Closing date of application: 28 January 2008
Commencement of trading: 30 January 2008
Established in the 1980, Wee Hur provides building construction services in Singapore and acts as the management or main contractor in construction projects for both private and public sectors.
Their major current projects are:
As of 9 December 2007, they have an order book of S$239m based on secured contracts.
Key Risk Factors:
- They are solely dependent on the construction industry in Singapore, and the Singapore economy.
- The Singapore construction industry is highly competitive, and Wee Hur does not seem to possess any major competitive edge.
Intended IPO price: $0.25
No. of shares available for public offer: Approx. 2m
No. of shares available for placement offer: Approx. 81.5m
Total post invitation share capital: Approx. 321m
Note: Unaudited 2QFY2007 figures were available in the prospectus.
FY2006
Revenue: $80.6m
Profit: $2.8m
NAV: 0.063
EPS: 0.0087
EPS % Incr: 80%
PE ratio: 28.7x
Price: 0.25
2QFY2007
Revenue: $91.2m
Profit: $11.5m
NAV: 0.103 (incl. IPO proceeds)
EPS: 0.0358
EPS Incr: 300% (Est.)
PE Ratio: 7x
Price 0.25
Dividend policy: No fixed policy.
Conclusion:
A typical small cap construction company trades at 10x PE, so based on that:
Wee Hur should trade at a Fair Value of $0.35 or 10x PE only.
Unfortunately, the public float for this IPO is extremely low, and in the current weak market environment, it might be better for those interested to wait and to buy it off the secondary market instead.
Probability of getting allotted for the IPO - VERY LOW
I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.
3 comments:
I believe const ind still be sustainable for next 3 yrs, but as Kleer had pointed out the competition is strong, profit margin is the key with raw material cost incr and so on...I saw it 2Q07 profit surge to 11.5m, that means 23m FY07 compare to 2.8 FY06 -> 8 times. wonder why the jump and whether sustainable, might take a discount on it PE just be safe...
BTW kleer, saw the Baltic Dry Index (BDI) falling lately, signaling freight rate coming lower. Should we avoid shipping stocks from now...or still a bargain from lately mkt correction...any comment on Cosco, YZJ..etc
Hi R2D2,
Thank you for your comments. At present, the shipping stocks have not fallen to low enough levels for me to consider them compelling buys.
With the two IRs, Sports Hub, new hospital and new MRT lines coming up, the construction industry here is overloaded. The Govt has to put on hold some construction projects. Wee Hur or any construction companies should do well over the next 5 to 8 years. Go for it
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