Courts Asia

(09-10-2012, 10:14 AM)wee Wrote: haha... good one. maybe private equities are into charity nowadays.

That said, some of these cornerstone investors are not dumb either. PE funds tend to have a time frame to realize their investment. It could be one of such reasons. I guess the key is to balance between each sides and see who have the larger incentive.

Interesting, management (CEO & CFO) has both subscribed for shares - good vote of confidence ($11m invested!)

(09-10-2012, 11:12 AM)dzwm87 Wrote:

(09-10-2012, 10:14 AM)wee Wrote: haha... good one. maybe private equities are into charity nowadays.

That said, some of these cornerstone investors are not dumb either. PE funds tend to have a time frame to realize their investment. It could be one of such reasons. I guess the key is to balance between each sides and see who have the larger incentive.

Interesting, management (CEO & CFO) has both subscribed for shares - good vote of confidence ($11m invested!)

Their biz model is sustainable, especially the credit service IMO

But yet to know the offer price is right @ $0.77

Naturally, when Target AM, Value Partners and New Silk Road enter an investment, I would sit up and notice.

Upon going through the IPO prospectus briefly, there are two notes worth paying attention to:

(1) Cornerstone Investors
There is no indication of how many shares each cornerstone investor subscribed. Total cumulative stake is about 14%. It is unlikely any of them subscribed to more than 5%. There is no lock-up period and they can start selling as soon as the shares are listed.

The managers at Target and Value Partners have built their reputations over a long period of time. New Silk Road is a relatively new investment manager, but their CIO spent many years at GIC before branching out on his own. JF Asset Management is an arm of JP Morgan. You can draw your own conclusions there.

(2) Management buy-in
Terry O'Connor will be paid a $16.5M bonus upon successful listing of the company, as part of an incentive package negotiated with substantial shareholder, ARG, earlier. Lock-up period for him, the CFO, and ARG is 6 months.

So hmm, suddenly the argument of following the "smart money" doesn't sound as convincing as before...

Similar to the cornerstone investors, we don't know what's the split between the CEO & CFO for the mgmt buy-in.

Didn't know he was paid $16.5m bonus if Courts Asia is listed. A huge amount indeed! That said, it still does signify something if he is willing to pour back $14M into Courts. It's all about opportunity cost.

One thing for certain is Terry O'Connor won't pour back in so much cash if Courts was to crash. Now the question is only how well can it go? Promising/stagnant?

*not intending to ballot*

(09-10-2012, 04:51 PM)dzwm87 Wrote: Similar to the cornerstone investors, we don't know what's the split between the CEO & CFO for the mgmt buy-in.

Didn't know he was paid $16.5m bonus if Courts Asia is listed. A huge amount indeed! That said, it still does signify something if he is willing to pour back $14M into Courts. It's all about opportunity cost.

One thing for certain is Terry O'Connor won't pour back in so much cash if Courts was to crash. Now the question is only how well can it go? Promising/stagnant?

*not intending to ballot*

From IPO Prospectus,

Pg 158-159
Terence Donald O’Connor : 12,857,000
Kee Kim Eng : 1,428,000

Pg 161
Mr Terence Donald O’Connor, our Chief Executive Officer and Executive Director and Ms Kee Kim Eng our Chief Financial Officer and Executive Director, respectively, have entered into a Subscription Agreement (as supplemented by a supplemental letter) with our Company and the Vendor for the subscription and/or purchase of up to S$11 million worth of Shares at the Offering Price. HSBC will extend a loan of S$11 million to Mr Terence Donald O’Connor for this purpose. Such loan will be unsecured and will only be drawn no more than 2 days prior to the Listing Date. The loan is expected to be fully repaid upon the listing of the Shares on the SGX-ST with the funds received by Mr Terence Donald O’Connor from ARG under the Transaction Bonus Arrangement.

Total no. of share after IPO = 560 millions
Net profit 2011 = 39 million
EPS = 6.96cts
PE = 77/6.96 = 11.06

Cheap?

(09-10-2012, 06:20 PM)yeokiwi Wrote: Total no. of share after IPO = 560 millions
Net profit 2011 = 39 million
EPS = 6.96cts
PE = 77/6.96 = 11.06

Cheap?

To add-on
PE = 11, PB = 1.6, ROE = 14%, ROA = 7% after IPO, base on 2011 result

Pertama holding:
PE = 16, PB = 1.3, ROE = 12%, ROA = 8%

Pertama is no debt, but Courts is highly gear. Pertama margin is much lower than Courts.

So what is your call?

(09-10-2012, 09:47 PM)CityFarmer Wrote: To add-on
PE = 11, PB = 1.6, ROE = 14%, ROA = 7% after IPO, base on 2011 result

Pertama holding:
PE = 16, PB = 1.3, ROE = 12%, ROA = 8%

Pertama is no debt, but Courts is highly gear. Pertama margin is much lower than Courts.

So what is your call?

No debt is always a +. As for the margin, Pertama has a higher asset turnover which results in it having slightly higher ROA. Does this means that Pertama's goods are cheaper?

In my opinion, they are fairly valued since they are not really exceptional company. The question is thus their growth prospect and how much will you be willing to pay for the growth

(09-10-2012, 10:07 PM)shanrui_91 Wrote:

(09-10-2012, 09:47 PM)CityFarmer Wrote: To add-on
PE = 11, PB = 1.6, ROE = 14%, ROA = 7% after IPO, base on 2011 result

Pertama holding:
PE = 16, PB = 1.3, ROE = 12%, ROA = 8%

Pertama is no debt, but Courts is highly gear. Pertama margin is much lower than Courts.

So what is your call?

No debt is always a +. As for the margin, Pertama has a higher asset turnover which results in it having slightly higher ROA. Does this means that Pertama's goods are cheaper?

In my opinion, they are fairly valued since they are not really exceptional company. The question is thus their growth prospect and how much will you be willing to pay for the growth

I suppose Courts is worth a stag.
But, to be fair, at the right price, Courts, Pertama are quite safe counters to hold.

Anyway, Pertama is suspended and most likely, it will be compulsory acquired in the coming month. So, we are back to one household appliances and furniture retailer again.

bad deal to buy from a private equity, challenger makes more sense