Wednesday, September 29, 2010

GIC IPO

A consumer asks for my views about whether the IPO from the Government of Singapore Investment Corporation, that is expected to be launched soon. Is this a good investment? I am not able to give an opinion. I asked an analyst to make a summary of the investment.

www.tankinlian.com/latest.aspx

Posted by at

1 comment:

C H Yak said...

I tend to agree with the analyst. -- Not to touch an IPO in a bull market.

Someone asked me for help to check his shares bought in an End April IPO for a company with Palm Oil production / cultivation biz in Indonesia. He was worried because the price had fallen by more than 30% and he used his CPF for purchase.

While the fundamentals look OK for the company as shown in the IPO brochures, I would not have advised him to invest at the time of that IPO in April. But since he is already stuck in the "mud", I told him to hang on unless the market take a sudden turn. He had already lost 30% in value and the risk to lose more is minimal. The problem is that he could not digest his IPO information to look at the possible yield vs PE value 8~9 and the nature of the oil palm farming biz. Even if the share had not fallen in value, it would take 8~9 years to re-coup based on any dividends given unless the price of processed palm oil sky-rocket.

It is important to know how the company will use the IPO funds.

For this GIC IPO, is the company holding a diversified portfolio or in a particular business line. If it is the proposed Mapletree Industrial Trust under Temasek Holding, the proceeds will be used to purchase six properties in Singapore and to repay debt...then it is necessary to study the nature and valutaion of these properties and the debt-restructuring vs PE ratio.

If it is the logistics real-estate unit, Global Logistic Properties, IPO, then it is also good to study likewise especially if committing to IPO in a bullish market.

You see, there are speculative talks about a major correction world-wide by year-end (short-term). But if the intention is to invest for medium to long-term, then it has to be assessed differently.

September 29, 2010 3:29 PM

Post a Comment

Subscribe to: Post Comments (Atom)

Blog Archive