IPO: CosmoSteel Holdings Limited

By: Derek Lim

Pipe components maker to launch IPO at 26cents a share

HOME-GROWN CosmoSteel Holdings, which makes piping components for the oil industry among others, has launched its initial public offering (IPO) of 45 million shares at 26 cents apiece ahead of a planned Singapore Exchange listing.

The company said yesterday that the IPO comprises 36.2 million new shares and 8.8 million vendor shares. This represents about 25.5 per cent of CosmoSteel’s enlarged share capital of 176.2 million shares.

The IPO is priced at a historical price to earnings ratio of six times, based on net earnings of $6.1 million in the last financial year.

The firm, which counts Keppel Corp and SembCorp Industries among its key customers, said that one million shares are available for subscription or purchase by the public while the other 44 million shares are for placement to investors.

The IPO will open next Monday and close at noon on June 20. The shares are expected to start trading on the mainboard on June 22.

Chief executive officer Ong Chin Sum said yesterday: ‘This IPO is very timely as we see a lot of opportunities for us to expand and grow our business in tandem with growth in the energy and marine industries in Singapore and in the region.’

The company derives 69.3 per cent of its revenue from the energy sector and 17.1 per cent from the marine industry. The remaining revenue comes from sales to traders who sell the products to other customers, as well as from the manufacturing and pharmaceutical sectors.

CosmoSteel intends to use the IPO proceeds to set up overseas representative offices to expand sales, marketing and purchasing and procurement activities in Bangkok and Shanghai.

It also intends to increase and widen its product range of 10,000 items including pipes and fittings and enhance value-added service capabilities. It will use some funds for working capital.

Source : The Straits Times
Author : Nicholas Fang

Price: S$0.26
Placement: 44,000,000
Public: 1,000,000
Date of Offer: 8th June 2007
Closing: 20th June 2007
Commence Trading: 22th June 2007
Underwriter: Westcomb Securities Pte Ltd

Prospectus Link

Another appealing IPO but with only 1 million offered to the public, you will have to very lucky. Even if I apply for 50 lots, I foresee the balloting ratio as 50:1.

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