JB Foods Limited

Dowload the Prospectus here

JB Foods Limited

Offer Price: $0.30
Offer Size: 84m new shares + 16m vendor shares
Public Tranche – 3m shares
Placement Tranche – 97m shares
NAV per share (post-IPO): S$0.159
Historical PE: 4.5x (FY11)
Market Cap (post-IPO): S$120m
Open: 13 July 2012
Close: 19 July 2012, 12.00 noon
Trading: 23 July 2012, 9.00 a.m. (on “ready” basis)

JB Foods Limited was founded in the 1980s and started as a processor

of wet cocoa beans to dry cocoa beans. Today, the company are one

of the major cocoa ingredient producers in Malaysia, with a production

capacity of 60,000 tonnes of cocoa bean equivalent per year. In FY2010, 

JB Foods’ cocoa bean processing accounted for 14.6% of the total cocoa

beans processed in Malaysia

JB Foods' principal activities comprise the production and sale of cocoa
ingredient products, namely cocoa butter, cocoa powder, cocoa
liquor and cocoa cake. Cocoa powder and cocoa butter are the company

two (2) key products that comprised more than 90.0% of the revenue for
the Period Under Review.

The company had recorded a net profit of RM 51 million in FY2011 with a

revenue of RM 690 million and that is net margin of 7.4%. JB Foods will raise

about S$23 million from the listing of shares and they will use the 8.3 million

of the net proceeds to repay bank borrowings and about 15 million for General 

working capital and to fund acquisitions, joint ventures and/or strategic alliances
when opportunities arise.

In respect of FY2012, the company intend to recommend and distribute not

less than 30.0% of the audited combined net profit attributable to Shareholders

as dividends, From 1 January 2012 to the Latest Practicable Date, the company

order book based on confirmed orders was approximately 50,406 mt, of which 

approximately 20,502 mt had been fulfilled and RM250.8 million of revenue had 

been recognised. The remaining orders of 29,904 mt will continue to be delivered

continually on a monthly basis until the end of 2013.

JB Foods have been granted call options to acquire equity interests in PT Koko

(a cocoa liquor processing facility in Maspion Industrial Estate in Gresik, Indonesia) and Kakao GmbH (a cocoa butter melting, deodorising and warehouse facility in Valluhn-Gallin, Germany). The construction of both facilities is expected to be completed by the second half of 2013.

Based on the offer price of 30cts, Neo Group with an NAV of 15.9cts will have a

89% premium of Invitation Price per Share over the Adjusted NAV per Share. 

This is a very OK valuation of the stock offer price. Also it is worthy to note that

the new investor will be paying 30cts a share while the major shareholders

are paying 12.9. I believe that investor are getting the share at a very reasonable

offer price.

I have been through the prospectus a couple of times and I am pretty excited

about the prospects and upside potential of the company. I like the sector it is

in although the competition is fierce, but I can see that JB Foods can only be

bigger and benefited from its expansion. It has a peer that is also listed in 

SGX and it is none other than Petra Food which is very much bigger than

JB Foods with a market cap of about $1450 million as compared to $120 million

for JB Foods and has more downline products. In a research report by NRA on

21 May 2012, Petra Food is trading at a P/B of about 3.6 times and it forecast

the company will be trading at a P/E of 21 times. In another research report by

SIAS Research on 11 May 2012, it forecast a P/E of 17.3 times and a P/B

of 3.7 on Petra Food. Base on the figures from the prospectus, JB Foods are

trading at a P/B of about 0.89 times and a historical PE of 4.5 times. Being 

small, JB Foods should trade at a substantial discount of the bigger peer, so

we just give it a 50% discount on both the P/B and P/E ratio. A 50% discount

on the P/B (1.8 times) will give the price at near to 45cts and 64cts at a P/E 

with a 50% discount ((21+17.3)/2/2). This is just my personal estimate on the

company's prospectus and I am making a lot of assumptions in my calculation

but it roughly show the great upside potential that the company has.

I am looking at a 50-66% upside on its debut if the public and private placement

shares are well-subscribed.  

When I was writing my personal view for the IHH Healthcare IPO, I stated that

"One thing to note will be if you are unsuccessful in your IPO application or only

receive a portion of what you applied,the money will only be returned or refunded 

on the 23th July. This is to say that your application money will be "stuck"for 

>2 weeks. If you need to use some money within this period, please do not show

hand and then all got no money to use or to apply for the next IPO, JB Foods, 
which should be out soon."

What a coincidence, JB Foods came out at the "wrong" time and I wonder 
whether the public tranch can be heavily subscribed. I know of readers who really show-handand apply for IHH and now only left a small sum to apply for JB Foods.
It's Ok, use whatever it is left to subscribe for the IPO and I believe that you will be rewarded. JB Foods will debut on Monday, 23th July and IHH Healthcare will
debut on 25th July, it should have some spill-over effect on JB Foods. In a couple
of  weeks time, another IPO, its peer and competitor in the Cocoa business 
Guan Chong, which is related to JB Foods will be doing a dual listing in SGX, 
and I believe JB Foods should be in  the wave again. 

My personal advice on the JB Foods IPO is a SUBSCRIBE and if you can afford

to hold, please grab it tightly until the listing of Guan Chong and even longer.

too    

IHH Healthcare Berhad

Download the Prospectus here

IHH Healthcare Berhad

Offer Price: $1.18*

(*subject to applicable refunds based on the Final Retail Price)
Offer Size: 2234.65m new shares
Singapore offering (public, directors, employees): 140.635m 

Public Tranche – 52m 

Historical PE: >90x (FY11)
Market Cap (post-IPO): M$23 billion / S$9 billion
Open: 3 July 2012
Close: 11 July 2012, 5pm
Trading: 25 July 2012, 9.00 a.m. (on “ready” basis)

Frankly, this is one IPO that I don't think I need

to say much. Very simple, SUBSCRIBE!

Yes, I know that IHH is going to use 90% of the

listing proceeds to pay debts, and the stock is 

listed with a high valuation of forward PE of 20

times, but this is one stock that I really can't miss.

There are a few investment theme that will be 

mentioned every now and then, and in fact it

is the future trend, and we are talking about aging,

private medical healthcare. If you are an investor, then you

really need to put some money into this stock.

IHH IPO attracted a listed of reputed cornerstone

investor and in total there are 22 of them as below:
 

Cornerstones:
1. AIA Group Limited’s subsidiaries
2. Blackrock Investment Management, LLC
3. Capital Group International, Inc’s wholly-owned subsidiaries:
4. Capital Research Global Investors
5. CIMB-Principal Asset Management Berhad
6. CMY Capital Markets Sdn Bhd
7. Eastspring Investments Berhad
8. Employees Provident Fund Board
9. Fullerton Fund Management Company Ltd
10. The Government of Singapore Investment Corporation Pte Ltd
11. HPL Investers Pte Ltd and Como Holdings Inc.
12. Hwang Investment Management Berhad
13. International Finance Corporation
14. JF Asset Management Limited
15. Keck Seng (Malaysia) Berhad and Keck Seng Investments

(Hong Kong) Limited
16. Kencana Capital Sdn Bhd
17. Kuwait Investment Authority
18. Lembaga Tabung Haji
19. Mezzanine Equities N.V.
20. Newton Investment Management Limited
21. Och-Ziff Capital Management Group’s affiliates
22. Permodalan Nasional Berhad

Cornerstone Investors to take up an aggregate of 1,387.5m

IPO shares representing approximately 17.22% of the enlarged

issued & paid-up share capital. Lock-up period for investors 

subscribing for >50 mln shares is 6 months. 

Is the list impressive or what?

After listing, IHH will become the third biggest IPO this year

after Facebook and Felda, and the 2nd healthcare provider

by Market Cap in the world, with 4900 hospital beds in in 30

hospitals and 60 medical centres in Singapore, with 3,300 new

beds in the pipeline (Parkway hospitals), Malaysia (Pantai ), 

India (Apollo ) and Turkey (Acibadem ). IHH has the ambitious

but achievable target of becoming the  number 1 healthcare 

provider in 3-5 years, which is currently occupy by HCA Holdings

in US. I believe that with such vision, its high valuation is justifiable. 

One thing to note will be if you are unsuccessful in your 

IPO application or only receive a portion of what you applied, 

the money will only be returned or refunded on the 23th July. 

This is to say that your application money will be "stuck"

for >2 weeks. If you need to use some money within 

this period, please do not show hand and then all got no

money to use or to apply for the next IPO, JB Food, which

should be out soon.  

If history were to repeat itself from what we saw from Felda

IPO, then we can expect a 10<x<15% kind of debut, which

will be a good return for some traders. We have 22 big shots

willing to be the cornerstones of the IPO, and that include

our very own GIC, there must be value and upside potential

that they see that they are willing to subscribe for the share.

Yes, the valuation is expensive and on the risky high side,

but I believe that it will still be a success as "Malaysia is a

bright spot on the otherwise dark canvas of global finance",

as described by PM Najib. In a word: Subscribe.

In a few words: Use the spare cash to Subscribe

Source: IHH Healthcare Berhad very thick IPO Propspectus, 
Lim & Tan Daily View on IHH Healthcare IPO 

Neo Group 粱苑集团

Download the Prospectus here

Neo Group 粱苑集团

Offer Price: $0.30
Offer Size: 22m new shares
Public Tranche – 1m shares
Placement Tranche – 21m shares
NAV per share (post-IPO): S$0.101
Historical PE: 6.8x (FY12)
Market Cap (post-IPO): S$43.2m
Open: 3 July 2012
Close: 9 July 2012, 12.00 noon
Trading: 11 July 2012, 9.00 a.m. (on “ready” basis)

I have to admit that I am a customer with Neo Garden Catering

for quite many years, having ordered buffets on numerous occasions

especially during the Chinese New Year period from them.

The food and customer service were rated above-OK by my 

guests, relatives, friends and family members, and of course,

my own choosy mouth. To say the truth, I was fairly surprised

that Neo Group is going for listing at this testing period but I 

guess it is a case of 明知山有虎， 偏向虎山行. For that, I admire

its Chairman and CEO, Mr Neo Kah Kiat's courage and foresight.

Ok, back to the IPO. 

Neo Group Limited is a leading food catering group with some of

the most recognised brand names in Singapore. In a report dated

April 2012, the company were ranked by Euromonitor International
Limited (“Euromonitor”) as the number one events caterer in Singapore.

Neo Group have received several awards over the years and if you

are interested or curious to know what they are, you can get more

detail at Neo Group Awards and Accolades   

Currently, Neo Group has three arms in the food catering business

that serve different population segments - Neo Garden Catering, 

Orange Clove and Deli Hub. Under food retail, the group has a chain of

16 Umisushi outlets offering Japanese convenience foods islandwide.

Through its “Neo Group Catering”, “Orange Clove”, and “Deli Hub” brands,

they supply buffets spanning a wide variety of styles and prices to suit a

diverse range of occasions, from private to corporate and community functions.

Its offerings in the catering business include daily meal delivery services,
Halal-certified food as well as catering for last minute events or emergency orders.

The company had recorded a net profit of 5.4 million in FY 2012with a

revenue of 38.4 million and that is net margin of 14%. Neo Group will raise

about S$5 million from the listing of shares and they will use the net 

proceeds o expand and develop our Food Catering Business and Food

Retail Business (which may include acquisitions, joint ventures and/or

strategic alliances)

Based on the offer price of 30cts, Neo Group with an NAV of just
10.1cts will have a 196% premium of Invitation Price per Share
over the Adjusted NAV per Share. This is a very rich valuation
of the stock offer price. Also it is worthy to note that the new

investor will be paying 30cts a share while the boss and directors

are paying 0.41cts and 8.43cts respectively. I believe that investor'

will be able to get the share at much cheaper price after the listing.

Neo Group intends to distribute dividends of at least 60% of its net

profits for the next three years, FY2013, FY2014 and FY2015.

It is quite a generous dividend distribution but I have my reservations.

A comparison between its peers like Select Group, Food Junction,

Thai Village, Sakae and Soup Restaurants reveals that it will is listed

with a much high valuation with higher PE ratio and P/B.

Somehow, I believe that once the initial IPO hype on the stock is

over, we will be able to get the stock below the IPO price of 30cts.

This is a company that I personally use its service and I believe that

it can still achieve growth under the guidance and direction with its

CEO, but from an financial view, this is exactly how I feel about the company. 

My suggestion is still to Subscribe for the Public tranche with a view

of selling off the stock with profits within the first few days of listing.

The public tranche only has 1 million shares and to  get it is

really purely luck but I will still risk my $2 application fee nevertheless.

For those who worry about not able to apply for the next IPO, 

IHH Healthcare as the money may be still in Neo Group IPO.

Fear not, as the money will be returned to you back on Tuesday

night and just in time to apply for the IHH Healthcare which IPO 

application closed on Wednesday.

Source: Neo Group IPO Propspectus, http://www.neogarden.com.sg
NRA Capital IPO Watch on Neo Group