It always got my attention when new IPO listed and drop like hell, a counter drop 36% since IPO listing price RM0.85 to RM0.545 in 14 days.The Star: “This is the second China-based company to announce its listing on Bursa Malaysia through initial public offering (IPO). It registered a net profit of RM46.8mil in the financial year ended Dec 31, 2008 on revenue of RM195.78mil. Its net profit and revenue grew at a compounded annual growth rate of 37.8% and 34% respectively over the last three years. It currently has about 1,900 employees and serves about 300 customers, including Guohui, 361° and Xdlong, the manufacturers of well-known China brands. It has set a dividend payout policy of at least 20% of its pre-tax profit per year.”
Wow, What a great sentence “dividend payout at least 20% of its pre-tax profit per year”
Check it out the financial report
52 million revenue, 13 million profit & 0.05 EPS
Let’s find out what’s the PE for this company: 0.05 x 4 = 0.2 cent
RM0.545 / RM0.002 = PE 272 (Our Public bank , Sime PE only 12, 13)
Can you imaging to earn back what you pay for this counter you need 272 years…. Can you make it that long??
If it happen drop to RM0.1, PE=50, you still need 50 years to earn it back your cost!!! How they justify IPO price RM0.85 I really wish to know.
Let’s look at THE EDGE http://www.theedgemalaysia.com/business-news/148513-quek-family-sells-36-stake-in-multi-sports.html
According to filings to Bursa Malaysia last Friday, the Quek family, via its Cayman Islands incorporated vehicle GuoLine Group Management Co Ltd, had disposed of a 3.6% stake comprising 12.97 million shares in Multi Sports on Aug 24.
Do you still want to buy RED CHIP IPO ???
Posts
How could one simply evaluate a newly listed company based on her financial result before listing.
ReplyDeleteWith the fund raised from IPO, companies may use it for expansion and topline and bottom line are expected to improve as well.
If the company previous can't even show good result, how you can expect they'll done well in future ?
ReplyDeleteIf the china company really so great, why they want come to malaysia this 20million population island listed ? Ask yourself and your common sense to think
I don't know whether the company is going to do well or not. This is another subject matter.
ReplyDeleteMy point is that one shouldn't use pre-listing earning to evaluate the company after the company is listed. Not right to calculate the PE ratio of listed company using pre-listing earning.
the 272 years is very misleading.
If a company couldn't show good result previously, it doesn't mean she won't do well in future. Example: Mah Sing
ReplyDeleteMalaysia is not an island. 20 million population was long way back. Malaysia now has about 27 millions of population.
OSK forecast 5.4 time PE ratio for year 2010
ReplyDeletehttp://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=147505&Itemid=79
It seems someone here didn't use common sense to think...
ReplyDeleteYo bro, fighting is useless, just wait and see how they doing and how market react... Market always right!! My common sense tell me something is not right if after IPO keep droping and major shareholder selling their share
ReplyDeletesound like you're very knowledage, show us your forehand call profolio
ReplyDeleteHi Beng Hooi,
ReplyDeleteThis's reality world, if those research can listen, everyone will be millionaire... They won't keep doing analysis for you.
Simple as that, what's the purpose they go study and do analysis so hard, reason behind could be they're holding alot of this counter they want to sell it....
haha, I just sharing not to offense anyone or any company
Ben and KT,
ReplyDeleteI didn't really look into this counter neither am I interested in it.
Having said all the above, my only point is that using pre-listing PE to evaluate a company that has been listed is not right.
Anonymous, what logic is that? Those knowledgable ones have to show forehand call portfolio? I am still learning. Must all savvy investors show their forehand portfolio to prove themselves? Is it necessary?
Haha... From the language style and verb agreement, Anonymous, KT and Ben are highly likely the same person
ReplyDeletehaha, since people have doubt, I'll change the setting to registered user only...
ReplyDeleteanyway thanks for visiting
I avoid IPOs. The majority of them are always overpriced.
ReplyDeleteSorry i thought the profit was 40million plus and their sales are expected to tripple after expansion, so i think the only concern is the quality and reliability of their financial statement.
ReplyDelete