Monday, February 4, 2013

Overseas Education Limited

Overseas Education Limited 

Download the Prospect here

Offer Price: $0.48
Offer Size: 125m new shares
Public Tranche – 3.75m shares
Placement Tranche – 121.25m shares

Twenty-five million additional shares are also available under its over-allotment option.
NAV per share (post-IPO): S$0.278
Historical PE: 6.6x (FY11)
Market Cap (post-IPO): S$187.4m
Open: 31 January 2013
Close: 5 February 2013 12pm
Trading: 7 February 2013 9.00 a.m. (on “ready” basis)


Oversea Educatio
n Limited (OEL) are a private foreign system school in Singapore 

offering the K-12 International Baccalaureate (“IB”) curriculum within a globalised
 multi-cultural environment to children aged between 3 and 18 years of expatriate
 parents who are senior executives and professionals working and living in Singapore. 

OEL believe that they were the first and currently one of five such foreign 

system schools in Singapore offering a straight-through IB curriculum in a single
location. They also believe they are an inextricable part of the social and economic infrastructure supporting foreign direct investments into Singapore and forming an
important consideration for expatriates contemplating the relocation of their families
and especially of their school-going children here. OEL master policy is “to provide a
happy, safe and effective school for overseas  families living in Singapore” that
prepares our students for their return to their respective national education systems
or, for the more senior students, for entry into universities worldwide.


 Financial Highlight

Use of Proceeds

My personal view

After a long break of IPO with public share application
since the last one  in October with Gaylin, we welcome
Oversea Education Limited. This is one IPO that I am
pretty excited and confident that it will bring good returns
and reward to those who can get it from the public allocation.

OEL have built a well-recognised name in the private
education sector in Singapore and is one of the top 3 
Foreign System School (FSS) in Singapore in term of
revenue having a 10.3% market share in the FSS industry
in Singapore.

I believe that our government's pro-foreigner policy and
friendly "open-arm" measures will have more and more
foreigners enrolling in the school with more parents in
Singapore. If the "worst-case scenario" of a 5.9 millions
population in 2020 and 6.9 million population in 2030 is 
to materialise, then I believe that OEL revenue, net profit
and net profit margin can only go UP. I am rather positive 
that this will be the likely scenario.

Oh ya, I mentioned that I am pretty confident about OEL
opening on the 7 February, which is this Thursday. You 
know how confident I am? I am going to put it this way:
If the stock open at about
a) 80cts, then it is just about reasonable
b) 90cts, then it is about "there" already
c) $1, then better sell and wait for the next chance to come in.
With the market in a sizzling hot mood and this being a quality
stock out on a very good time, I believe that it will open with 
a bang this Thursday morning 9am.  

This is one stock that I am willing to keep with a mid-long term
investment horizon. The company stated in the prospectus
that it intends to pay out at least 50% of the net profit after
tax for each financial year as dividend. This is a rather generous
pay-out and I am willing to be paid while "waiting" for the stock
to reach my optimal price. Ok, some readers will probably think
about what happened to its other peers in the stock exchange,
namely Raffles Educations and Informatic. This 2 stocks have
fallen from the grace and are now lingering and consolidating
again in the hope that it can regain its former glory. The reason
why this 2 companies failed is that they seek to expand too quicky
and way too fast that they can't absorb totally. I believe that the
OEL management will take heed of what happened and will not
commit the same mistake again.

To end, I am advising all readers to "show hand" and SUBSCRIBE
for OEL public shares. If you are not lucky enough to get it,
you only lose $2 and the money will be back on Wednesday night
and you are still in time to do your CNY marketing. But if you should
get it, then it will be a great early Red Packet from Mr Market himself.
I am also showing hand on this IPO but I will be keeping half and
taking profits on the other half should I get it.                                            

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