Wednesday, 23 July 2014

Accordia Golf Trust

This piece of report is filed while in between flights. Pardon the lack of graphics and pictures. I would have loved to include the golf course with Mt. Fuji in the background. Will back fill the pictures when I am back :)

Accordia Golf Trust ("AGT" or the "Company") is the first business trust with golf course assets in Japan. 

The IPO will close on 24 July at 12pm (page 77 says 24 July 4 pm). I am not sure why the manager chose to give public investors a pathetic 2 days to make a decision. Probably this is because the placement tranche is fully subscribed. The listing will happen on 1 August 2014 at 2pm. 

There will be up to 782m placement units of which 164.592m units are to placement holders in Singapore, 41.163m units for public investors and 576.27m units for Japanese investors.  The price is between S$0.97 to $1 and will be finalized when the IPO closes. There will also be an over allotment of 41.22m units. The market cap will be around $1.066 to $1.099 b depending on the final agreed price. 

I have to say the business trust structure is getting innovative with more interesting assets even though in general, they have not really done well on the local bourse. (Just look at Hutchison Port). 

Principle business

The initial portfolio consists of 89 golf courses and related assets valued at S$1.85b. Most of the assets are centrally located in Japan. 


The yield projected to be about 9.1% for  FY2015. However it will drop to 7% if we include non recurring items. 

What I like about the Company

• High barriers of entry in land scarce Japan created obstacles for competitors 

• Aging population as retired people has more time to pursue this hobby but that can also be a weakness if the earning power decline. 

•  The return of golf as a sporting event for the Olympics and Tokyo hosting the event in 2020. 

• High brand awareness and utilization rates on the courses with 5% market share. 

• Strong sponsor who has earmarked 26 golf courses that could be offered to AGT.

• The sponsor will continue to hold at least 25% of the trust post IPO to ensure alignment of interest. 

My concerns

•  The game is waning in popularity among younger generation. There is a chart on the declining number of golfers. 

•  Transfer pricing issues between related parties. 

•  The post IPO performance for business trusts (Asian Pay TV, Hutchison Port) are really disappointing and Japanese assets have never performed well (Saizen, Croesus Retail Trust). 

• If you look at the financials on page 64, the revenue is stagnant and the profits increase is derived from declining labour cost. I am concerned about future profitability. 

• JPY exposure for Singapore investors. Less so for Japanese investors. 


I didn't have the time to analyze the NAV per share. Perhaps some readers can help but purely evaluated this from a yield perspective. You have seen how HPHT and Asian Pay TV, despite the yields are languishing. The 9% initial yield is more like the sponsor giving a price discount on his assets. The yield will drop further if it is priced at $1 instead of $0.97. 

My ratings 

I will give it a one chilli rating and will give it a miss. Buy only if you like the assets, is happy with a 6-7% yield and believes it is sustainable. 

On a side note, I have forgotten how to play golf as it is too time consuming. Perhaps it is a timely reminder to clean up the clubs in my store room and put it on eBay. Any takers? 

Happy goofing :-P
Sent from my iPhone

Monday, 21 July 2014

Alliance Mineral Assets Limited

Alliance Mineral Assets Limited ("AMAL" or the "Company") is placing out 67.669m shares at $0.23 each. 43.479m will be new shares with the balance being vendor shares. The offer will close on 23 July 12pm and list on 25 July 2014. The Company will have a market cap of $90.6m post IPO.

The Company is a mining company headquartered in Perth, Western Australia and is primarily developing and exploiting the Tantalite Mineral Resources in Australia. After going through the prospectus and the so-called Expert report, i am none the wiser with regards to how to value this Company.


The Company is mining what is commonly know as "red earth". There are many uses for Tantalum and you may find this article interesting that it is one of the most important element you have never heard of, with South America and Australia accounting for 2/3 of the world's supply.

Use of Proceeds

You can see that listing expense continue to dominate the use of proceeds, which is extremely unhealthy.


Husband and wife team of Suen Sze Man and Tjandra Pramoko will hold about 49.8% of the Company with the balance held by several investors, including Alan Wang. Alan Wang is also one of the convertible loan holders and his effective cost per share is around $0.14 (versus the IPO price of $0.23)

What i like about the Company
  • For once, not the usual coal mining companies from Indonesia or some funny Phosphate mine from China :-P
  • The resources is pretty unique and has many commercial uses.
  • Business strategies and future plans clearly outlined.
  • Alan Wang is investing... and subscribing for > 5% of the placement shares. I believe it is the same Alan that is behind QT Vascular and Starbust IPOs in recent times.

My concerns
  • Save the earth please!
  • Loss making for the last 3 years
  • IPO price is at a huge premium over the NAV per share by more than 200%
  • Currency risks
  • Small cap company

Given there is no public tranche and the company is pretty unique, i will not give it any target price as i am not privy to other information. However, I understand the IPO is very hot and probably i can understand why given Alan Wang's involvement. I will give it a 2 Chilli rating for this ipo debut and good luck to those who are lucky enough to get some shares.

Happy IPOing.

Sunday, 20 July 2014

First Sponsor Group - Balloting Results

First Sponsor Group announced its balloting results where the invitation is 1.75x subscribed. I must say this is a weak subscription.

The public tranche balloting rato are as follows:

The probability of getting some shares if you apply is more than 50%, with those applying 10 to 49 lots getting 4 lots each. 

I don't see any big names in the placement tranche other than the cornerstone that was announced earlier but not part of the invitation and this is such a poor announcement where they did not even disclose how many shares were allocated to the three "substantial applicants" below other than a cursory "more than 5%". Terrible.

I have given my rating on this stock previously. If you asked me if i am "bearish" for its IPO debut, i have to tell you that my gut feel is that it should debut above its IPO price for a few reasons.

  1. The shares are tightly held. There are no much free float and i believe the holders are strong hands and the tycoons have many friends.
  2. The shares are fairly priced whereby the sponsor sold at book value but its at a discount to the market value. 
Having said that, i am not expecting a firework kind of debut as well. It will do well to hold between $1.50 to $1.60. Anything above $1.60 will be a bonus to me.

Happy IPOing.

Spackman Entertainment Group - Balloting Results

Spackman Entertainment Group announced its balloting results. There was no public tranche.

I didn't do an in-depth analysis of the institutional investors but it seemed like the Company has lined up some good names to support its IPO.

I have given the IPO a 2 Chilli rating for its debut, but longer term wise, it is anyone's call, depending on many factors, including whether they can produce a few movie hits.

Happy IPOing if you are one of the few lucky placement holders.

Monday, 14 July 2014

Spackman Entertainment Group

Spackman Entertainment Group ("SEG" or the "Company") is placing 69.44m placements shares at 26 cents each for a listing on Catalist. 50m New Shares and 19.44m vendor shares will be offered. There is no public tranche available. The IPO will close on 18 July 2014 at 12pm.

Principal Activities

The Company is mainly involved in the production of films as well as distribution of foreign films in Korea. This is quite an interesting company to analyze given that this is the first time there is a film production house to be listed here.

Not sure if you have watched any of the movies above, but i will try to catch one when i am on my next business trip... Cold eyes is one of the top 10 movies in Korea for 2013 that is produced by the Company. If you look at the top 10 list, no.3 and no.10 were produced by the Company but somehow, i had trouble trying to see how the revenue for Snowpiercer is flowing into the Company as it wasn't so evident in the 2013 financials.

Competitive Strengths

I will not type it out but "cut and paste" from the prospectus for your information. Basically if you cut all through hay stack, you are basically investing in people. This is a production house with about 35 full time employees. It is difficult to place a value on the brains of this creative bunch but you will have to hope that the good ones will stay with the Company and not be poached away.

Financial Hightlights

Majority of the revenue for 2013 was from Cold Eyes. It is difficult to predict if movies will be a success or a flop but perhaps that is the reason why they are able to launch the IPO at a supposedly "rich valuation" now as they have just launched a new movie "Confessions". They better launch the IPO before the box office results is out? 

The Company has a short operating history with EPS of 0.78 cents for FY2013. If we use an exchange rate of 1.25 and a post IPO shares of 395.31m shares, the EPS will be 0.78 x 1.25 x 344.54/395.31 = 0.85 Singapore cents. That will translate into a listing PER of 30.6x. The market cap post IPO is around S$102.78 million.

According to the prospectus, the NAV per share is 2.6 US cents x 1.25 x 344.54/395.31 = 2.83 cents. The IPO price is at a huge premium of 9x over its NAV.

Use of proceeds

Most of the IPO proceeds will be used to invest in films production and for general working purposes.

What i like about the Company
  • Very unique company. Finally we get one to list here following the popular K-wave!
  • If the directors are creative and can create blockbuster movies or k pop group, then the Company will do very well. 

My concerns
  • Film production is always a risk as any major flops can be financially draining to the firm, not to mention the risk of the image being tarnished.
  • Film production can be highly profitable or highly risky. It's a binary kind of product. 
  • Creative people usually have no concerns over costs and this may result in costs overrun of films and they can leave anytime and start a new production house.
  • The industry is pretty fragmented but highly competitive given vibrant market.
  • Piracy of films will reduce the royalties and fees received by the firm.
  • There are a lot of pre-ipo investors in the Company and they got in at between 6-16 cents.
  • The two key directors in aggregate (including the % via Spackman Equities Group) only controls about 15.6% of the Company. I think that is a tad too low to retain talents.
  • Huge 78.5% premium to its NAV
  • Not sure for how long the K-wave will last

My Ratings

I understand from source that the demand for the IPO shares have been pretty good so i am expecting to see some fireworks. The lack of public tranche has been fairly disappointing for our K-wave fans in Singapore ^_^ . If you ask me.... i will hesitate to invest in this for the longer term for the concerns i raised above. 

For those who managed to receive some shares from the IPO placement, I will give it a 2 Chilli rating for the debut but it it just too difficult to predict how the future will look like for this firm at this juncture.  It is a binary option and can go either way.

Happy stars gazing

Sunday, 13 July 2014

First Sponsor Group Limited

First Sponsor Group Limited ("FSG" or the "Company") is offering 3m shares for the public and 30.25m shares via placement at $1.50 each for its IPO. The offer will end on 17 July 2014 at 12pm and starts trading on 22 July at 9am.

It was priced at the lowest end of its book building range according to the Company's term sheet. The market cap will be around $884.7m based on the IPO price.

Principal Activities

The Company is a developer and owner of residential and commercial properties in PRC and is backed by 2 key controlling shareholders, Hong Leong Group Singapore (through Millennium & Copthorne Hotels Plc) and Tai tak Estate Sendirian Berhad. 

The Company operates in 2 key cities of Chengdu and Dongguan and the picture below will show you all their projects (current and future) at one glance.

Financial Performance

It is frankly difficult to predict what the future profitability will look like given this is a property development company and much depends on how successful they are in bidding for the projects and executing them.

The EPS based on the post-invitation shares is 8.14 cents. This translate into a PER of around 18.4x, which is not exactly good value. I am not privy to the 2014 results, so at this juncture, it is very difficult to determine how the forward earnings will look like given the lumpiness of such business nature.

As you can see from the table above, much of the revenue is generated by the sale of properties.

Strategies and Future Plans

The main bulk of the IPO proceeds is for future development projects and the table below shows its strategies and long term plan.

What i like about the Company
  • Strong sponsorship. The two major holders are reputable companies, especially the Hong Leong Group. 
  • Focus on 2nd tier cities and mass market segments, where the supposedly growth will come
  • The Company has been very high cash flow generative and has no long term debt at this juncture. Much of the capital requirement has been provided by the sponsor on an interest free basis
  • It is sold at 25% discount to its book value
  • Managed to attract Tecity as a cornerstone investor
  • Committed to pay out some dividends every year
My concerns
  • China property sector has been in the doldrums for a while now. It remains to be seen if recovery is on the cards
  • Overly concentrated on only two cities. 
  • Complicated shareholding structure with a cross holdings by other companies within the Hong Leong group.

The Company intends to pay out $10m a year (or 1.695 cents) for now. Based on the IPO price and shares, that works about to be about 1.13% yield. 

My ratings

The Company is listed at a slight premium. The post IPO NAV is around $1.42 versus the IPO price of $1.50 The fact that it is priced at the lower end of the book building range is not encouraging. However, having said that, the adjusted NAV based on the appraised valuation is around $1.99. So investors are effectively getting in at a discount of around 24.8% to its value appraised by DTZ.

I present the peers valuation table from Capital IQ below. I did not attempt to remove the bigger market cap companies as technically, the smaller one should be trading at a discount.

Given that i am not sure of the forward earnings, i will use the book value as a benchmark. From the table above, a range of 0.7x (median) to 0.8x (mean) would be a fair value range and that will translate into a price of between $1.40 to $1.60. As for PE benchmark, i think First Sponsor Group is already fairly valued.

Personally, i am not so keen into property counters right now, especially the ones in China. You can see that there are better valued companies for you to choose. I will give it a 1 Chilli rating, i.e. subscribe only if you like the company and the sector. The float is pretty small and very well-controlled. The Company is cash rich and don't really need to do the IPO, so this exercise is probably more for strategic reasons. Given that they have placed out the shares pretty well and this is a Hong Leong related company, i think downside will be limited but I will frankly be surprise to see much first day fireworks as well. The rich tycoons are too shrewd to sell you anything cheaply.

As there is only 3m public shares available, it is probably not going to be easy to get the shares. Having said that you will also need to hold a longer term view when you press the apply button as you will have to sit out the property cycle doldrums.

Happy IPOing.

Friday, 11 July 2014

Frasers Hospitality Trust - Balloting Results

Frasers Hospitality Trust ("FHT") announced that its public offer of 45.454m stapled securities was approximately 13.8x subscribed. I have to say that this a strong set of subscription results given the big float.

FHT will start the trading debut at 2pm on Monday 14 July 2014.

The over-allotment issue of 35.737m stapled securities have also been triggered, which means the price stablisation will occur should the debut be weak. Given the strong demand, my gut feel is that this will not be required in the first week.

It is not too difficult to get the shares. Investors who subscribed between 50 to 199 lots will receive about 9 lots each and the probability is around 42%.

I have shared with you the fair trading range of between 82c to 95c, my gut feel is that it will debut between 90c-93c.

Happy IPOing!

Wednesday, 9 July 2014

Starburst Holdings Limited - Balloting Results

Starburst Holdings Limited announced their balloting results this evening and the company will start trading tomorrow. The entire tranche was about 9.5x subscribed. I have to say that IPO is very hot.

Public Tranche

The public offer is very difficult to get with probability of around 14% for those who applied for 100,000 shares.

Placement Tranche

As per my IPO write up, Alan Wang from Asdew Acquisitions took 10m placement shares and Eastspring Investments (part of Prudential) are the anchor for the placement tranche. Collectively, they own about 6.4% of the Company and the remaining free float is now reduced to about 34m shares (13.6%). My personal view is that the two are quality investors with a long term investment holding horizon. This should bode well for investors of Starburst.

Happy IPOing and congratulations to those who got the shares. ^_^
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