Recently, there were quite a number of advertisments on the STX Pan Ocean. It really created an impact on me to find out more about this company. I happened to find out from Today newspaper that it is planning an IPO in Singapore. It plans to price its share on 8 July and start trading on Singapore Exchange on 14 July. It will be the first Korean company to be listed in Singapore. The Prospectus can be found at MAS right now.
Comment: KK, you were asking me about STX the other day. Hope this information is useful to you and let us know what you feel about this IPO. I check out the prospectus already and there are 265 pages. Without much financial knowledge background, I really don't know what to look out for. Maybe you can share with us your view and how to retrieve the critical information from the prospectus. Thanks a lot.
Comment: KK, you were asking me about STX the other day. Hope this information is useful to you and let us know what you feel about this IPO. I check out the prospectus already and there are 265 pages. Without much financial knowledge background, I really don't know what to look out for. Maybe you can share with us your view and how to retrieve the critical information from the prospectus. Thanks a lot.
5 comments:
Without reading the prospectus, I say go ahead n apply n stag :) With the high profile adverts on TV and newspapers, coupled with the good earnings of shipping stocks, I say the IPO will be oversubscribed. The only possible deterrent would be the pricing.
Anyway, I'll wait till the prospectus is registered (now lodged only) b4 I take a look
I also saw the STX advertisement on CNA and decided to dig a little deeper into this. Here’s my take after reading the prospectus. Comments base on Warrant Buffet’s guidelines :)
Simple and understandable?
I am not too familar with the region and shipping, but the financial statements is understandable.
This company has a quite turnaround story,
1993- Under Judicial Management
2004- Released and bought by STX affiliated companies.
Korean development bank also a major shareholder.
A consistent operating history ?
Since company is new to be I did a study on its LT solvency, ST liquidity ratios and its cashflow(well, those thats in the prospectus)
(1) Prospectus has 2002-2003 results. Profitable for the last 3 years. Company turn in a stellar performance last year, EPS of US$0.11. Perhaps last year was a good year for all in the business, I remember NOL also did superbly last year!
And guess what they gave out US$1 per share. Interesting ?!?!?
For 2003, dividend was US$0.10 per share.
(2) Past 3 years company is pretty liquid and solvent.
(3) Positive cash flow coming from operating activities.
Especially good last year US$298.5mil.
(4) The thing I don’t like is it’s a high CapEx business, low profit margin and gearing is very high. Gearing improved over the past three years though, as of first three months of this year it stands at 0.57(include LT and Short Term borrowings). Which again is a good sign.
Favorable long-term prospects ?
The business is cyclical, very volatile, competitive and depends a lot on a number of uncontrollable factors including charter rates, freight rates, exchange rates and oil prices. Company does quite a bit of hedging against interest rates and currency.
Managerial Excellence
Return on equity ( not earnings per share )
Well, if you look at this, 2003 was 11.5%, 2004 was 44.9%(taking only the Equity of the particular year and not average). Which of course is great! But usually, gearing improves ROE, gearing was 0.57 as of March 2005, so its ok.
Profit margins ( which must be high )
Not good, tough business to be in!
2003 – 1.4%, 2004-7.2%
Now for the difficult part, EXECUTION
Good story.
But how is it price ? IF low PER will apply!
Other things to note, this year, oil prices expected to be high, also in 2005 they have a US$196mil in operating lease obligation. Prospectus also mention they Board has agreed to payout 30% of profits for FY05, but not sure how much they going to shares they going to offer so cannot tell how much it works out per share.
Disclaimer : Use the above at your own risk! We'll not be responsible for any losses incurred but you can give us credit if you make money :D
Warren Buffett has another criteria. He only looks at cos. that had been aro' for at least 10yrs. That's why he wasn't affected when the Dot.Com bubble burst a few years back as he didn't buy into any of those IPOs. So, this one will fail that criteria :D
looks like I missed the BIGGEST Criteria of them all :O
SEOUL (Dow Jones)--STX Pan Ocean Co. confirmed Tuesday it will offer 600 million shares worth as much as S$762 million in a planned initial public offering early next month in Singapore.
The South Korean shipping firm will offer 400 million existing shares and 200 million new shares with a maximum offering price of S$1.27 per share, according to the company prospectus registered with the Monetary Authority of Singapore.
The pricing of the shares is slated for July 8, but may change, the company said.
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