EXPOLANKA HOLDINGS PLC (EXPO.N0000)

innam · **126** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sat Apr 23, 2011 10:45 pm

innam

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babytrader wrote:

innam wrote:let me repeat the key points of my reply again just to make it clear one FINAL time.....as i've said before you can lead a horse to water but....

-keep in mind i'm not talking about the return you can get from the IPO,
-what i and a few other posters are pointing out is that a select group of people got shares at 6 less than six months ago
-while retailers are now expected to pay 14
-remember for someone who got shares at 6 even selling at 9 rupees will deliver a 50% return.....

innam agree with you. Just one point of clarification. Just wondering if the cost of investors in the private placement should be more than Rs 6 ?... if you look at table 12, example JKH got 4.67% pre-IPO share.. but with the IPO its share becomes 4.26%.

I mean there is a dilution of shares right ? ... so the cost would be 6.60 ? which is still a very good discount

just keep things simple....pre-IPO JKH owns 83.3 million shares (@6), post-IPO they still own 83.3 million shares (@6) don't get hung up over the percentage ownership.....
let me repeat my point slightly differently, will JKH sit and wait for rosy magical EPS increases from debt/working capital reductions or will they pull the trigger and sell the shares they got for 6 for an easy 50%-100% return?

Antonym · **127** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sat Apr 23, 2011 11:01 pm

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@innam: Some good insights there! I appreciate your diligence in going through the prospectus and making things clear to us... And the patient repetition of the key message!

If I was JKH, I wouldn't 'sit and wait'... Forewarned is forearmed, I hope! Smile

FKhamissa · **128** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 12:24 am

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Point to ponder.. why will JKH, Ceylon investment, Lanka Strategic investment, Softlogic, Falcon trading, Timex garments (companies that received the largest junk of the private placement according to the prospectus) all of who are as big as EXPO by them selves with some of the best financial analysts dump a share at less than its true value when they know that it is worth well more based on current industry valuations.

its like owning car worth 4 million in the market today.. but selling it for 3 million just cuz you bought it for 2 million.. these big investment fund didnt become big by selling their investments off cheap.

MHS · **129** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 12:42 am

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FKhamissa wrote:
Point to ponder.. why will JKH, Ceylon investment, Lanka Strategic investment, Softlogic, Falcon trading, Timex garments (companies that received the largest junk of the private placement according to the prospectus) all of who are as big as EXPO by them selves with some of the best financial analysts dump a share at less than its true value when they know that it is worth well more based on current industry valuations.

its like owning car worth 4 million in the market today.. but selling it for 3 million just cuz you bought it for 2 million.. these big investment fund didnt become big by selling their investments off cheap.

Good Point!!That makes sense.

I heard from Aquity stock brokers that there were some private sales of Expo (grey market) at 23 rupees by people who had bought at the private placement. according to my broker people were desperate to buy at around 20 rupees but couldn't find any one to sell. so if any of the big investors wanted to dump and make a quick profit they had the opportunity.

econ · **130** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 6:21 am

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I think SEC should introduce rules to stop private placement just before IPO at lower price. if any company want to give shares to their friends or other big players they should give it same price as IPO price . otherwise this is unethical. this is just fooling retailers.
we should avoid these type of IPOs.

pdgsuranga · **131** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 7:48 am

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company have to think about private placement before the IPO. Why they playing with small investments. We should avoid them.

smallville · **132** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 8:36 am

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econ wrote:I think SEC should introduce rules to stop private placement just before IPO at lower price. if any company want to give shares to their friends or other big players they should give it same price as IPO price . otherwise this is unethical. this is just fooling retailers.
we should avoid these type of IPOs.

Well the problem is; this is not pre-ipo stage.. sometime around 6 months back.. SEC cant do anything abt this, as if a company wants to raise capital intervene of SEC would result in a company getting a loss incurred at that stage without cash requirements for intended projects and so forth .. And its not ethical stopping a company from further investments though..

But why EXPO had to sell the shares at a mere Rs.6/- to another party and they value share @14 now at the IPO stage is the golden question we have to find answers to...

As Innam clearly pointed out,
Its not abt how much return we get.. can be 10-50% or even less
Its abt why we pay 14 when others have got it at 6? Have the retailers been taken as fools???
Again if some party starts dumping at even 15, the share may end up in going negative track..

seyon · **133** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 8:44 am

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FKhamissa wrote:
Point to ponder.. why will JKH, Ceylon investment, Lanka Strategic investment, Softlogic, Falcon trading, Timex garments (companies that received the largest junk of the private placement according to the prospectus) all of who are as big as EXPO by them selves with some of the best financial analysts dump a share at less than its true value when they know that it is worth well more based on current industry valuations.

its like owning car worth 4 million in the market today.. but selling it for 3 million just cuz you bought it for 2 million.. these big investment fund didnt become big by selling their investments off cheap.

Agreed, EXPO is running in good business model. Now the issue is Private placement / sell down taken place @ Rs.6 and IPO comes @ Rs.14.. As u said, these strategic investors had done good analysis, whether to invest @ Rs.6 not @ Rs.14

As innam pointed out, If these investors sell their shares even @ Rs.9-Rs.10 with huge return....??? Ok to be positive, let us assume these strategic investors will not sell until to see rosy picture of the financial....

How will be the behavior of shareholders representing others with 130Mn shares???????... These might have allotted to friends,family and relatives or other institutional investors... We can not rely on them...

Happy trading...

Last edited by seyon on Sun Apr 24, 2011 8:50 am; edited 2 times in total

investor1984 · **134** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 8:45 am

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Yes.. big companies take us for a ride.. its bad.. but we cant do anything about it.. But do we really have to talk much about WAPO dumping their sweet heart deal on first day??? I don't think so, if EXPO worth @ 16 , i don't care.. I will apply for IPO.. I don't bother about the price others got, its in a way good that if WAPO gonna dump, then price will go below 16 and i can collect more.. Why are we all so concerned only about the first day trading price??? Isn't EXPO a share worth holding for long time???????

smallville · **135** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Sun Apr 24, 2011 9:10 pm

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investor1984 wrote:Yes.. big companies take us for a ride.. its bad.. but we cant do anything about it.. But do we really have to talk much about WAPO dumping their sweet heart deal on first day??? I don't think so, if EXPO worth @ 16 , i don't care.. I will apply for IPO.. I don't bother about the price others got, its in a way good that if WAPO gonna dump, then price will go below 16 and i can collect more.. Why are we all so concerned only about the first day trading price??? Isn't EXPO a share worth holding for long time???????

May be we can collect more and be the hard-core investors of EXPO in big time Wink

I was thinking, why not being long term investors of this company.. its also said to be a blu chip, isn't it? Twisted Evil

But we should not weep over the stupidity.. if any company dump shares and the price goes down we'll have to catch it from the lowest levels like ppl did in PCH.. Twisted Evil

milanka · **136** Expo Lanka - Interview with CEO Mon Apr 25, 2011 8:05 am

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Important note from the interview :-

Instead of issuing new shares , the original shareholders, partly solddown during last year Rs. 1.9 Bn PP, which based on Fundamentals at that time was priced at Rs. 6 per share. The PP saw entry of some of the highly respected respected companies and Investors.

Funds raised thru PP didn't go in to pockets of shareholders but reinvested in the company.

Full Interview on ft.lk today.

http://www.ft.lk/2011/04/25/expolanka-excelling-by-being-extraordinary/

smallville · **137** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 8:22 am

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Now only they've shed some light on it.. but they say the intrinsic value at that time was Rs.6/- but how come it got more than double in quite a small time frame?
Anyways, still the argument prevails.. We still cannot say whether the cars group would not go for a capital gain without wait Wink

Soundchips · **138** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 8:29 am

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http://vanguard1.vanguardlk.com/lbo/fullstory.php?nid=1640706196

Are they long term investments... JKH might keep them as long term investments.... foreign funds were also interested ...

cse.alpha · **139** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 8:38 am

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Note 4.5 on page 60 of the Expo Prospectus says that the Rs.1.9 billion private placement was done in December 2010. The shares were valued at Rs.6 then.

Although report says funds from pvt placement was reinvested in group by retiring debt, it is difficult to reconcile this statement with Expo balance sheet as at 31/12/10.

Academic · **140** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 10:34 am

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milanka wrote:Important note from the interview :-

Instead of issuing new shares , the original shareholders, partly solddown during last year Rs. 1.9 Bn PP, which based on Fundamentals at that time was priced at Rs. 6 per share. The PP saw entry of some of the highly respected respected companies and Investors.

Funds raised thru PP didn't go in to pockets of shareholders but reinvested in the company.

Full Interview on ft.lk today.

http://www.ft.lk/2011/04/25/expolanka-excelling-by-being-extraordinary/

"The number of fully paid ordinary shares of Expolanka Holdings Limited at the time of lodgment of the application on 25th March 2011 is 1,782,915,000 shares. There were no shares issued for two (02) years preceding the date of the prospectus." (p.44 of the Prospectus).

However, in the same page it is indicated transfer of 316,667,500 shares from existing shareholders (at the time). By mutliplying this by Rs 6, it become 1.9 billion.

Implications.

1. 1.9 billion issue in the above article is seems to be a sell out of existing shares . This further confirms as the prospectus says they had no new share issues for 2 years

2. So it is not a private placement according to SEC directives.

3. So anyone purchase at 6 can sell it immediately without waiting one year.

By considering all above the statement "Funds raised thru PP didn't go in to pockets of shareholders but reinvested in the company" seems to be a lie. Because once existing owners sell shares that money goes to respective owners pocket. Not like a sole-proprietorship in a company if owners bring equity capital to a company it should be through a new share issue. Since they have not issue any new share recently, this reinvestment claim deemed unacceptable.

Further, can anyone justify what economic or company specific changes made Expo worth 14/6=2.33 times just within 6 months?

Academic · **141** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 10:52 am

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cse.alpha wrote:Note 4.5 on page 60 of the Expo Prospectus says that the Rs.1.9 billion private placement was done in December 2010. The shares were valued at Rs.6 then.

Although report says funds from pvt placement was reinvested in group by retiring debt, it is difficult to reconcile this statement with Expo balance sheet as at 31/12/10.

In the note they say "The private placement was a transfer of shares from existing shareholders of the Company (the promoters) to new investors. The Company’s obligations in this agreement are not
material to its ordinary business activities."

1. This confirms it is not a new issue.
2. What is the agreement?

KPMG · **142** Expo Lanka Holding Limited - IPO Mon Apr 25, 2011 12:18 pm

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Expo Lanka Holding Limited, another IPO.As usual our retails investors are very busy to find cash to apply for said ipo.Some time they sell their good stocks to find cash. Who cares prospectus? Why? Every IPO share price is going up in first day. So no need to read prospectus and best thing is applying all IPOs. Do you think same? We think that most of our retail investors think so. Companies, those come to IPOs, they know how our investors think and they value their IPO price with smart premium and rest will be handed over to our investors. They are doing job well. Finally IPO is oversubscribed by many times.
If above comments is not relevant to you, please forget it.
Here we would like to highlight few points regarding Expo Lanka Holding Limited.

· Stated capital of the company Rs.1,782,915,000/=.its equal to issued no of shares (before IPO).This means promoters cost of shares is Rs.1.if directors sell 127,351,071 shares @14,their cost for the company is zero. They can do this without changing major shareholding.
· 15%, out of IPO shares will be allocated to employees, its means 25,800,000 no of shares. In addition to this another 2,678,500 shares will be allocated on May 2011 under ESOP. some time they may dump their holding in first day,if they feel,price is getting down and they know their company real value.
· 316,667,500 shares were transferred @ rs.6.we can’t say exactly their decision on first trading day. but we know if they sell @14,they will get a wonderful capital gain (14-6).
· ROE of the company is 15%, EPS .711 for nine months ended including major one off income, Book value per shares 2.41 after IPO increased to 3.42.pls make your valuation.
· Company has declared dividend for the nine months ended 31st December 2011,cents 0.121.this reduced further cost of a share of directors
· During the year Rs.100,626,192 has been granted to directors as advance

Note. If you think that above comments are wrong, please discuss with us. And also we would like to say that above are our views. Please make your own analysis or contact your advisor for relevant decision making.

http://sinhalainvestor.blogspot.com/2011/04/expo-lanka-holding-limited-ipo.html?spref=fb

MoneyMaker · **143** Is Expo Lanka Worth @ 14 When PP was @ 6 Mon Apr 25, 2011 5:15 pm

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Is Expo Lanka Worth @ 14 When PP was @ 6.

There are many schools of thought.

Personally I plan on waiting for the share to come into the market and eventually see the behavior and buy if it performs positively.

Whats yours?

seyon · **144** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 5:48 pm

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MoneyMaker wrote:Is Expo Lanka Worth @ 14 When PP was @ 6.

There are many schools of thought.

Personally I plan on waiting for the share to come into the market and eventually see the behavior and buy if it performs positively.

Whats yours?

Just view the lengthy discussion http://forum.srilankaequity.com/t2882-expolanka-facts-from-prospectus-valuation

MHS · **145** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Mon Apr 25, 2011 10:31 pm

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innam wrote:the IPO price you might say is not vastly over priced for a conglomerate but the biggest problem is that the existing shareholders had sold nearly 300 million of shares at a price of Rs 6/=, so friends and the big players have got 300 million shares at 6/= while retailers and smaller big boys are going to get 172 million at 14/=......the question is will those 300 million shares get dumped onto the market on the first day or will the SEC one year lock rule apply to them?

Innam.. i am trying to get in touch with you but i dont seem to be able to send you a message as i am too new.. appreciate if you can send me a message regarding Expo IPO.. Thanks..

gamaya · **146** Are we such fools as they think we are? Mon Apr 25, 2011 10:52 pm

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http://forum.srilankaequity.com/t2882-expolanka-facts-from-prospectus-valuation

If u are thinking to buy, just check out the explanation by Innam.

And I have a wild guess why he chose porky for his profile.

hhperera · **147** price change Tue Apr 26, 2011 10:16 am

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Basic finance tells you:

sales
- EBIT
-----------
NOPLAT (net operating profit less adjusted taxes)
- Capex
- Dep
- change in Working cap expenses
-------------------
Free cash flow

then

PV of all free cash flows
- Non operating assets
--------------------------
Enterprise Value
- debt (and equivalents)
---------------------
= EQUITY VALUE

i.e, it follows that once debt is retired/paid off... the equity value of a company increases
(hence, the price per share).

Hence, if the private placement was utilized in retiring debt it follows that the price per share increases. (Prospectus, page 43 shows the dramatic drop in debt/equity ratio from .56X to 0.12X (from fy 10 to fy 11- 9 month interim).

Additionally it is well accepted, across world mkts that pvt placements do take place at a discounted value to the "sophisticated" investors, for these reasons.
E.g various tata group companies in india, twitter, recently facebook etc.. etc...
the practice is accepted and part and parcel of the financial world.

Academic · **148** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Tue Apr 26, 2011 3:03 pm

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hhperera wrote:

i.e, it follows that once debt is retired/paid off... the equity value of a company increases
(hence, the price per share).

Hence, if the private placement was utilized in retiring debt it follows that the price per share increases.

Can you explain when promoters (original owners) sell part of their existing stake, how that money come into the company to release debt, without having a new share issue and/or new debt? Page 44 of the prospectus say no new issue for 2 years.

pdgsuranga · **149** Re: EXPOLANKA HOLDINGS PLC (EXPO.N0000) Tue Apr 26, 2011 3:25 pm