@Quibit wrote:Latest Research
http://research.srilankaequity.com/t252-access-engineering-ltd-ipo
If one carefully notices, the purpose of this IPO is to increase the marketability of the 980Mn shares that have already been issued. And the main purpose is not to raise funds through the issue of 20Mn shares to the public. 980 million shares vs 20million shares. Cant they raise this Rs.500Mn through another private placement??
This is new way of raising funds now. First Bonus issues, Sub divisions, private placement and later issue of a small number of shares to give an opportunity to sell shares.
one more point to note that 600 million shares have been issued by way of bonus issue during 2011. The company did not have huge reserves to do the capitalization at the same rate of PP or IPO. Therefore, the rate of capitalization Rs.5 after taking into account of subdivision. if the capitalization was done at the same rate of Private Placement or IPO i.e at Rs.25, they could have issued only 120 millions shares as bonus issue not 600 million shares.
Price to Book ValueBook value per share before this IPO is ......
Net asset value as of 31/03/2011 4,344mn
Issue of shares after 31/03/2011 4,500mn
Total book value ignoring value
creation after 31/03/2011 8,844mn
Book Value per share Rs.9.02 (Rs.8,844mn/980mn shares)
Price to book value 2.77 times (Rs.25/9.02)
Price Earnings RatioProfit to equity Holders of the Parent Rs.962mn
Number of shares before PP 800 mn shares
EPS Rs.1.20 (Rs.962mn/800mn shares)
Price Earnings Ratio 20.83 times (Rs25.00/1.20)
However, if you notice 31/03/2011 accounts, there is a one off gain (Most probably one off/irregular) of Net Gain from Fair Value of Investment Property amounting to Rs.291mn.... If we exclude this from the net profit..
Profit to equity Holders of the Parent Rs.962mn
Less: Net Gain from Fair Value of Investment Property Rs.291mn
Profit excluding irregular profits Rs.671mn
Number of shares before PP 800 mn shares
EPS Rs.0.84 (Rs.671mn/800mn shares)
Price Earnings Ratio 29.76 times (Rs25.00/0.84)
(This one of gain has been ignored by the research person)
My reply does not constitute a subscribe/not to subscribe recommendation. It is up to the investors to make a informed decision. I'm have not commented on the Future prospects of the company that matters most. Few lucrative contracts can huge profits to the company. However, as it stands now, the price does not seem to be so attractive to me considering the selling pressure that comes in different dates from PP and employee shares.