UOA Development Bhd IPO Target Price Fair Value RM3.45
UOA Development Bhd IPO closing date (Retail Offering 25 May 2011) and (Institutional Offering 26 May 2011).
UOA IPO price RM 2.90.
The UOA Development Retail Price will be fixed at RM2.90 or 97.00% of the Institutional Price, whichever lower, subject to a refund of the difference between the Final Retail Price and RM2.90 per Share.
The Institutional Price is by way of book-building. What is the target or expected institutional strike price or Retail Price? Very hard to say, example Maxis and JCY strike price was at the lower end but Pchem was at higher end.
Issuing house MIH-515 and listing date of UOA Development will be tentatively on 8 June 2011 in Bursa Main Market.
Whether can subscribe or apply UOA Development IPO, let us do a very simple PEGGY Method Evaluation.
PE: PE Ratio
G: Growth
G: Gearing
Y: Yield
Using UOA Development share price or Institutional IPO price of RM3.00.
UOA Development PE ratio is 26.2x (2010 Dec). Growing at 66.1% (2011), 41.3% (2012) and 29.6% (2013). PE ratio will then be 15.8x (2011), 11.2x (2012) and 8.6x (2013).
UOA Development net gearing is fairly high at 55.6%. Post IPO will drop to 4.8% (2011). The UOA Development dividend yield is 2.5% in 2011, and this is based on 40% dividend payout ratio. UOA Development dividend policy is dividend payout of 30% to 50%.
The above figure are by RHB and UOADEV target price fair value is RM3.45, that is at its RNAV per share.
Based on the above figures, UOADEV PE ratio is not cheap. Although it has high growth, at UOADEV share price of RM3.00, this has been factored in. Have to wait two more years then only the PE ratio drop to below 10x. UOADEV dividend yield is just average, although it will grow as the profit grow.
This has confirmed by RHB, where they give a UOADEV IPO stock target price which is only 15% from RM3.00.
I think there are few issues that you need to consider:
1) RM3.00 or RM2.97 is NOT fixed yet.
Although the above PEGGY Figures are not very cheap, but the Retail IPO price is not fixed yet. You may get a lower price and get refund of the difference if they fix the strike price lower. A lower price means UOADEV will have lower PE ratio and higher dividend yield and higher potential share price increase upon listing.
2) IPO year.
So far, Year 2011 is very good year for IPO. The recent few IPOs listing prices were crazily high. This may help UOADEV to trade higher.
3) Top 5 listed property developers stock
Post IPO, UOA Development market capitalization will be in the top 3 or top 5, behind UEM Land, SP Setia and about the same as Suncity-Sunway and IJMLand. Large UOADEV market capitalization will attract more institutional investor and can justify higher PE Ratio or higher price.
4) How RHB get the growth figures?
The growth figures are quite impressive, but how they get it? According to RHB, 2011 profit growth mainly due to the tail-end construction of The Horizon Phase 2, Kepong business Park and Villa Pines. 2012 to 2013 will be (I will post when I got time).5) Property market Crash?
Many people said property market may crash soon. But I have been hearing that for so many months. I have no idea, up to individuals to judge.
Last day to apply for this IPO, so after all simple above mentioned criteria are you still up for it? Do you plan to hold it for long or go for a quickie? It is all down to your risk appetite.
1) use large bank borrowing to aggressively develop and capture good profit in year 2011/2012/13 to show very good growth,( actually giving tail end effects )
4) Thereafter in Year 2014, company performance drops drastically. Small investors start to cry while big shots offload their shares long before the arrival of Year 2014.
IB should also play a part on how to maximise these strategies.
Just my view.
Mar 21 2011, 08:57 PM, updated 15y ago
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that the internet application can only be done through the bank managing the IPO.
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