My decision to sell Keppel at 9.5 and Sembcorp Ind at 4.64 turned out to be good one. Overall, I feel that this company is worth investing in and would be applying for the IPO. An allotment of 1000/2000 shares would require a commission of ~10%/5% to sell it. While I can foresee that this IPO will be extremely hot, a public trench of 2.2m shares is simply too little to get anything substantial from the IPO (A 50k application is already ~10% of the public trench value). (On the other hand, it attracts more people to it, which is good for people intending to flip this, people like me.) I would rather the company pay a lower amount of dividend and to reinvest the rest to increase market competitiveness. I’m quite skeptical on the intentions to pay a high amount of dividend (7.3% yield, 90% earnings payout) in the first year. However I do also have some reservations about it. Medical stocks tend to trade at a high P/E ratio. Net profit margin at ~37% is also very healthy. The last 3 years has been very profitable for O&G (Increasing revenues, profit from operations and net profit). Why else would they build a hospital in Jurong east?. Construction of the High Speed Rail will also bring more patients north of Singapore (Malaysia and even beyond it). It has taken on many high profile cases from the region and even across the world which shows the good reputation of Singapore in terms of medical care/science around the world. Singapore has always been trying to establish itself as a medical hub in SEA. There are many reasons why I think this IPO would be extremely popular. The business model is quite simple to understand, 7 doctors (6 medical specialist + 1 general surgeon) operating 8 clinics (focusing on women’s healthcare) around Singapore. Singapore O&G Ltd is offering 43.6m new shares (out of which only ~5% or 2.2m shares will go to the public) at $0.25.
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