Starland Holdings

[Musicwhiz]

The Business Times
April 20, 2012
Starland issuing 22.2m new shares in IPO
By Joshua Tan

SINGAPOREAN-OWNED property developer Starland Holdings yesterday launched its IPO for a Catalist listing, aiming to raise about $4.9 million from the issue of 22.2 million new shares at 22 cents apiece.

It plans to use the estimated net proceeds of $3.1 million for the acquisition of a land bank and for general working capital.

The 22.2 million new shares on offer represent about 15.3 per cent of Starland's post-placement share capital of 144.7 million shares.

The IPO is priced at a historical price-earnings ratio of about 14.2, based on an earnings per share of 7.79 fen (1.54 Singapore cents) and a pre-placement issued and paid-up share capital of 120 million shares.

Starland Holdings develops integrated residential and commercial properties in Fuling District, in China's Chongqing Municipality. The demand for homes is growing at a steady pace, especially from first-time buyers and upgraders, due to rapid urbanisation.

Starland's first completed property development, University Town, is located beside Yangtze Normal University and is targeted at the mass market.

It is currently building its second and third property developments in Fuling as well. These are targeted at the mid- to high-end, and high-end markets respectively.

For the financial year ended Sept 30, 2011, Starland's revenue was 77.7 million yuan (S$15.4 million), with a net profit of 9.3 million yuan. Its cash and bank balances stood at 11.7 million yuan, with zero gearing.

The placement will close at 12 noon on April 25 and trading of shares should begin on April 27.

[shanrui_91]

a company with only SGD 1.8m profit decides to go for ipo to raise $4.9m capital at a historical pe of 14.2. Total market cap will then be around $35m.

Does china property developer deserves such a P/E though it is Singapore-owned?

[d.o.g.]

SINGAPOREAN-OWNED property developer Starland Holdings yesterday launched its IPO for a Catalist listing, aiming to raise about $4.9 million from the issue of 22.2 million new shares at 22 cents apiece.

It plans to use the estimated net proceeds of $3.1 million for the acquisition of a land bank and for general working capital.

Gross Proceeds = $4.9m
Net Proceeds = $3.1m
Effective Cost of Funds = $1.8m (36.7% of gross proceeds)

Are you kidding me? Either the promoters completely failed mathematics in school, or someone is being taken for a ride - and I don't think it's the promoters or the underwriters.

There is no shortage of people in Singapore willing and able to stump up $3m for a genuine property project in China. Find 10 of them to invest $300k each, and you're done. No need to pay a 36.7% commission either - 5-7% will be plenty of incentive to the people with the requisite know-who.

The company will of course have some (among many) standard answers: that the listing is only the first stage in the company's development, it will enable future access to the capital markets etc etc. In other words, they will be raising additional capital in future. Rights issues? Not likely. Share placements? For sure.

As usual, YMMV.

[shanrui_91]

very interesting IPO:

Group was just founded in August 2008
Make losses in 2009 and 2010 as no revenue is recognised.
A track record of successfully completing only 1 property called University Town and the company made 1.8m SGD profit

4 years of operation, 1 completed project, profit of 1.8m and they can be listed in SGX?
Only consolation is management is a Singaporean

[dzwm87]

For a moment, I thought University Town refers to NUS UTown.

Probably coming in at the wrong market timing - curbs on China property is likely to continue given this year is a leadership transition year for CCP and moreover, Chongqing isn't necessarily in the most positive of image here. With the hype over Bo Xilai, a pure play in Chongqing might not be too advantageous.

Use of proceeds - SGD$2m for land bank purchases - translating into RMB will be around RMB10m. A quick referral to Ying Li International: its Da Ping Project was bought at RMB2302/sqm of land cost and total site cost was around RMB850m. Given that it is prime land status, Starland probably will be at best aiming for 2nd-best locations.

At 0 net gearing level, they will probably leverage up significantly after the IPO. More share placements are also plausible.