Joyas Int. Holdings IPO.

Closing date of application: 11 March 2008
Commencement of trading: 13 March 2008

Established in the 1991, Joyas Int. Holdings is principally engaged in the design, manufacture, packaging, and sale of metal gift products, jewellery products, as well as packaging and other items. Their principal place of business is Hong Kong while their production facilities are in Shenzhen, PRC.

Their customers include International established brands, designer labels, and major corporations (for corporate gifts) in Europe, U.S., and Asia. They also sell their own metal gift products under their own propriety brand name "Argent" through their franchisees' retail outlets in PRC and Hong Kong.

Key Growth Plans:

1. They intend to expand and upgrade their production facilities to increase their production capacity to one million pieces a month.
2. They intend to enter into Australian, Eastern European, and other markets, having already registered their "Argent" brand in Australia.
   

Key Risk Factors:

1. They do not have long term contracts with their customers.
2. They are adversely affected by the rise in metal (key raw material) prices.

Financial figures

Intended IPO price: $0.29
No. of shares available for public offer: 1m
No. of shares available for placement offer: 27.8m
Total post invitation share capital: Approx. 107.5m

Note: Unaudited 2QFY2007 figures were available in the prospectus.

FY2006
Revenue: $27.8m
Profit: $4.0m
NAV: 0.1303
EPS: 0.03675
EPS % Incr: 5%
PE ratio: 7.9x
Price: 0.29

2QFY2007
Revenue: $30.7m
Profit: $3.8m
NAV: 0.1452 (incl. IPO proceeds)
EPS: 0.0355
EPS Incr: -5% (Est.)
PE Ratio: 8.1x
Price 0.29

Dividend policy: No fixed policy.

Conclusion:

Most PRC small cap manufacturing stocks that use metals as raw materials tend to trade at 6X PE, hence this IPO is rather overpriced.

What is worse is that its growth has been quite flat over the past three years. Naturally, I do not think this one is worth considering.


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.