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Thursday, 28 February 2019

Sim Leisure Group Ltd

For Information Only - No public offer


First of all - my sincere apologies. I had a family matter to attend to and was rather pre-occupied with it. As the IPO has now closed, i will just do a quick summary for completeness sake.

Sim Leisure Group Ltd ("Sim Leisure" or the "Company") is offering 26.4m Placement Shares at $0.22 each for a listing on Catalist and there is no public offering. The IPO closed on 27 Feb and will be listed on 1 March 2019 with an initial market cap of $29.53m

Business
Sim Leisure is a developer and operator of theme parks based in Penang, Malaysia. The Group is a retro-eco theme park developer and operator that provides affordable quality fun where everyone can play the games of yesteryear, recreated for today. The website to the theme park is here


Financial Highlights


The Company's revenue has stayed consistent from FY2015 to FY2017 at around RM 9.7m but net profit declined to RM 1.3m in FY2017. Having said that, the unaudited revenue for 1H2018 jumped to RM 8.4m and net profit RM2.0m. This is due to increase in ticket price and the number of visitors with the opening of ESCAPE Waterplay in Nov 2017. If we do a simple 1H X 2 projections, revenue will likely come in at around RM 16m and net profit at RM4m.

The Company has also announced a dividend policy of 30% of its net profit attributable to owners for FY2019 and FY2020.

Assuming EPS is around 0.52 cents x 2 = 1.04 cents, the forward PE is around 21x, which is not exactly "value for money".  Assume a pay out rate of 30%, that will translate into a DPS of 0.312 cents into a yield of 1.4%. 

What i like about the Company
  • Easy to understand business  - the theme park business is pretty straightforward and any increase in ticket prices or visitors will translate to the bottom line.
Some of my concerns
  • Highly exposed to Penang Tourism - The profitability of the Company will be highly dependent on the tourism receipts. For investors who view loves that exposure, it will be a positive. Having said that, the Company is trying to diversify outside of Malaysia and the next stop will be China
  • Currency exposure - The MYR exposure can be challenging if it continues to be weak and when the Company profits is translated back to SGD for reporting purposes
  • Capex may be high - if the Company wants to expand to new geographies or expand its theme park, it will then need to incur capex and there will be risk if the rides turn out to be less than popular
  • Valuation is high - the listing valuation at 22x PER is not exactly cheap. In fact, it is pretty expensive. For comparison - Genting Singapore is trading at 16x PER and 3.4% yield. Six Flags Entertainment that is listed on NYSE is trading at 17.7x PER and 5.8% yield
Chilli Ratings

If there is a public offer, i would probably have avoided it given that there is better alternative in Genting, Six Flags or other similar companies.

Monday, 4 February 2019

Happy Year of the 🐷



To all readers who celebrate Chinese New Year, here's wishing you and your loved ones a healthy, prosperous and wonderful year of the 🐷.

This IPO blog was started on 7 July 2007 and that was the year of the Fire Pig. 2019 is the year of the Earth Pig. The blog has came to a full zodiac cycle of 12 years. (Amazing to think that I have been blogging for that long...)

As I looked back from 2007 till 2019, what can I share with you? If you are below 40, these may be a few principles to stick with. 

Save and save more - when you are young, cultivate the habit of saving. I don't earn much when I am younger but I save a lot. There is no short cut, you need to save! 

Buy your first property - A roof over your head has two key benefits, it acts as an inflation hedge and it provides shelter to you and your family. You can worry about the investment property later. 

Aspire to do well in your chosen career - Your "job" be likely be the main source of funding for your retirement. Your first few roles and the firms that you work for will be important. It will determine your career path and earnings trajectory over the next 30 years. Choose your path wisely! 

Start investing when young - you will inevitably pay school fees to Mr. Market. I am still paying them even at my age. If you start young, you pay less fees as you earn less. My first "school fees" was paid when I was still in army. While it was a painful lesson, on reflection, those were the best lesson learnt.


I received a reader's email a few weeks back and she is the same age as me. In her email, she said, "we have many similarities towards investment approach" and she listed 4 similarities and I also included my thoughts below her points. 

1. grow passive income from equities- my CDP holdings is significantly larger and I only have $60K worth of stocks in my SRS account.  

Mr. IPO thoughts - As i moved into mid 40s, I shifted some equity holdings into investment grade bonds bearing interest of 6-7% and levered on those bonds, giving me a yield closer to 8-10%. I am happy to compound my wealth at 6-8% annually as bonds have lower volatility. I have previously blogged about bond ladder. I will move out of bonds again back to properties when the opportunities arise. 

2. focus on building my career- so yeah, my current work income is high, but I have built my career carefully to reach where I am (similar strategy to yours!)  I am cognizant that various external factors can affect the stability of any career- so I "make hay while sun shines" to maximize my earnings.  

Mr. IPO thoughts - I agree totally. Focus on building a great career. Make hay while the sun shine! Save and invest when you are still earning a nice decent income will help you reach your financial goals much faster.

3.  I also believe in CPF!! Done various hacks such as reached SA FRS 5 years ago; repay CPF used for mortgage to earn OA interest etc.  I received $22K CPF interest for 2018, so total CPF size is around $730K now- can easily reach $1M  by 55 years old!

Mr. IPO thoughts - it is time for everyone to be less sceptical on the CPF and embrace the intent behind the CPF Scheme. Use the various hacks such as voluntary contribution etc. You can reach $1m by 55 too! 

4. Opening CPF accounts for both my kids- they have $10K each in SA, earning good interest.  Start young is good- my kids are 14 and 16 this year

Mr. IPO thoughts - good for them and my two kids have their CPF special accounts topped up as well.  I matched their CNY Ang Pow money "dollar-for-dollar" for whatever cash deposited into their CPF special account each CNY. This will be my little "help" to let them understand the magic of compounding. Below is the statement of my elder Son. 


Conclusion 

I wish you all the very best In the year of the pig 🐷. If you have yet to start planning for your retirement, hope this year will be the start of your journey. 

㊗️ ζ­ε–œε‘θ΄’ πŸ’°、身体ε₯εΊ· πŸ’ͺ🏻、万事如意 πŸ“ˆ。

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