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Saturday, 26 December 2015

Singapore IPOs Tikams for 2015

As we approach the end of 2015, i will continue with the tradition of posting my tikam results.

The tikam post for 2013 and 2014 is here and you will find the 2012 results here.

This year is probably one of the worst as the IPO market in Singapore is in doldrums! I made only $808.82 (at least the numbers look auspicious)

There is only one mainboard listing and the rest are all catalist where you can mainly get shares only via placement. 

I participated in 5 IPOs this year and the results are as follows:

My biggest losses came from CMC Infocomm of $7,983 while the biggest gain was from Jumbo Group of $8,817. CMC was a "painful" incident where I got "played out" by the backers but i don't blame anyone. As i have said before, you have to be responsible for your own profit and loss so don't blame anyone! ^_^ (including those who lost money on my recommendations. @_@)

Hope 2016 will be a better year for everyone, including SGX who is having a difficult time luring any decent companies to list here.

Since we are only 6 days away to 2016, I wish all readers good health and a joyful and bountiful 2016 in whatever you do!

Wednesday, 9 December 2015

BHG Retail REIT - Balloting Results

It was quite rare to see such a "funny" announcement this morning.....

where bookrunner and BHG Retail REIT announced that they have "agreed" to proceed with the offering. This probably means they had 'robust discussion' on whether to proceed with the IPO. ^_^

Placement Shares

I belong to one of the placement holders above... luckily it is for the 1,000 to 9,000 category. DBS even tried to "kill" the placement applicants by exercising its over-allotment issue of 24.636m. This will allow DBS to buy back at a lower price if the share price opens lower tomorrow. It is a "win-win" situation where DBS earns 1% placement fee and then make the difference again if they can buy below the IPO price tomorrow through its stabilization exercise! Disgusting!

Public Tranche

There are only 594 applicants for the public tranche. If you have not heed my zero chilli ratings and apply for the shares - you will definitely get some shares. In most cases, you will get almost full allotment. Even the independent directors and cornerstone investors have to chip in to help subscribe for the shares.

Let's see how the stock price will "perform" on this coming Friday at 2pm. Be prepared for some bloodshed.

Sunday, 6 December 2015


BHG Retail RETI ("BHG" or the "REIT") is offering 151.169m units at S$0.80 per unit. The placement tranche comprises 143.169m units with the retail tranche making up the balance of 8m units. The gross proceeds raised will be around S$394.2m. Based on the IPO price, the market cap is ~$597.2m. The IPO will close on Dec 7 and starts trading on Dec 11.

There is an over-allotment option of up to 24.636m units. This over-allotment option will be a strong indicator if there is demand for the IPO.

Principal business

As the name implied, BHG is a REIT focused (initially) on quality properties in Tier 1 and Tier 2 cities in China. Since investors in Singapore are very familiar with REIT, after some of the basic information, I will jump straight into what i think BHG.

Initial Portfolio

The initial portfolio comprises of 5 properties listed below with valuations by DTZ and Knight Frank. It is good to see that the company is valuing it at >$$30m below the market value. 

Valuation of IPO Properties

It is good to note that they are not pricing the IPO at the maximum valuation.


The forecast below for records purpose.


The distributions will be made semi-annually. 

The projected yield for FY2016 is around 6.3% but that is because strategic investors have waived their entitlements. The yield would drop to 4.5% if there had been no financial engineering! (I don't like it!) This financial engineering will be in place all the way till 2021!

What I like about BHG

  • China will be the biggest consumer market by 2018 and with rising income and middle class, consumer expenditure will drive the China economy. The relaxing of the one child policy is also positive for this sector
  • Experienced management team
  • Strong sponsor in BHG. They have 12 other malls which they own and another 26 managed by the Group
  • Some decent cornerstone investors such as China Life, China Hi-Tech Holding Company, China Merchant Banks
  • BHG didn't max out the valuation and mark it up and based on existing valuation, there is modest leverage around 34% with more headroom if required for acquisition
  • Strong pipeline with 12 properties identified under ROFR which will triple BHG's size
Some of my concerns
  • Competitive landscape – In my limited understanding, while each property is unique and location dependent, the landscape for retail is pretty competitive
  • Changing consumer habits. With investors making purchases online via smartphones, a physical store may become obsolete over time and we can see that happening in China with rising online sales
  • Financial engineering in increasing the distribution yields. Without the financial engineering, the yield for FY2016 would drop from 6.3% to 4.5%! Yucks.
  • The manager has elected to receive the fees in units, which would further dilute the yield from FY2017 onwards.
  • While BHG group and its affiliates will continue to own about ~31.5% of BHG REIT, the alignment is not as strong

  • Potential conflict of interests with other sponsor properties
  • The properties have less than 32 years of lease tenure balance 


According to REIT data, Capital Retail China is trading at 7.122% with gearing of 28.5% while Mapletree Greater China Trust is yielding 7.52% with a 41% gearing.

In my view, the above two REITs provide better value propositions then BHG REIT in terms of dividend yield but definitely Capita Retail China Trust has a better debt ratio than Mapletree. Assuming BHG REIT trades to a yield of 7%, the fair value range will be between 51-72 cents

My Chilli ratings

Considering this is the first mainboard IPO for Singapore Exchange for 2015, it is hugely disappointing. I will give it a zero Chilli rating based on the above reasons. 

Do note that i am vested.

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