A review of SGX IPOs of year 2009

A review of SGX IPOs of year 2009 - (#2 for IPO review series)

This is the second article on IPO review series. The Review of year 2008 is here.

1. Westminister Travel Limited (then E2-Capital, now Astaka(42S.SI)  {Travel} : IPO at Jan 2009

IPO price
(not backdated)
First day close
(backdated to account for consolidation, etc)
% +/-
(wrt 1st day Close)
Total Dividend collected
(not compounded)
$0.235$0.043$0.134 (before cap reduction in Jul 2014)211.6%
Despite economy downturn after 2008 GFC, the company managed to grow its earnings for few years before eventually sold its business to Corporate Travel Management in early 2014 and became a cash company with a new name - E2-Capital Holdings. And E2-Capital was RTO by Astaka in Nov 2015. When the news was announced in Sep 2014 the price shot up to $0.80. Dato Wong Sin Just is a shrewd businessmen isn't him? But its a rare case of the company willing to share profit to minor shareholders as well.

2. Japan Foods(5OI.SI) {F&B - Restaurant} : Feb 2009
The business model of any F&B is similar, open more outlets and improve food quality to improve top-line and streamline operation to improve bottom-line. Revenue has grown from 33.5mil to 65.5mil, net profit from 2.7mil to 4.7mil, EPS from 3.82cent to 2.68cent. While not a really fantastic record, the business is a cash generating business and has been kind in rewarding shareholders through dividends and bonus shares.

3. Teho Intl(5OQ.SI) {O&G}: May 2009
Similar to Mencast, the company has grown from a supplier of rigging and mooring equipment to a marine and offshore solutions provider. Due to the O&G slump, the company has been been in losses for the last 4 years despite having similar revenues, due to crushing margins.

4. Heatec Jietong(5OR.SI) {Piping & Heat Exchanger}: July 2009
With their main customers from O&G, it's not surprising that they are also struggling. Revenue has increased a lot from 7.4mil in 2009 to 21mil in 2017, but earnings dropped from 0.5mil in 2009 to negative 4.6mil in 2017.

5. JLJ Holdings Limited (now $Jubilee Ind(5OS.SI) ) {Manufacturing - 
Precision Plastic}: July 2009
Just one year after IPO, JLJ was hit by a bribery scandal involved with their only customer - Apple. Ex-MD Jacky Chua Kim Guan was jailed in 2013, and the company changed its name to Jubilees in the same year. It took them years of restructuring and maybe now they are ready to focus on growing their business again? Even though 9 years had since passed and your initial money had already shrank 86%. 

6. SingMedical(5OT.SI) {Healthcare}: July 2009
Revenue grew from 30mil in 2009 to 68 mil in 2017, while net profit grew from 3mil to 8.8mil. If I want only take these two points you might have the wrong impression that their businesses were growing steadily. They was struggling to stay profitable until the new management took over in Dec 2013 and slowly rebuilding and made better acquisition . Year 2016 marked the year of turnaround where their net profit hit 2.4mil, a sharp contrast compared to last few years earnings (2013: -6.4mil, 2014: 0.08mil, 2015: -0.15mil). The company's future looks as promising as ever.

7. PEC(IX2.SI) {Engineering} : Aug 2009
A EPC (Engineering, Procurement and Construction) specialist in O&G, chemical and pharmaceutical industries; which also takes on maintenance works. While they keep expanding their businesses in different region, their profits peaked at 2011, as margins were narrowing for projects due to rising costs and cost pressure from customers. But they have been weathering the storm well with healthy finance and managed to stay profitable in recent two years. A testament to this is that they have been giving dividends every year since IPO.

8. Mary Chia(5OX.SI) {Lifestyle & Wellness}: Aug 2009
It is perhaps simply difficult to operate such business in a tiny red dot where people's wealth were not growing for years, as evident by company's shrinking revenues and growing loss over the years. Coupled with tightening rules on employing foreigners and intensified competitiveness within the industry, perhaps one should be rejoiced that there is willing buyer to take over. Suki Sushi launched a mandatory take over in Aug 2017 for $0.111 per share.

9. Latitude Tree International Group Ltd (to Brooke Asia, then now $China Star Food(42W.SI) ) {Furniture}: Aug 2009
IPO at $0.22. This is a subsidiary companies of Latitute Tree Holdings Berhad, a still listed company in KLSE. This subsidiary manufactured furniture in Vietnam and sold to international customers, mostly US. They were doing OK, paying decent dividends before finally taken back by parent company. Unfortunately usually when this sort of activities happen, minor or retail shareholders suffered, as the main shareholder (parent company in this case) would offer a price that doesn't reflect the potential of the business. And so this company became a shell (Brooke Asia) in 2014 and was RTO by China Star Food in 2016. 

10. Passion Holdings Limited {Handicraft}: August 2009
IPO at $0.25. Not much info could be found. Received voluntary cash offer from Decorative Arts Holdings Limited for $0.26 per share and delisted in year 2011.

11. China Gaoxian^(AZZ.SI) {Fabric}: Sept 2009
Another fabric stock from China. They were one of the biggest IPO in 2009, to con your money. Con star of the year. Doesn't matter if they are selling premium type of fabric or not, this scandal-hit company was simply not meant for business. Just one year after IPO, the company cited an exceptional loss of 1 billion RMB (decrease of 1 billion cash). What's more astonishing was after this mysterious loss, they could still  managed to get a dual listing in Korean Exchange in 2011. How did they manage to con people around the world in the era of internet? They were fined by Korean regulator in 2013 over disclosure issues and became the  first China company that gets suspended in Korea. In 2014 the auditor gave a qualified opinion due to bulk of the firm's accouting records before 2011 could not be found. Why on earth, is still stock still tradable, and no legal actions are taken from Singapore side? This is an outright scam. 

12. Great Group Holdings (now $Forise Intl^(I5H.SI) ) {Apparel - Undergarment} : Sept 2009
As an established undergarment manufacturer in PRC, their businesses was on the rise. They were even in Forbes China's List of 2011 China's Potential Enterprises, as the only apparel company in the list. How fast that changed within months. Perhaps that had to do with the whole structural change in China's economy where they were already sprinting away from the labour intensive, cheap OEM of the world towards to higher end of value creation - advance and smart manufacturing. The company eventually change its name to Forise International in 2015, disposing their legacy busines and seeking new direction. The parent company Fu Hua Holding is a strong company in China, but when will the parent company do something on Forise is anyone's guess.

13. Ziwo Holdings (now $Ziwo^(I9T.SI)  {Raw material - SBR (Styrene Butadiene Rubber)} : Oct 2009
I don’t know much about the raw materials that they are producing, but their businesses was struggling throughout. It was perhaps even shocking to one of their main product - 30D filament yarn was rendered obsolete by warped yarn starting from year 2015. Did they not have the foresight or competitive advantage to upgrade their products? Another sunset business. Is it too late to only start to change business in 2018? 

14. Goodland(5PC.SI) {Property}: Oct 2009
Small and continuing to stay small? Doesn't seem the company have much desire to grow. Anyway, not much news could be found for this seemingly dull counter.

15. Hengyang Petro(5PD.SI) {Services - Logistics and storage of chemicals}: Oct 2009
They are simply in a tough business. Revenues were growing, so as the loss. And when the revenues dropped, the loss gets widened. Net gearing is high. And yet the risks are higher than other industries since it involves handling of chemicals. A fire broke out in year 2016 at DeQiao and lasted for 16 hours and caused casualty for one firefighting crew. Couldn't find one aspect to like about the business. The company has recently divested 49% of China Holdco on May 2017 and is currently an investment holding company. 

16. Jason Marine(5PF.SI) {Marine & Automation solutions}: Oct 2009
A resilient O&G and marine related company that was hit hard. It is an interesting company now that it is traded below its NTA

17. SBI Offshore(5PL.SI) {Offshore & Marine}: Nov 2009
Another O&G company, but this company has chose to diversify into solar energy sector from July 2015. Two years have since passed and they have not made any significant progress yet on the new business. Times is perhaps running out for them as their reserves are getting more and more depleted.

18. Sino Grandness(T4B.SI) {F&B - Food Products}: Nov 2009
Ok this is not a fraud but a legit S-chip. However, opinions are divided. It is the market leader of loquat fruit juice in China but how popular is loquat fruit juice in China? Let's take a look at their revenues, net profit and earnings per share at year 2010, 2013 and 2017 (all in RMB). Revenues (645mil -> 2260mil -> 3700mil), net profit (100mil -> 400mil -> 1400mil), EPS (0.469 -> 0.697 -> 0.38???) So after 7 years of tremendous growth in revenues and profit, earnings per share is now worse? Let's take a look at all the placement and rights.
Mar 2013: 28.5mil new placement shares at $0.82 per share (before share splitting of 2 for 1)
Oct 2014: 86mil new private placement shars at $0.61 per share to Thoresen Thai & PM Group (of which they have sold some shares in 2015 and caused price tumbled)
Feb 2017: Rights issue, Offer of 5 For 11 @ $0.21
If the business is really valuable, why would they place out shares or issue rights, each time at a lower price? What's more, why does their plan for Garden Fresh to be IPO on Hong Kong, has never materialized since 2013? Fifth person has an interesting article on why this company was not on his watchlist. All these lingering doubts, perhaps contribute the super low PE to this stocks. To me, it just seems they have a hard time competing with all the beverages behemoth in China and want to expand their market share fast with at the expense of margins. After all, they are not a big player. Just quote leopardsg here: "来自中国的臭名昭著的骗纸, 自称 PE 2.7    PB 0.3 , 但是既不回购, 高管也不增持, 自称现金多, 继续配股圈钱, 摆明了愿者上钩的无赖相."

19. Capitamalls Asia {Retail Mall}: Nov 2009
Although I haven't really started investing that time, I was made aware of this blockbuster IPO, and nearly considered to apply it. If I have, I would have be getting pathetic return for 4 years until it gets taken back by its parent and delisted in 2013. Capitaland, initially offered $2.22 per share, raised the offer price to $2.35. Minor shareholders get bullied again where the parent company chose to take back the company when it is finally ready to grow. More info in the article below.

20. Q&M Dental (QC7.SI) {Healthcare}: Nov 2009
Ok this is another simple business. Open more dental clinics to increase the topline, and streamline operation to increase the bottomline. Number of clinics increased from 37 in 2009 to 74 in 2017, Revenue up from 30.3 mil to 123 mil, profit up from 3.8 mil to 23.6 mil, EPS from 1.84 cent to 3 cent. And perhaps whats contributing most to the high % of return, is the increase of PE from 15 to 20.

21. Hiap Tong(5PO.SI) {Services - Lifting & Haulage}: Dec 2009
This is the type of business that Charlie Munger hates, because most earnings at the end the day, goes to acquire more equipment (in order to stay in the business). "There's all of my profit, rusting in the yard". Revenue has been more or less flat, 37.5 mil in 2009 to 41.5mil in 2017; while net profit dropped dramatically from 12.9 mil to 4.7mil. Just not the right type of business to invest in.

22. Hafary(5VS.SI) {Trading - Tiles}: Dec 2009
I don’t think anyone would have expected a dull business without much prospects would have become 2 bagger (including dividends) in 9 years. Surprisingly their revenue has been increased steadily from 2009 up to 2015 due to the boom in property market. Revenue grew from 30 mil in 2009 to 115 mil in 2017; net profit up from 3.4 mil to 8.4mil. During good year like 2013 and 2015 where their margins were good their net profit was above 15 mil. But earnings per share were actually flat: 2.3 cent in 2010; 2.03 cent in 2017. This cash cow is decent dividend counter.

23. Hock Lian Seng(J2T.SI) {Construction}: Dec 2009
As a construction company their earnings have always been lumpy and depending on the projects that they win. One thing they have managed to grow is their NTA, which was $0.184 in 2009 and now 0.395. Among the construction companies, I guess they are one of the most shareholder friendly in terms of dividends. 

In total there were 23 IPOs in 2009, where apart of 6 China stocks, the rest are all local ones. The obvious stars are Q&M and Japan Foods, which are 4-bagger in 9 years; followed by Hafary & Hock Lian Seng, which are 2-bagger. SingMed has finally turn-arounded in year 2016 and 1.5bagger. The most interesting one of course is Westminister Travel, which could be a few bagger depends on when you exit it. It was interesting because although their revenues and earnings were growing, their share price were almost dead, until they sold their business away for a good price. 

Latitude Tree and Capitamalls Asia were both taken back by parent companies unfairly to a certain extent; while PEC & Sino Grandness were OK. So this year wasn't a bad year, as only 10 counters that would send you to KR. But out of those, there were this China Gaoxian that is perhaps the biggest scam stock ever seen. For other fraud companies, maybe they made the wrong decision or turned the wrong way sometimes after the IPO; but this one was intended to scam your money right from the start, in your face.