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Wednesday, 29 July 2015

Choo Chiang Holdings - Balloting results

Not sure if i would consider 2.3x as "strong" but definitely it will be interesting to see how it debuts.

Balloting table as follows:

Didn't see any strong "names". My guess is it will be a challenging debut.

Good luck...

Wednesday, 22 July 2015

NauticAWT Limited - Balloting results

The Company announced a decent subscription number where the tranche was 6.1x subscribed. 

Having said that, I don't see any interesting "anchors" like the ones in iX Biopharma. The share price has a decent debut today but as usual, don't be the last to hold the baby. 

Let's see how this stock debuts and good luck to those who got it.  :)

Tuesday, 21 July 2015

iX Biopharma - Balloting Results

iX Biopharma announced an interesting set of balloting results where the entire IPO offer was 1.4x subscribed. The balloting ratio is below.

It is also interesting to see Alan Wang playing in this IPO. Let's see if there is any "magic" from him tomorrow. Probably he saw value that i can't. :)

Happy IPOing and good luck to those who got it!

Saturday, 18 July 2015

Choo Chiang Holdings Ltd.

Choo Chiang Holdings ("CCH" or the "Company") is offering 33.28m shares at $0.35 each. 1m shares will be by public offer and the rest via placement. The offer will close on 27 July at 12pm and starts trading on 29 July. The market cap will be around S$72.8m

The Company has a retail presence in Singapore of over 20 years and is a leading retailer and distributor of electrical products and accessories in Singapore. Some of these products include 3rd party and proprietary brands and they carry eight product categories.

The Company also owns 13 investment properties and 4 retail properties of which 9 of the investment properties are rented out to 3 parties.

Financial Highlights

The EPS as of FY2014 is around Singapore 2.66 cents and that translate into a PER of 13.1x

The revenue is stagnant and margins are declining. 

Competitive Strengths

According to the prospectus, these are the investment merits
  • Wide retail network located across Singapore
  • One stop provider of products and accessories
  • Long term relationship with suppliers
  • Established track record
The Company intends to expand its operations to overseas but i believe it will be challenging.

Shareholders structure

The Company has a simple shareholding structure. Post IPO, the public will hold 16%.

What i like about the Company

  • It is a stable business and the Company has been paying out dividends 
  • The Company intends to pay out 30% of its net profits as dividends for FY2015 and FY2016. If EPS remained about the same, the yield will be around 2% but i am not privy to current year performance.
  • The investment properties will help provide some recurring income. 
Some of my concerns

  • This is a "cashing out" exercise for the vendors. The Company will not received any proceeds. 
  • The Company has a negative cash flow for FY2014 and from the way it looks, it probably leverage up its balance sheet and pay out a bumper dividend of $10.8m prior to the listing.
  • I don't like the fact that a partner of the previous audit firm is now holding a 14% and was the auditor from 1991 to 2015. Potential conflict of interest? 
  • It's a business in decline. The margins are dropping and middle man are gradually being "cut off" globally.
  • It is just a distributor with Singapore-centric business. It will not be easy to expand beyond Singapore.
  • It's a family business. Last count 14 employees who are related.
My Ratings 

I will give this IPO a miss and a 1 Chilli rating. Buy only if you really like it. The business and its prospectus are not too exciting and not scalable beyond Singapore.  It is also a cashing out exercise for the owners. 

I would have given it a zero chilli had it kept all the shares for placement. This is to send a signal that all IPOs should include a public tranche ^_^

Friday, 17 July 2015

NauticAWT Limited

NauticAWT Limited ("Nautic" or the "Company") is a Singapore headquartered firm offering subsurface, subsea and surface facilities engineering services and contracting solutions for field exploration, development and refurbishments.

The Company has 11 offices across the world and provide a range of solutions for the oil and gas industry.

The Company is offering 28m shares at $0.20 each for a listing on Catalist where 1m is through Public Offering and the balance via Placement. The market cap is around S$37.8m. The IPO will close on 21 July at 12pm and start trading on 23 July 2015.

Financial Highlights

I like the revenue and profit growth trajectory. According to the prospectus, the Company has an order book of US$34.6m and intends to pay 20% of its profit after tax attributable to the owners of the Company as dividend from FY2015 to FY2017.

Looking at the proforma where the acquisition of AWT is included, the revenue is about US$45m and net profit is around US$4.2m (not very accretive) and the EPS went down to Singapore 2.87 cents.Based on the IPO price of 20c, the historical PER is around 6.97x

Use of proceeds

The Company intends to use the IPO proceeds to invest in new capital equipment and is spending $2m on professional fees! :(

Growth Strategy

The above is the growth strategy. It's for you to evaluate if they sound reasonable!


The shareholding are tightly controlled and post IPO, there will only be a public float of 14.8%.

What i Like about the Company
  • Competent management who have been growing the Company steadily. For the last three years, revenue and profit has grown significantly and this is in the wake of difficult conditions in the oil and gas sector.
  • The independent board members are also reputable and competent and it is audited by a big 4.
  • Kim Seng Holdings is an experienced oil and gas player (Tan Kim Seng founded and sold KS Energy in 2006) and they have a substantial 25.6% stake. Between 1998 and 2006, Tan Kim Seng grew KS Energy's net income from S$2m to S$31.9m. You can safely say that they do see some value in this investment.
  • Interest is aligned and the free float will be tightly controlled as 69% are held by John and Kim Seng Holdings. 
  • With oil prices falling, new oil exploration activities will probably drop and there will be more focus on mature oil fields to improve the yields.
Some of my concerns
  • Recent market sentiments is weak
  • Oil & Gas related sectors stocks continued to be challenged, looking at how the share prices of many companies in this sector has performed in the last 12 months. However, having said that, the Company is not in the same type of business as many of them and has delivered in 2014 even though it was a challenging environment. When i look at the list of competitors, i couldn't identify a listed company for peer valuation.
  • It is a small cap stock at S$37.8m and with a small public float. 
  • Whether the newly acquired AWT in 2014 will perform as expected and meet the earn out.
My valuation and ratings

If i assume that EPS continues to grow by a more modest 25% this year and PE remains between 6-8x, the fair value is around 20.5 cents to 27 cents.

With majority of the shares held by by two key players and a small free float of 28m shares, it will not be difficult to control the placement. Given the low share price of 20c and the promise to pay dividends for the next 3 years, i believe there could be some post IPO support but don't expect too much first day fireworks.

As such, I will give it a 2 Chilli ratings purely because it is sold at decent valuation and my gut feel is that you can probably flip it for at least 2 cents. The key challenge is whether you can get enough shares from ATM to make it worthwhile.

Happy IPOing!

Saturday, 11 July 2015

iX Biopharma Ltd

iX Biopharm Ltd ("iX" or the "Company") is issuing 65.5m shares at $0.46 each. The public tranche is for 1m with the balance through placement. 

I will just do a high level "copy and paste" analysis on the Company. Before I start, I want to declare that I know nothing about this sector. You may want to refer to my post on QT Vascular on how I "validated" the medical technology then.  

Having said that and looking through the prospectus, this Company is probably too high risk for me and to be able to list under current bear market conditions at such high valuation is a really "astonishing" for me. 

The Company is a drug development company with 3 drugs under development. It has its roots in Australia. 

Financial Highlights

As you can see, this is a loss making company and its products are too early to generate substantial revenue. With a total equity of only $11.9m versus its listing market cap of $271.5m. Frankly, I don't know how to reconcile the two numbers. It's beyond my ability... 

Perhaps the existing patents are worth something but it is definitely not reflected in the Company's balance sheet. The NAV per share is around 7.12 cents versus the IPO price of 46 cents. This is likely to pay for the "WaferiX Drug Delivery Platform" but i don't know how to prescribe a value to it.

The Company runs a negative cash flow business so investors will really need to take a long term bet on this business that the drugs will develop to its full potential.


While it is interesting to have such listing, the Company is like a start up company to me. Its products are too early stage, pre FDA and with no firm timeline of meaningful revenue for the next few years. 

For the products it is researching on, I am really ignorant about the competitive landscape. However, to develop a product on male erectile dysfunction when the blue pills Viagra is widely popular and easily available is beyond me unless the Company intends to develop a cheaper version to help clean out the illegal drug peddlers selling fake sex drugs in Geylang. ^_^

Use of Proceeds

As you can see from the prospectus, the Company intend to use the IPO proceeds is to fund clinical trials for the product development and for submission to the FDA (or its equivalent) for market approval and commercialization. As you can tell, IPO investors are bearing the development risks.

Management team remuneration

CEO Eddy Lee cam on board in Jan 2008. He has the biggest stake at 33.4% but it is amazing that he is not even medically trained and he was more involved in running casinos and the last casino he ran was Burswood in Perth. He sure has placed his chips correctly as his 33.4% stake is now worth $90.7m!

The management team other than him, is probably more experienced in this line but I don't like the fact that while the Company is bleeding, he has been getting a fat salary and been issuing shares to attract his team of management like Albert Ho and Philip Choo.


As you can see, Mr. Eddy Lee is the CEO with the biggest stake at 28.9% post IPO. Unlike the case of QT Vascular, i couldn't find other expert investors who can help validate the technology for me at IPO.

As you can see from the above table, public investors are paying 46c while earlier investors got in at between 6.7c to 12.5c. Of key concern to me is that there is a huge chunk of "other shareholders" at 39.9% post IPO. I don't like the way they do the disclosure as it is all lumped up in small print.

16.4% of the investors in this "others" category will not be subject to moratorium and i believe they have made good capital gains at the IPO price and will be most keen to get out if the price and volume is there. Once the moratorium is over, i am sure there will be renewed selling as well.

Mr IPO's views

While i like the healthcare sector and the fact that it is offering some shares for the public, I don't like this IPO for the following reasons:

  • It is too early stage and IPO investors are taking on development risks
  • It is priced at a very high valuation 
  • There are too many pre-IPO investors who got in a a lower price and some are not under moratorium
  • The CEO is paying himself too much for this loss making company
  • The current market sentiments is too weak for post market support
As such, this will be a zero Chilli rating for me and i will give it a miss (even though my good broker from CIMB offered me some shares - thanks!)

Happy IPOing

Tuesday, 7 July 2015

Happy 8th Anniversary!

It seemed just a short while ago when i penned this post 12 months ago!

Time really files and i am sad to report that this must be the worst ever IPO drought I have ever experienced other than during GFC... we only had 3 small Catalist listings for the first 6 months this year (versus 10 for the same period last year). 

I spoke to a few bankers doing ECM here this week and they are all looking for new jobs or roles. Mr. Loh Boon Chye, the newly appointed CEO of SGX, has a huge task in front of him to lure listings back to Singapore. Hope the new team can bring forth new ideas to revitalize the market here. I do have a few "suggestions" for him:
  1. Bring back the lunch hour - let the brokers and dealers have a decent lunch so that they can trade better in the afternoon
  2. Increase the brokerage commission - help improve the livelihood of dealers and remisiers and they will take care of you
  3. Increase the bid-ask spread - the market needs volatility to thrive and traders will love you
  4. Get brokerage or insurance firm to bear the credit default risk and not passed those risk to the remisiers who make negligible commission!

Image result for drought

Despite the drought, there is a silver lining!

The only thing positive is my fans (yes you!) grew from 2,706 this time last year to 3,685 today. This is a growth of 36%... ^_^

A big Thank You to all of you and hope the IPO market revives soon!

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