Roxy-Pacific Holdings IPO.

Closing date of application: 10 March 2008
Commencement of trading: 12 March 2008

Established in the 1967, Roxy-Pacific holdings is a Singapore-based specialty property and hospitality group.

Property Development:

• The development and sale of residential properties typically comprising small to medium size residential developments such as apartments and condominiums targeted at middle to upper middle income segments.
• For competitive positioning, our Group places an emphasis on unique designs.
• Between 2004 and 2007, our Group developed nine projects and sold 279 units of small to medium sized developments, mainly in the eastern region of Singapore, including St. Patrick's Loft and Axis@Siglap.
  

Hotel Ownership and Property Investment:

• They own the Grand Mercure Roxy Hotel and 51 retail shops at The Roxy Square Shopping Centre.
• The Grand Mercure Roxy Hotel (“Grand Mercure”) is a major asset and is managed by international hotel operator, Accor Group.
  

Key Competitive Strengths:

• They have been developing properties since 1967, and having experienced several cycles in the property market, have an established track record and reputation.
• They are one of the more active developers in the Eastern area of Singapore, with an in-depth familiarity and a land bank of 30,422 sqm for 8 prospective developments there.
  

Key Risk Factor:

• The risk of the Singapore Property Market bull run coming to a halt in the near term.
  

Financial figures

Intended IPO price: $0.30
No. of shares available for public offer: 7m
No. of shares available for placement offer: 126m
Total post invitation share capital: 636.56m

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

FY2006
Revenue: $48.8m
Profit: $5.2m
NAV: 0.0726
EPS: 0.0081
EPS % Incr: 138%
PE ratio: 37x
Price: 0.30

2QFY2007
Revenue: $84.9m
Profit: $15.4m
NAV: 0.1149 (incl. IPO proceeds)
EPS: 0.0242
EPS Incr: 196% (Est.)
PE Ratio: 12.4x
Price 0.30

Dividend policy: No fixed policy.

Conclusion:

Based on its numbers, Roxy-Pacific is comparable smaller property developers which only focus on the Singapore property market such as Eastern Holdings, Sing Holdings, which typically trade at 10-12x PE.

As such, Roxy-Pacific should trade at a Fair Value of $0.30 (IPO price) or 12x PE only.

And with the market downturn pushing stock prices down to low valuations, it actually makes more sense to buy already listed property stocks instead, since they offer lower valuations, longer listed history, and include dividend payouts.


Probability of getting allotted for the IPO - FAIR


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.