Tambun Indah Land Berhad IPO

HO Ho HO tis the season to be jolly and to apply for promising new IPOs. On cue for listing on 18th of January in the year of our Lord 2011 is Tambun Indah Land Berhad at offer price to public of 70 sen per unit (par value at 50 sen each). After some initial hand-wringing, Yours Truly checked out the figures on the prospectus and from industry sources in the pearl of the orient i hear tell that this here is a promising little company indeed. It's a Penang-based property developer pretty famous in Penang and it has a low gearing ratio of 0.17 times currently (its prospectus says that its gearing ratio will be reduced to 0.12 times after listing by utilising some of the proceeds of its listing). Their future projects will probably be more on the mainland in seberang perai where land is cheaper and more plentiful than on the isle. They are also scouting around for suitable land in the Klang valley but nothing concrete there has come up yet, for now at least. Its price earnings ratio for 2007 is 6.76, for 2008 it's 5.63, for 2009 it's 5.54 and for 2010 (estimate) it's 9.99 respectively. Which is fairly respectable, given the downturn in economy of the last couple of years. They have of course, a 3-year preceding profit track record (proft after tax for 2007 is at RM19.558 million, for 2008 RM23.476 million, for 2009 RM23.764 million respectively) for main board listing on Bursa. They're projecting proceeds of around RM22million+ from this IPO. A few things conspire in favour of Tambun Indah's listing: it's an all-Malaysian company; it's board of directors are loan-averse (they like internally-generated funds to drive their expansion such as this IPO); they're well-known and established in penang; the stock market is currently on an uptrend and hungry for promising new companies; Malaysia which falls under the emerging economies' sphere of economic influence is reaping the rewards of being in the right place at the right time as are promising new companies coming up for listing on the bursa. Soooo...fingers crossed and hope to get some of the goodies this time. The closing date for Tambun Indah's IPO application is at 5pm, 6th January. Balloting is on 10/01/2011 and allotment is on 17/01/2011.

Post Blog Note: But having said all the above, Tambun's debut price was less impressive than some others. Eventhough Tambun was oversubscribed by over 18 times, it commanded a premium of slightly over 10sen only on listing day. This as compared to Benalec Bhd, a land reclamation outfit which listed at around the same time but commanded a premium of over 35 sen over its offer price of RM1-00 (on 20/01/2011 its premium has gone up to 47 sen). Perhaps the smaller property developers aren't that attractive to the market. So far all companies coming up for a listing after the New Year have enjoyed a premium over their offer price. So for now, almost ANY tom dick or harry IPO is a winner it seems.

Post Post Blog Note: Woaaah, Tambun has fallen to 68.5 sen today, that's BELOW its IPO offer price. What's up with that?

the humbler IPO and yet ...

After the milestone Petronas Chemicals Group Bhd IPO, I next applied for the IPO of little-known Careplus Group Berhad. At 23 sen a unit, it was cheap as cheap gets. Its bosses were folks from Seremban and it was an all-Malaysian, all local company. This was an ACE company and ACE companies unlike Main Board companies on Bursa don't need to have 3-5 years' profit track record to qualify for listing on Bursa. I even felt a tinge of remorse after applying for it as this company seemed too tiny to really make any significant impact in the market. They make rubber gloves, mostly latex rubber gloves, not the nitrile ones although in its prospectus the company had said that it was venturing into nitrile gloves with new machinery purchased from the proceeds of this IPO. Surprise surpise, my application and another application i know of has both been REJECTED today. this means that the retail over-subscription rate for Careplus' IPO is probably quite impressive. More impressive than even big brother Petronas Chemicals, i'm begining to believe. I didn't even get 1 blessed unit of Careplus Group Berhad out of the 20,000 units which i applied for. The company debuts on the Bursa ACE market on 6th December so i'm really curious as to how it will perform on market opening day. Unlike the Petronas Chemicals Group Berhad IPO which raked in billions of Ringgits, Careplus is projecting IPO proceeds of around RM15 million only.

POST-BLOG NOTE: little David falls the mighty Goliath. The Careplus Group Berhad IPO was oversubscribed by 84.67 times for the public category while the Petronas Chemicals Group Berhad IPO was oversubscribed by 2.98 times for the public category.

North Korea

Rogue states like North Korea should be taken out forcibly by an international expeditionary force sanctioned by the United Nations. They are a threat to world peace and are not only illegitimate, but hopelessly corrupt and criminal. There is no basis whatsoever for such a regime to continue to exist on paper or in fact.

Quantitative easing, anyone?

The US Federal Reserve prints money in QE2 (no, not the cruise ship, the second round of Quantitative Easing) as much as US$600 billion to buy up long term US treasury bills over the next 8 months. This is supposed to flush the US banking system with cash so that US Banks will lend out more money to US businesses which in turn create more jobs in the US and lower the US unemployment rate which is now hovering near 10%. That's in theory. But what happens in fact is that all this new money gets pumped OUT of the US into emerging markets in developing countries, so-called "hot money" snapping up properties, stocks, commodities, bonds in emerging economies and creating asset bubbles. Then i dread that as fast as this hot money comes in, foreign fund managers will take profit and spirit out their investments INCLUDING yours and mine hard-earned cash leaving markets in emerging economies crumbling in a tailspin.

budget 2011 - business as usual

The 14th budget deficit in a row since 1998 albeit narrowly lower at 5.4% compared to 5.6% for 2010's budget saw the return of mahathirism's megaprojects par excellence. They're going to build a new subway system for Kuala Lumpur (why did they build a monorail in the first place?), they're going to build a 100-storey tower in the heart of the city within a stone's throw from old chinatown (projected glut in office space be damned), they're doing all these and more. But no open tenders as usual (the day when there are open tenders for government/GLC projects in Malaysia will be a cold cold day in hell). Service tax goes up from 5% to 6% for 2011 and there's (among others) a new tax for astro satellite tv subscribers. The much hoped-for abolition or reduction in withholding tax (currently at 10%) for Malaysian Real Estate Investment Trusts (M-Reits) failed to materialise. And they want the private sector to take the lead in transforming our economy. Yawns! Ah the stale clammy air of recycled policies of old. Un-original, un-inspired, un-imaginative.

elections

i was at a government department recently and overheard civil servants talking about "what if i was picked as a candidate". Candidate presumably means standing as a candidate for the government in the coming general elections. Even before any official announcement have been made or parliament had been dissolved some people are already counting their chickens or manoeuvring for positions to STEAL more from the system and line their pockets. Kleptocracy in its full glory.

gratitude

I always miss out on the good things in life and chose instead to focus narrowly on the bad. That's a personal weakness i hope will grow smaller and smaller over time.