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Saturday, 25 January 2014

Balloting results - OUE Commercial REIT

OUE C REIT share offering was 2.75x subscribed. The over-allotment was also triggered, enabling the stabilising manager to support the share price should it fall below $0.80 on debut. 

The probability of getting the shares is about 50% for those who applied with the majority given to those who applied between 10 to 100 lots. 

Good luck to readers who applied and got it. If you have applied and still don't get this, then really you need to do something drastic to improve your chances liao. :-P such as the superman method. 

Happy weekend all!

Wednesday, 22 January 2014

Balloting Results - Kim Heng

The balloting results for Kim Heng is out.

Very difficult to get... so expect some fireworks tomorrow on this but i will be flying, so wouldn't be able to see the fireworks.

Interest shareholders in Havenport and OneEquity. 

Congrats to those whose lucky stars are shining.

I didn't get any.

Sunday, 19 January 2014

OUE Commercial REIT

OUE Commercial REIT ("OUE C-REIT") is launching its REIT at $0.80 per unit. The prospectus is here. The offer will end on 23 Jan 2014 at 12pm. 

There will be 208m units for the IPO of which 151.75m Units will be for Placement and 56.25m shares for the public.The market cap will be $1.39 billion based on the IPO price.

Initial Portfolio

The initial portfolio will consist of OUE Bayfront Property in Singapore and Lippo Plaza Property in Shanghai.

OUE Bayfront and OUE Tower comes with a 99 year leasehold starting from 2007 but Lippo Plaza Property has only a 50 years lease starting from 1994.

There will be 3 properties of which OUE C-REIT will have the right of first refusal and they are:
  • One Raffles Place
  • OUE Downtown 2 and Downtown Gallery
  • US Bank Tower

The Cornerstone investors are all from China. Founder of Summit Group as well as the husband and wife team Mr. Gordan Tang and Madam Chen Huidan from Singhaiyi.  OUE will continue to own 45.2% post IPO and the public will hold 28.8%.


This is after, another REIT. It is a yield play, so buy only if you like the assets and the yield of 6.8% for FY2014 and 6.89% for FY2015. Note that without the income support, the yield would have dropped to 5.56% and 5.75% respectively.

The distributions will be made on a sem-annual basis within 90 days from the months ending June and Dec.

Peer Valuation

This is the peer valuation table as of last Friday. You can see that from the peer valuation, without the income support, the yield is really one of the lowest among its peers. However, at 0.76x book value, it is one of the "better valued" REITs, even though OUE Ltd is trading at 0.73x Price to book!

What I Like about OUE C-REIT
  • A chance to own properties along the Marina bayfront below its "market valuations". According to the prospectus, the discount is around 23.9% based on the offering price. 
  • A strong sponsor (Lippo Group) with ROFR Properties
  • Some potential for rental improvements (but that effect is already off-set by the income support)
  • Spread out lease expiry

My Concerns
  • Income support again?! Seemed like a "feature" associated with OUE 
  • Given the high gearing of 42.3%, this counter will be impacted by the FED tapering and rising interest rate
  • Short lease life for the China properties.
  • The previous OUE HT is hovering around its IPO price.
My Ratings

I nearly fell asleep trying to analyze this counter. It is another REIT to me and not terribly exciting. I am personally not interested in this REIT but given that it is better valued than most of its peers, the downside is probably limited but don't expect too much fireworks either. I will give it a one chilli rating, buy only if you like the properties and is looking for yield in your portfolio but beware of rising borrowing costs should interest rate goes up!

Saturday, 18 January 2014

Kim Heng Offshore & Marine Holdings Limited

Kim Heng Offshore & Marine Holdings Limited ("Kim Heng" or the "Company") is offering 174m shares for the IPO at $0.25 each of which 160m are new shares and 14m are vendor shares. There will only be 3m shares for the public with the balance via placement.

The prospectus is here. The IPO will end on 20 Jan 2014 at 12pm and begin trading on 22 Jan 2014. The market cap post IPO will be around $177.5m. I have two "fact sheets" about the IPO, one from DBSV and one from Lim & Tan for your reference. 

Principal Business

Kim Heng has a long history and is an established integrated offshore and marine value chain services provider. The Company offers a one-stop solution for oil & gas projects with customers in more than 25 countries globally.

The Company specializes in offshore rig services and supply chain management as well as vessels sales.(See picture below if you need the details on the business the Company is engaged in).

Financial Highlights

The last 3 years figures have been fairly inconsistently with revenue fluctuating and net profit hovering around the 17-18m in the last 2 years. The first half performance also showed a slower pace versus the same period last year. The net profit declined by 24% from the same period last year. As i am not privy to the forward looking results, i can only make a guess.

According to the prospectus, the post invitation share cap is 710m shares and the adjusted EPS for 1H2013 is 1.1 cents. I will assume the full year EPS to be = 1.1 divide by 0.6 (since 1H seemed to be stronger than 2H for FY2012) = 1.8 Singapore cents. Based on the IPO price of 25 cents, the forward PE is around 13.8x.

However according to the fact sheet from Lim & Tan, the Company expects a more robust second half and recommend investors to 'subscribe' for the IPO. Assume a more robust second half, my EPS will be approximately = 1.1/0.4 = Singapore 2.75c and that translate into a forward PE of around 9x (which is reasonable).


Looking at the list of shareholders, Credence Capital Fund II is run by Tan Chow Boon, Koh Boon Hwee and Seow Kiat Wang and one of the investors of Credence Capital Fund II is Mr. T

Credence bought into the Company at an average price of 20c. As they invested only in 15 May 2013 and holds a 17.6% stake post IPO, they are still in the value creation mode.Given that it is supposed to generate private equity like returns, Credence's target price to exit will probably be above 40c with a 2-3 years time frame. 

What I like about the Company
  • Established brand name with more than 40 years track record
  • Oil & Gas sector exposure
  • Blue chip customers
  • Experienced management
  • Reputable institutional investors
My Fair Value

Assuming my more "robust" EPS of 2.75c is correct, i will give the IPO a fair value PE range of between 10-12x forward PE and that translate into a price of between 28c to 33c.

My Ratings

I am not privy to any 3 year plan of the Company but i believe Credence will not be there for the short term. As such, i will not give the 1H 2013 results too much weightage. Ms. Syndicate told me that this IPO is very hot and will have a +10c debut. I will tamper that expectation down a bit and say that i believe an opening above 30c is very likely even though the huge placement float of 174m can be a turn off unless they place the shares to institutions and strong hands. If you want to give this a punt, i will say just do it but make sure you apply at least 50-100 lots so that you will get around 3 to 5 lots. 

3 Chills for me this time and Happy IPOing 

Saturday, 11 January 2014

Eurosports Global Limited

Eurosports Global Limited ("Eurosports Global" or the "Company") is offering 80m shares of which 40m are new shares and 40m are vendor shares at 28c each. 78.5m shares will be available for public offer and 1.5m shares for the public. 

The offer will end on on 15 Jan 2014 at 12pm and starts trading on Catalist on 17 Jan 2014.The market cap will be around $74.2m.

The Company was started by the Goh brothers and they specializes in the distribution of ultra-luxury automobiles. The brands they carry are primarily Lamborghini since 2001 and Alfa Romeo since 2004. 2 new automotive brands were added in 2012 and i have to say I am not familiar with those brands since i am not in that league. haha and even if i am in that league, i would probably not buy a Lamborghini.

Financial Highlights

The revenue for last FY declined from $113m to $86m and net profit dropped from $7.6m to $6.7m. The NAV of the company is around 7.35c versus the 28c paid by investors.

Based on the earnings of $6.7m, assuming service agreement was in place and based on enlarged share cap of 265m shares, the EPS will be around 2.18 cents and that translate into a historical PER of 12.8x.

Q1 FY 14 continue to show a decline in revenue and net profit over the same period last year and i am not privy to the current financial performance.


Post the IPO, Melvin will own 41.9% and Andy 27.9% with the balance of 30.2% held by the public. Effectively, no outsiders can take over the company as the majority ownership is still held by the brothers.

Special Dividend

The Company intends to sell and lease back its Teban Garden showrooms and pay a dividend of between $6m to $8m. I am not sure if that is a good move as it will subject the company to market rates and the majority of the payout will go back to the founders anyway. A $6m payout will translate into a yield of around 8% based on the IPO price but there is no formal dividend policy thereafter.

What I like about the Company
  • Allow Lamborghini fans to have a chance to own a small piece of the action :-P
  • Small float means easy to place out to the towkays who buy the cars from them. Each car probably cost more than $1m and I am sure they know many towkays in Singapore who can help support the stock.
My Concerns
  • Company is highly dependent on the distributorship from Lamborghini. The manufacturer is able to terminate the agreement at anytime with a 12 months notice period. 
  • Car industry is a competitive one. The other competitors in the ultra luxury market will probably be Ferrari, Bentley, Maclaren, Aston Martin and to a lesser extent Maserati and Porsche. 
  • Limited growth prospects unless they can acquire other brands.
My ratings

There are no similar peers that i can think of locally except TCIL (Tan Chong International). TCIL is trading at good value of around 6x PE, a discount to book value and a yield of 3% but they are targeting different consumer segments. Investors should seriously do their homework if they want to buy Eurosports for the long term and compare it with TCIL while punters don't really care since 28c is a nice number. My view is that if they do the placement well, the company should open above 30c and it is supported by a special dividend. However, i will give it a miss since i don't really like the car's design, limited growth prospect and declining profit trend. I will give it a 1 chilli rating - buy only if you like Lamborghini cars.

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