$104.4 million.

The Company operates in the midstream of Natural Rubber supply chain, specializing in processing and merchandising of Natural Rubber. According to the prospectus, it is one of the largest exporter of Natural Rubber in South Sumatra, Indonesia. The final customers will probably be the tyres manufacturer and the Company is certified by the top 20 manufacturers. Major customers include Cooper Tire, Bridgestone, Sri Trang and New Continent.

Financial Performance

The NAV per share post IPO will be Singapore 15.49 cents. Based on the enlarged share capital and assuming the service agreement was in place, the EPS for FY2011 will be approximately Singapore 1.81c. This translate into a historical PER of around 20x. 

Looking at 9 months results, it seemed that net margin has "suddenly improved" from 2.76% to 5.2%... hmmm....

Assuming the sales is flat but the margin has improved, the net profit for FY2012 will be around US$12m and the EPS will be (US$12m x 1.236 divide by 290m shares) = Singapore 5.1 cents. That will translate into a FY2012 PER of 7x, which is probably reasonable.  Assuming 25% is paid out, the implied yield will be around 3.5%.

Dividend Policy

The Company intends to distribute at least 25% of its net profit attributable to shareholders for FY2012 and FY2013.

Fair Value

Assuming a trading range of 6-10x, the fair value will probably be between 30 to 51 Singapore cents but downside should probably be limited by the dividend yield and the current bullish sentiment. The Company has a low free float of 20% (or 59m shares) so trade with caution. I will not be surprised if it trades towards the upper boundary of the fair value range.

Happy IPOing. Hope to see some real IPO soon....