Tuesday, June 21, 2011

MAKTUB




WRP WORLD BERHAD IPO

Former APL Industries Bhd (APLI) CEO Datuk Lee Son Hong is making a comeback to the corporate scene via the proposed listing of glove manufacturer WRP World Bhd on the Main Market of Bursa Malaysia.

Lee had sold his substantial block in APLI to Supermax Corp Bhd in 2005. APLI, then loss-making, failed to turn around after Supermax bought it over and the latter subsequently in late 2008 wrote off its entire investment of RM27.8 million in APLI.

After the listing of WRP, Lee’s family will control a direct and indirect stake of 44.4% stake in the company, second to Datuk Hamidah Abdullah, whose family will own a direct and indirect interest of 49.8%. A majority of Lee and Hamidah’s stakes in WRP are held jointly in two private vehicles.

WRP planned to launch an initial public offering (IPO) of 148.37 million new shares of 50 sen each to raise proceeds mainly for its capital expenditure. The issue price of the shares has not been determined.

Following the listing exercise, the company will have an enlarged share capital of RM300 million compared with RM225.8 million currently.

WRP — which was originally known as Wembley Rubber Products Sdn Bhd in the 1990s — was principally involved in manufacturing latex gloves and urology balloon catheters.

In 2005, Lee was invited by the late Tan Sri Ibrahim Mohamed, then a shareholder and chairman in WRP, to participate in the restructuring of the company’s businesses. Lee was made the CEO of WRP and was credited to have turned around the group. WRP posted a net profit of RM12.7 million in FY08 ended Dec 31, RM38.6 million in FY09 and RM35.7 million in FY10. Its revenue was RM491.07 million in FY10.

Lee had ventured into WRP as a shareholder and director about the same time he exited APLI and sold his stake to Supermax.

Recall that in 2005, as part of its strategy to beef up in size, Supermax acquired 45 million shares representing a 12.9% stake in APLI from Lee for RM27 mllion cash. Subsequently, it increased its stake in APLI to 14.09%. Given that Supermax was also running APLI on a day-to-day basis, APLI was considered an associate company of Supermax and its profit and losses was equity-accounted into the latter’s books.

Despite Supermax’s efforts to restructure APLI, the latter continued to make losses and became a PN17 company in 2007. In December 2008, Supermax put an end to its investments in APLI by making a full and final write-off of the latter’s remaining net book value of RM16.7 million.

WRP said it commercialised five of its own brands of latex gloves and supplied for major brands of latex gloves as well.

For FY10, we have expanded our markets to cover a total of 48 countries. Some of our major export countries include the US, Germany and Austria.

WRP has two manufacturing plants in Sepang, with 44 latex glove production lines and a urology balloon catheter production line with a total production capacity of about 3.65 billion gloves and 10.8 million urology balloon catheters annually.

tobeasuccesstrader

Wednesday, June 15, 2011

DO YOU WANT BUMI ARMADA'S IPO?

Some simple facts when Bumi Armada was TAKEN PRIVATE back in 2003.
  1. Bumi Armada had an eps of RM 1.01 per share
  2. Bumi Armada had a growth rate of 25% per annum.
  3. Bumi Armada was delisted at rm 7.00.
  4. That's an PE multiple of 7x based on CURRENT earnings.
  5. With a growth rate of 25% per annum, Bumi Armada's eps would hit RM 1.97 per share within 3 years.
  6. And the EPS would double to RM 2.46 per share by the 4th year.
  7. Using a price of 7.00, the stock WAS TAKEN private with a pe of 3.55x using a 3 year forward earning.
Shocking?

Yes, that was how CHEAP Bumi Armada was delisted via a privatisation exercise.

Many felt robbed!

But now Bumi Armada is GOING to be relisted on the stock exchange again.

Incredible isn't it?

Companies can easily list and delist and list again in Bursa Malaysia.

Doesn't this make a total mockery of the stock exchange?

Why our stock exchange so no class? Why allow stocks to list, delist and list again? Main masak-masak ah?

Mentioned in the blog posting: How Will Previous Shareholders Feel About Bumi Armada's Re-Listing?

  • It is a US$1 billion IPO, which values the company at about 20 times price-earnings for its 2011 earnings, and 16 times for 2012," a banking source said yesterday.
Think about it.

If you are a long term investor, how?

Think about it once again. Stock moves up and down. What if, in the future, when the stock moves down, the company decides to pull off the same stunt all over again? Not possible?

Yes, what if, in the future, the company decides to take the company private at a cheap price, as we had witnessed back in 2003?

Is that not possible?

Would you want to take such a risk?

Do you want to give the company a chance to make a fool out of your money again?

Ok. I, understand, many 'IPO investors' are merely speculators who subscribes to the IPO hoping the stock would jump on listing day.

It's an open strategy - which I would not criticise at all. It's not for me to comment on how one attempts to make money from the market.

However, recently, the past few IPOs aren't hot!

IPO investors and speculators are hit badly with plunging IPOs. For example? XOX Plunged 35% On Listing Day! And what was most annoying was that despite the stock opening significantly lower than its IPO price and continued to plunge after that. the major shareholders Of XOX were photographed laughing happily while pointing at a screen which was displaying the stock trading at a loss and of course, this triggered the usual Blame Game on the local press.

Some comments stood out.
  • New listings on Bursa Malaysia are failing to gain premium in the market because their valuations are overstretched in the first place, merchant bankers who spoke on condition of anonimity said yesterday.

    Recent IPOs such as XOX Bhd, UOA Development Bhd, MCLean Technologies Bhd and Ideal Jacobs (Malaysia) Corp Bhd struggled to gain premiums on their debut or struggled to maintain their momentum.

    "For most of the initial public offers (IPOs) coming out in the market now, the valuations were done at least three or four months ago, when the appetite for risk was much greater," said a merchant banker who has worked directly on a couple of IPOs earlier in the year.
Yeah, they admitted it.

That because the demand was there or the appetite for risk, IPOs were priced at a premium with overstretched valuations.

And would this not best reflect the Bumi Armada relisting?

The company, which had a 25% per annum growth, was taken private using a CURRENT earnings valuation.

And how does the stock wants to be relisted? Let me quote again:
  • It is a US$1 billion IPO, which values the company at about 20 times price-earnings for its 2011 earnings, and 16 times for 2012," a banking source said yesterday.
Won't you say that stock is priced at a premium?

Won't you?

ps: Again this reminds me of this one statement made: 'When stocks are taken private, the minority shareholders are offered the cheapest possible valuation but when stocks are listed, they WILL be sold to the prospective investors at a premium price!'

And on yesterday, the CEO made an incredible statement on Business Times: Buoyant outlook for Bumi Armada
  • We are going to the capital market to have a good dose of equity. We believe this exercise will help to grow the company further," said director and chief executive officer Hassan Basma in Singapore.

WOW!

That's very nice of the CEO to tell the investing public that they are going to the stock market to be listed so that they can get a good DOSE of liquidity (Money!!!!)

And Bumi Armada's preliminary prospectus is already loaded on SC website.

Page 9 of the draft prospectus:
  • We have and will continue to have a significant amount of borrowings. As at 31 December 2010, our total borrowings stood at RM3,418.9 million (including RM1.2 million of hire purchase). Our ability to service our debts and other contractual obligations will depend on our future performance and cash flow generation, which in turn will be affected by various factors, many of which are beyond our control.


    As a result of our indebtedness, we are exposed to interest rate risk, primarily from borrowings bearing variable interest rates to the extent that our exposure to floating interest rates remains unhedged by interest rate swaps.
And isn't this great?

When Bumi Armada was delisted back in 2003, it was only carrying some 148 million in debts. (you can verify that fact by clicking Barmada's quarterly earnings report here - data from word file attached)

Now it's carrying some 3.4 BILLION in debts, it wants to get a good dose of liquidity, a good dose of money by relisting!

Now, isn't the stock market a great place to get money?

So how?

Do you want Bumi Armada's IPO?

From 'whereiszemoola'