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IPO Watch: Tee Land
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By: Mr.IPO
Articles (33) Profile

Tee Land Limited (“Tee Land” or the “Company”) is offering 115 million shares at $0.54 each. The offer comprises 6 million Public Offer Shares and 109 million Placement Shares. The prospectus is here. The IPO will close on 4 June at 12pm and will start trading on 6 June. An over-allotment option of 23 million shares have been granted to the stabilizing manager.

You have to understand that this is a “corporate carve-out” or spin-out. Nothing has changed fundamentally, similar to how Fragrance Group spun out its hotel arm, Global Premium Hotels or Capitaland spinning out CapitaMallsAsia.

I guess the advantage to shareholders of Tee International is that it helps separate the risk (property and development) from its other businesses while investors can now choose which piece of the business they like to invest in. To be honest, I did not know that Tee International is a property developer.

Anyway, back to Tee Land. Tee Land is a property developer with a “track record” of residential property development in Singapore. The Company intends to focus on quality property development and expand into commercial and industrial property development. It also intends to strengthen its position in Malaysia, Thailand and Vietnam as well as expand into new markets such as Myanmar, Sri Lanka and New Zealand.

Financial Highlights

The Company had a revenue of $7.9 million for FY2012 and a profit of $1.54 million. The 6 months audited revenue is $6.7 million and profit is $0.67 million. Basically you can see that this is a “boutique developer” with “wide-swinging” revenue and profit figures. I have a dislike for construction-related and property developers as it is really tough to second guess what future performances will be. In any case, the fact that it is a small boutique developer does not help its standing in my opinion either. I am also not sure if it will have the financial resources to expand to so many countries to as far as New Zealand.

Risk Factors
They have stated out a lot for risk for (as in all prospectus) investing in their company. Go read them from page 26-38. 13 pages of risk factors and I do think many of the risk factors are real. The Company is subject to the cooling property measures in Singapore, land sites available for sale, economic and political conditions of the countries which they operate in. Basically, I feel they are a small fish in a big pond.

Use of proceeds
The estimated net proceeds of $57.8 million is to be used for new projects ($26 million), repay loans to Tee International ($15 million), repay bank loans ($6 million) and for working capital (balance).

Key Ratios
The NAV is $0.315 versus the IPO price of $0.54c, implying a Price-to-Book ratio (PB) of 1.72x. The historical Price-Earnings Ratio (PER) is more than 136.7x (before even considering the enlarged share cap). The company shall have a market cap of $241.3 million post IPO.

The Company intends to distribute not less than 50 percent of its net profit for FY13 to shareholders. Again, I am not privy to how much profit 2013 will bring, perhaps those in the know or who have attended the roadshow can help shed some light. This info is usually ‘verbalized’ at such roadshows.

“Prominent Pre-IPO shareholders”
The Company managed to “attract’ prominent local investors such as Koh Wee Meng (billionaire founder of Fragrance Group) and Tommie Goh, the ex-founder of JIT and 2G capital. They came in at $0.25 per share, so it was a “no-brainer” for them but you will have to think very hard why you are coming in at $0.54

Fair Value
I am sorry to tell you that I don’t know how to give you a fair value. Most small developers (Hiap Hoe or Singholdings) here are trading below book value. You can see that Fragrance is at 1.85x PB, perhaps that is why Koh can better appreciate this company than most ordinary folks like you and me. I will prefer Keppel Land or a bigger developer anytime.

In addition, I have to tell you that I am not too impressed with the track record of SAC Capital either.

Perhaps prominent investors, Koh and Goh’s friends will support this stock during the initial IPO so I will give it a 1 chilli rating (buy only if you like it) but I will avoid it for the longer term and for fundamental reasons (Chopped Chilli).

Happy IPOing

Mr. IPO has been covering companies listing in Singapore since July 2007. His IPO blog can be found here. All views and opinions found on his blogs are personal and can be very biased.

Please click here for more information about this author.

TEE Int'l  0.046 -- --   
Business: Provides specialized engineering services mainly in infrastructure & construction, integrated real estate & facilities management. [FY18 Turnover] Engineering (50.1%), real estate (39.3%), infrastructure (10.2%), Corporate & Other (0.4%).

Insight: Apr-19, 9M18 revenue jumped 52.3% to $273.7m due t... Read More

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