Starburst Holdings

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Asdew allocated 10m while Temasek linked Eastspring got 6m. V interesting small cap ipo...
They are 9.5x oversubscribed!!! Their IPO is really bursting lol
Finding the Value in a Speculative World
Too bad, I couldn't get any after the balloting. Went up 35% on first day
Winston Churchill:-
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
"The farther backward you can look, the farther forward you are likely to see."
I first read about this company during its IPO. The business sounds interesting to me but as advised, I try to stay away from IPO. So I passed on it. But last night's first result released got me excited. Profit for the Q is 264.7% and profit for 1H is 531.3%. Then I quickly scanned the prospectus and saw that its revenue and profit for the past 3 yrs are continuously growing even before IPO. I also quick checked the management. The top 2 management own 40% each. Although I should dig for more details. With a quick estimate, I came up with around PE of 8 @ 57c for estimated 2014 earnings.

So I quickly jumped in @ 57c and will never look back. [emoji6]
Time to roll!!!
Well done, Bubbachuck,

I did a quick calculation too and added my position at 57c. This looks like another "Straco" in the making, i.e. exciting growth play with a defensive moat.
Btw from the result statement, it is said that "As at the date of this announcement, the Company has not utilised the IPO proceeds."

Meaning, they haven't "really" started expanding yet.
Time to roll!!!
Good call, Bubbachuck!
The only concern I have is, revenue is on project-basis; hence may cause flunctuations/increase in certain quarters and it is also non-recurring.

But vested because of its growth potential and niche business.
(19-08-2014, 03:58 PM)Damien Wrote: The only concern I have is, revenue is on project-basis; hence may cause flunctuations/increase in certain quarters and it is also non-recurring.

But vested because of its growth potential and niche business.
But the good thing is, management is focused in growing their recurring business which is the maintenance segment. More projects, more environment to maintain.
Time to roll!!!
Source : CIMB Research

Starburst Holdings Ltd - Stopping bullets home and away

1H14 profit (~S$9m) has already exceeded FY13’s (~S$8.7m) on the back of contract wins that will carry on to CY15. A recent IPO was meant to gather funds to double its production capacity. (Annual capacity pre-IPO is ~S$40m revenues). Also, being listed does not hurt its credibility when tendering for larger contracts either. We believe earnings for FY14 could be almost double FY13’s.

Order book growth spurt
Secured orders will safely allow Starburst to recognise another S$17m revenue for 2H14 (1H: ~$21.5m). Actual revenues is likely higher as there is a maintenance element from previous contracts. The key is not current orders but what’s up for grabs. Starburst reckons that it is in the running for 10 contracts in the next 2-3 years, worth ~S$100m. Also, we speculate that with actual contract sizes tripling (~S$30m vs. ~S$10m in 2010-11), the initial guide could be breached. With an industry-wide infrastructure upgrade trickling steadily down to the company, we think the order book will remain strong for the next 1-2 years.

Middle East is the star
The company had its track record forged in servicing Singapore clients. The home base still has work to do as ranges are being upgraded to cope with new threats. But, the bonus is the Middle East market. In 2013, it established an office in Abu Dhabi after winning its first Middle East contract earlier, and also, in recognition of potential orders in the region. Order wins in Qatar, UAE and Kuwait are possible but the big upside is potential work in Saudi Arabia.

Fair value estimates
We value Starburst on a 7.6x – 10.1x CY15 P/E basis, which means that it could trade at S$0.87 – S$1.16. This is at a 20-40% discount to global peers, recognising the relatively small size of Starburst vis-à-vis global players.

Key catalysts for the stock are:
1) the regional upgrade in defence infrastructure,
2) breaking into the Saudi Arabia market and
3) as a potential target for acquisition by larger defence contractors.
Time to roll!!!

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