Trans-cab Holdings

[valuebuddies]

I have not check out its OM, but I think it may not be a bad buy. Firstly public tranche is relatively small, so tendency of "significant oversubscription" is high, which already set a physiological base that possibly preventing market price to go under its IPO price, furthermore there are also large placements various fund managers which is additional assurance.

On another perspective, if you can get a defensive stock which can earn 5% yield is considerably good enough, and if the IPO proceeds are fully and appropriately utilised in business expansion, we could probably seeing the earning yield easily exceeding 5% based on its IPO price, though this take years.

I personally like companies to be prudent in its accounting policies, so having a huge gain from the disposal of PPE signifies that the company might over-depreciate its PPE, which is good because the rest of its fleets might be undervalued too, at least on my personal opinion.

Next, profitability of a taxi company doesn't rely on the demand from the passengers but actually depending much on the demand of the taxi drivers. With the increased cost of living, I believe many elder people would eventually be driving taxis though they have "officially retired" from workplace.

Eventhough I have been regular taxi passenger, I think the cost of taking cab is not excessively high in Singapore. Any increase in the taxi fare in the coming two years is probable, which actually beneficial to the cabbies and the taxi companies too.

[Tiggerbee]

Wow. Anyone subscribing?

Will not subscribe as the NAV is < 20 cents and PE is around 20.

How did you arrive at 20x PE? Adjusted EPS for 2013 is 5.44c (based on 36.5M NPAT and 670.76M shares post ipo dilution). At ipo price of 68c, PE is about 12.5x. Forward 2014 EPS is projected to be about 6.54c so forward PE should be about 10.4x.

[butcher]

The dividend yield at the ipo price is around 1% which is rather low if comparing to other yield stocks

[safetyfirst]

Usually a company goes for listing when it shows good growth in profits in the recent years. Interestingly, the growth is often not sustained after listing.

[level13]

Usually a company goes for listing when it shows good growth in profits in the recent years. Interestingly, the growth is often not sustained after listing.

Thats why IPO is also known as "Its Probably Overpriced".

[weijian]

I personally like companies to be prudent in its accounting policies, so having a huge gain from the disposal of PPE signifies that the company might over-depreciate its PPE, which is good because the rest of its fleets might be undervalued too, at least on my personal opinion.

Similarly, if the company had already made "10year plans" with a mid term goal to get listed, i could argue the possibility of some simple financial engineering by "saving its profits" for the time where it really matters now....A win-win situation of less taxable income in the earlier years, and higher valuation (if priced in P/E) when it is time to sell itself (by publishing last 3 years' results only).

[intellect]

Wow. Anyone subscribing?

Will not subscribe as the NAV is < 20 cents and PE is around 20.

How did you arrive at 20x PE? Adjusted EPS for 2013 is 5.44c (based on 36.5M NPAT and 670.76M shares post ipo dilution). At ipo price of 68c, PE is about 12.5x. Forward 2014 EPS is projected to be about 6.54c so forward PE should be about 10.4x.

After taking out gains from sales of property, plant and equipment, seems like Transcab earnings did not grow much and stayed at SGD20mil for past 3 years(2013, 2012, 2011). Meanwhile revenue increased in those 3 years, thus profit margins for the taxi operations actually decreased from 15% to approx 10%. NAV per share is around 0.10 and EPS at 0.03 after including IPO shares. Yet, the IPO is priced at 0.68?

Agreed. I have adjusted the numbers and the table is as attached.



My understanding regarding the gain on disposal of PPE is that it relates to the disposal of their CNG taxis as they are phasing them out currently. Not sure whether adjusting for such gains on disposal is useful as fleet renewal is part and parcel of their business.

As for the IPO price of 0.68, the adjusted PE would be somewhere above 20, which is probably higher than ComfortDelGro (~20) but lower than SBST (~39) or SMRT (~30). While they are still in the PE range of the listed companies in the transport industry, it may not be a good buy at IPO prices.

[Temperament]

I have not check out its OM, but I think it may not be a bad buy. Firstly public tranche is relatively small, so tendency of "significant oversubscription" is high, which already set a physiological base that possibly preventing market price to go under its IPO price, furthermore there are also large placements various fund managers which is additional assurance.

On another perspective, if you can get a defensive stock which can earn 5% yield is considerably good enough, and if the IPO proceeds are fully and appropriately utilised in business expansion, we could probably seeing the earning yield easily exceeding 5% based on its IPO price, though this take years.

I personally like companies to be prudent in its accounting policies, so having a huge gain from the disposal of PPE signifies that the company might over-depreciate its PPE, which is good because the rest of its fleets might be undervalued too, at least on my personal opinion.

Next, profitability of a taxi company doesn't rely on the demand from the passengers but actually depending much on the demand of the taxi drivers. With the increased cost of living, I believe many elder people would eventually be driving taxis though they have "officially retired" from workplace.

Eventhough I have been regular taxi passenger, I think the cost of taking cab is not excessively high in Singapore. Any increase in the taxi fare in the coming two years is probable, which actually beneficial to the cabbies and the taxi companies too.

Next, profitability of a taxi company doesn't rely on the demand from the passengers but actually depending much on the demand of the taxi drivers. With the increased cost of living, I believe many elder people would eventually be driving taxis though they have "officially retired" from workplace.

Unquote:-
i beg to differ.
With the above idea and the confirmation of how easily we can travel around the whole of our little RED DOT when our SMRT LINES are fully implemented and working, i think Singaporeans do not need so many taxis on the roads. My guess is by that time, most people (those die also must take taxis) will take very short Taxi trips from SMRT stations to their final destinations. And maybe only is because rushing for time.
If you must IPO, don't hold it too long is safer, i think.
Cheers!

[Temperament]

Usually a company goes for listing when it shows good growth in profits in the recent years. Interestingly, the growth is often not sustained after listing.

Thats why IPO is also known as "Its Probably Overpriced".

Ha! Ha!
Well put!
Why bother to take so much pre-listing IPO troubles just to put some money into your pocket?

If i buy IPO, i will guage independent market reports too.
i will guage what is the % of 1st day price?
Can stag or not?
Can buy for long-term or buy, bye?

How about IPO as "It's Properly Overpriced".

[valuebuddies]

I personally like companies to be prudent in its accounting policies, so having a huge gain from the disposal of PPE signifies that the company might over-depreciate its PPE, which is good because the rest of its fleets might be undervalued too, at least on my personal opinion.

Similarly, if the company had already made "10year plans" with a mid term goal to get listed, i could argue the possibility of some simple financial engineering by "saving its profits" for the time where it really matters now....A win-win situation of less taxable income in the earlier years, and higher valuation (if priced in P/E) when it is time to sell itself (by publishing last 3 years' results only).

I would disagree with you. Firstly depreciation doesn't affect the taxable income. Secondly it's hard to believe that companies would start doing dodgy things for its planed IPO which may or may not happen 5 years later. Moreover auditors would probably won't be convinced if management proposed to change its accounting policies every few years.

But having quickly go through its prospectus, I think 2014 is probably the best year for it to launch IPO, due to its significant amount of "Other Credit" as a result of COE and PARF rebates. For the year 2013 alone, more than 1000 taxis were scrapped, which is more than 20% of its fleets as of the date of prospectus. From 2012 to HY2014, it was near 2000 taxi scrapped. With this, can we safely assume that almost all of its first batch of old taxis were scrapped, and those are in operations now would probably due for replacement another 3-5 years time? If this is true, then obviously it's "other credit" is not sustainable.

Having said this, I like this defensive stock, will be vested for the sake of hit and run :-)