Shares & Derivatives
United Overseas Australia IPO.
By Kleer  •  December 13, 2007
By: Kleer Closing date of application: 17 December 2007 Commencement of trading: 19 December 2007 Established in the 1987, United Overseas Australia (UOA) is a Malaysian-based, Australian-listed property developer that focuses on the middle to high end residential and commercial property development and investment projects in Kuala Lumpur. They are seeking a secondary listing in Singapore because they believe a Singapore listing will allow them to raise funds more effectively to expand into Asia, because investors here are likely to be more familiar with the asian market than Australian investors. Beyond Malaysia, they are also looking to expand into other Asian countries like China, Vietnam, and India. Their Key Completed Projects include the following:
  1. UOA Centre
  2. UOA Damansara
  3. UOA II
  4. UOA Pantai
  5. Villa Mon’t Kiara
  6. Villa Yarl
  7. Taman Megah Kepong Baru (Phases 1 to 3)
  8. Prima Midah Heights Condominium and Terrace Houses
  9. Prima Setapak Mixed Development (Phases 1 to 4)
Key Competitive Strengths:
  1. Their 'UOA' brand is recognised in Malaysia as a developer for premium properties.
  2. They have a significant land bank in the strategic prime districts of Kuala Lumpur, with a total saleable and lettable area of 316,149 sqm of properties under development, and a total saleable and lettable area of 761,516 sqm being held for future development.
Key Risk Factors:
  1. Their revenue fluctuates from period to period, which makes it difficult to predict their future performance.
  2. They will require additional funding to finance future land acquisitions or developments.
Financial figures Intended IPO price: $0.38 No. of shares available for public offer: 2m No. of shares available for placement offer: 53m Total post invitation share capital: Approx. 818.5m Note: Unaudited 2QFY2007 figures were available in the prospectus. FY2006 Revenue: $40.2m Profit: $21.8m NAV: 0.3315 EPS: 0.0266 EPS % Incr: -50% PE ratio: 14.3x Price: 0.38 2QFY2007 Revenue: $29.8m Profit: $39.8m NAV: 0.3326 (incl. IPO proceeds) EPS: 0.0486 EPS Incr: 83% (Est.) PE Ratio: 7.8x Price 0.38 Dividend policy: No fixed policy. Conclusion: UOA has no real peer on SGX, being the first property play with a focus on the Malaysia market. Similar small cap property plays such as Eastern, Heeton, LC Development, tend to trade between 10x - 12x PE. Based on that, UOA has priced its IPO quite attractively at only 7.8x PE. However, its earnings are by no means consistent, since it actually saw a drop of -50% from FY2005 to FY2006, which makes it difficult for us to predict its earnings as thus peg a fair value to it based on that. Thus the safest bet would be to buy it at or below its NAV of $0.33. That would mean avoiding this IPO and waiting to buy it on the secondary market, which is not a bad idea since there are only 2m available shares for its public offer. Probability of getting allotted for the IPO - VERY LOW I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here. Source: Extraordinary Profits
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By Kleer
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