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 ???
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