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Looks good at current price...anyone vested 
Established in 1999 and based
in Xiamen City in PRC, Changtian Plastic & Chemical is engaged in
the manufacture and sale of these products sold under their "Changtian" brand:
Key Competitive Strengths:
Intended IPO price: $0.47
No. of shares available for public offer: 5m
No. of shares available for placement offer: 210m
Total post invitation share capital: Approx. 660m
Note: Unaudited 1QFY2007 figures were available in the prospectus.
FY2006
Revenue: $105m
Profit: $29m
NAV: 0.0619
EPS: 0.0439
EPS % Incr: 57%
PE ratio: 10.7x
Price: 0.47
1QFY2007
Revenue: $117.7m
Profit: $34.1m
NAV: 0.1519 (incl. IPO proceeds)
EPS: 0.0517
EPS Incr: 43% (Est.)
PE Ratio: 9.1x
Price 0.47
Dividend policy: It intends to pay not less than 20% of profit for FY2007 and FY2008 as dividends.
Conclusion:
Changtian's most comparable peers on SGX would be Southern Packaging, which trades at 6-8x historical PE. However, Changtian enjoys significantly higher profit margins of 29% compared to Southern Packaging's 4.8%.
Another point to note is that Changtian has a much larger market cap with a total 660m listed shares compared to only 237m for Southern Packaging. This would put Changtian within the radar of the fund houses, who typically avoid stocks with too little listed shares because then they would not be able to buy enough of them.
For those reasons, I believe Changtian should trade at a Fair Value of $0.78 or 15x PE only.
Probability of getting allotted for the IPO - 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.
- Adhesive tape (44% of revenue)
- Release papers (22% of revenue)
- BOPA film (27% of revenue)
- A2MPS (7% of revenue)
Key Competitive Strengths:
- They have increased their customer base from 233 in FY2004 to 286 in FY2006.
- Revenue and profit has been growing annually at 56% and 84% respectively for the past three years.
- To install one additional BOPA film production line, to double production capacity from 5,400 to 10,800 tonnes per annum.
- To
expand the range of their release papers by installing a UV cured film
production line, with a production capacity of 3,000 tonnes per annum.
- To install one additional 2-A2MPS production line, to double production capacity from 1,500 to 3,000 tonnes per annum.
- Their entire revenue is derived from PRC and from repeat customers only.
- Their
intellectual property (product innovation) is key to their business
success but is difficult to protect - small economic moat.
Intended IPO price: $0.47
No. of shares available for public offer: 5m
No. of shares available for placement offer: 210m
Total post invitation share capital: Approx. 660m
Note: Unaudited 1QFY2007 figures were available in the prospectus.
FY2006
Revenue: $105m
Profit: $29m
NAV: 0.0619
EPS: 0.0439
EPS % Incr: 57%
PE ratio: 10.7x
Price: 0.47
1QFY2007
Revenue: $117.7m
Profit: $34.1m
NAV: 0.1519 (incl. IPO proceeds)
EPS: 0.0517
EPS Incr: 43% (Est.)
PE Ratio: 9.1x
Price 0.47
Dividend policy: It intends to pay not less than 20% of profit for FY2007 and FY2008 as dividends.
Conclusion:
Changtian's most comparable peers on SGX would be Southern Packaging, which trades at 6-8x historical PE. However, Changtian enjoys significantly higher profit margins of 29% compared to Southern Packaging's 4.8%.
Another point to note is that Changtian has a much larger market cap with a total 660m listed shares compared to only 237m for Southern Packaging. This would put Changtian within the radar of the fund houses, who typically avoid stocks with too little listed shares because then they would not be able to buy enough of them.
For those reasons, I believe Changtian should trade at a Fair Value of $0.78 or 15x PE only.
Probability of getting allotted for the IPO - 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.