4july2008

Hong Kong dry-bulk shipping line company Maritime Capital Shipping has
decided not to proceed with an initial public offering (IPO) in the Singapore Stock Exchange due to weak sentiment for the Singapore stock market in recent weeks.

A report quoted the CEO of Maritime Capital Mr. Mark Harris saying “The performance of the global equity markets has deteriorated sharply in the last few days and equity markets have closed for IPOs, regardless of the underlying fundamentals of the company.” Mr. Harris did not say when or whether the company might reconsider listing plans.

After witnessing the “failure” of some of the recent IPOs in Singapore share market, most investors would find it hard to jump into another IPO. Most recent Singapore IPOs have tanked on day one of listing and are still trading below their respective IPO prices. The last count is that 15 of the 18 new companies whose shares are listed in the Singapore stock exchange this year are now trading below their offer prices.

After the recent sell off in the broad market, some recent IPOs are trading at 3-4 times FY08 earnings…….it’s no wonder new IPOs are finding hard convincing investors to subscribe to them at 4-5 times FY07 earnings.

If you are value investors, do some homework yourself on some of the recent IPOs where stock prices have fallen to 3-4times FY08 earnings. Monitor their 2Q08 results and track if these companies are on track to meet consensus estimates or the forecast FY08 earnings given during IPO. If they are on track, then the next question is WHEN is the right time to accumulate …….this is when Mr. Chart’s technical indicators and analysis come into play

Happy Hunting!