Largest IPO in 2 Years Goes Live on 7 March - Mapletree Greater China Commercial Trust

Previous post: [Gloomy Days Ahead for Gold and SPDR Gold Shares]

Largest IPO in 2 Years Goes Live on 7 March

And so, just a quick update about the Mapletree Greater China Commercial Trust that has reignited the attention onto the SG IPO scene.

• S$1.68 billion to be raised in largest REIT IPO
• Last year SGX raised a total of S$4.5 billion which was somewhat a dampener compared to the $9.4 billion raised in 2011. 
• Offer is confirmed to be S$0.93/share
• Highest price of the previously indicated indicative price range of S$0.88 to S$0.93
• Retail offer shares ballot application start on Feb 28
• (for green investors/IPO-applicants, do check out the "Guide to IPO Investing" on this blog regarding the SG IPO application procedures)
• (do also check out "SG IPO Statistics" on this blog for a statistical breakdown of IPOs since 2012)
• Listing date March 7
• Cornerstone investors
• Temasek Holdings
• Morgan Stanley
• Norges Bank Investment Management
• AIA Group subsidiaries
• CBRE Group
• Henderson Global Investors

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Quick Conclusion

As mentioned before, the upper pricing of this IPO is vastly within expectations given the wide search for yield even in this period. With such a brand name and big boys backing this IPO, it is also not surprising that the institutional demand ensured that the IPO be priced at the higher end of the spectrum. 

What this means for us investors is 

• the general assurance of a good fundamentally strong stock. take general with a pinch of salt after what ratings agencies did to our financial system leading to the sub-prime meltdown.
• while knowing that we, as retail investors, are getting it at a much higher premium than did the first cornerstone investors and even the institutions at the placement tranche

All in all, it should impress that if you are fine with the extra premium through the IPO, then this IPO has few fundamental reasons to be avoided. If not, you may want to observe its market equilibrium first before deciding to buy in. My feel is that it is not too late.

I am also skeptically wondering why the IPO is still going ahead at such a suddenly volatile period for the markets. Just my thoughts.

Anyway, I have previously written a more elaborate analysis of the MCGCT IPO that you can find here. Do read it before you make your decision!

Happy and healthy trading people.

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Gloomy Days Ahead for Gold and SPDR Gold Shares

[Previous post: Earnings Report Trade - Kreuz]


Gloomy Days Ahead for Gold and SPDR Gold Shares

Gold has been correcting sharply this week owing to two main reasons: first, the economic situation seems to have lifted tremendously from days of yesteryear. Europe is pretty much well contained, at least for now while USA is growing albeit slightly and China has rebounded strongly from its slump towards the end of last year. Political uncertainty worldwide has also decreased. Secondly, comments from the Fed yesterday indicated that the current unlimited stimulus could be withdrawn soon given how the outlook has improved again. What is still uncertain is that the Fed committee is still at odds with when is the appropriate time to remove it. Nonetheless, with lesser stimulus, expect commodity prices to fall on a whole and hence gold will not be spared too.

• Large back solid candlestick this week bringing prices down to a major support level at US$150.
• MACD - has turned negative and diverging downwards.
• RSI (25w) - has turned below 50% sharply
• Short TP - $140 (8% from current levels) expected in 3-5 weeks. With the current outlook, it seems like gold prices should break support and head further south on the jittery Fed minutes that was recently disclosed. With more market opportunities elsewhere, it is easy to understand why this out flow of money has just begun.

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Earnings Report Trade - Kreuz

[Previous post: Back in Focus - STXOSV]

Earnings Report Trade - Kreuz

1. Kreuz (Offshore services)

Kreuz had recently announced contract wins totally US$15.5 million in January resulting in a considerable surge in its share prices. Prices have already risen a whopping 100% since its 2 year low in May 2012. Traders have turned considerably bullish lately again on the nearing of its earnings report tomorrow 21 Feb 2013.

• Large white candlestick last week that has broken a 2 year major resistance line on some trading volume.
• MACD - is high in the positive with some wavering though.
• RSI (25w) - is recapturing 70% high since Oct 2012.
• Short term trade TP - $0.54 (11% from current levels) expected in 1-2 weeks. On the back of anticipated strong earnings, if reported tomorrow, will give the bulls more reason for higher prices. Of course, the risk here is that the company reports lower than expected earnings and prices fall through the support. If nothing drastic, prices could still be supported by $0.47 support levels and it does seem like a decent risk-reward trade.

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Back in Focus - STXOSV

[Previous post: Largest IPO in 2 Years - Mapletree Greater China Commercial Trust]

Back in Focus - STXOSV

1. STX OSV (Offshore support vehicles)

STXOSV shares slid in Nov after reporting dismal quarterly results. Share prices were then hit again by news of a buyout by Fincantieri mopping up their shares at $1.22/pc and will be making a cash offer for the rest of the shares. However, last week STXOSV reported securing 3 new contracts for OSCVs illustrating a  positive outlook for the OSV market in Europe.

• Large white candlestick last week that erased a 2 week-loss. Trade volumes was almost twice higher than the average for the last 3 weeks of trading.
• MACD - is recovering with decreasing negative divergence.
• RSI (25w) - is rebounding off ~45% and heading towards 50%. Note that the RSI is at a 1 year low.
• Long with TP - $1.50 (16% from current levels) expected in 4-5 weeks. Buying pressure seems to be coming back with the stock scheduled to also report their quarterly results on the 26 Feb. Seems like traders have been repositioning and accumulating for the last 2-3 weeks, stemming the stock price decline. On the back of good contract win news, this buying momentum should be good for this coming week and possibly after the next on good earnings.

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Largest IPO in 2 Years - Mapletree Greater China Commercial Trust

First of many IPOs this year we hope. After a couple of months without a large IPO, the IPO market in Singapore looks set to heat up again with the proposed listing of Mapletree Investment's Mapletree Greater China Commercial Trust. In fact, it is the largest IPO in 2 years.


Summary of offering

• IPO to raise up to S$1.68 billion to purchase 2 China-based commercial property assets from Mapletree Investments
• The biggest IPO of 2013 and the biggest trust IPO since Hutchinson Port Holdings Trust that raised US$5.5 billion in 2011
• Assets are Greater China-based
• Beijing Gateway Plaza
• Hong Kong Festival Walk
• Strong brand name in Singapore with experience in office, logistics, industrial, residential and retail properties
• 45 assets in Singapore
• 20 assets in China
• 9 assets in Hong Kong
• 32 assets in Japan, India, South Korea, Malaysia and Vietnam
• 23 commercial-linked properties
• Figures and numerics
• raising up to S$1.68 billion 
• indicative price range of S$0.88-S$0.93
• Use of proceeds
• No exact break-down so far but cash raised will be used to buy the 2 properties from Mapletree Investments.
• Dividend policy
• Semi-annual
• 5.6-6% for the first year
• 6.1-6.5% for the second year
• 100% of distributable income until March 2015. At least 90% of disctributable income thereafter.
• Cornerstone shareholders
• Temasek Holdings - 851.7-931.6 million shares
• 953.5 million shares to be shared among
• Morgan Stanley
• Norges Bank Investment Management
• AIA Group
• CBRE Group
• Henderson Global Investors
• 776.6 million shares for institutional and retail investors
• Timeline for offering
• 18 Feb - Offer to institutional buyers
• 28 Feb - Offer to public
• 7 Mar - list on SGX

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Commentary

Brand name
Mapletree is pretty much a big brand name in Singapore akin to Ascendas, both of which are government-linked. It is noteworthy to realise that Mapletree Investments manages a portfolio valued at S$19.9 billion. They have ample management experience in office, logistics, industrial, residential and retail.

China + Commercial Experience
The current IPO is a divestment of 2 China-based commercial assets into a REIT. China is not a new destination for Mapletree as they already easily manage 20 assets in China such as the Mapletree AIP in Guangzhou under Mapletree Logistics Trust. Out of these assets, 6 are commercial-related properties - Beijing Gateway Plaza, Hong Kong Festival Walk, Shanghai Silver Court, Nanhai South Station Enterprise City, Minhang Development Project and Nanhai Business City. The rest are mostly logistics and industrial with some residential properties. Having said that, Mapletree also has considerable commercial property experience outside of China with 7 other assets spread over Japan, Vietnam, Malaysia.

Quality of assets
Both are Grade-A offices in the heart of China and Hong Kong with size more than 100,000 sqm. They also consist of some retail space located at the base of the assets. Festival Walk was purchased by Mapletree Investments in 2011 for $2.4 billion.

Current REIT market conditions
REITs are clearly the outright winning category of 2012 as investors flocked to yield havens, resulting in a yield compression that we see today. Even so, REITs have still enjoyed considerable upside to the start of 2013. Mapletree brand name REITs have also done well in the current market conditions, surging even further in the last 2 days upon the announcement of listing of this REIT.

• Mapletree Commercial (listed 2011) - $1.445 15 Feb closing price compared to IPO offer of $0.88
• Mapletree Industrial (listed 2010) - $1.390 15 Feb closing price compared to IPO offer of $0.93
• Mapletree Logistics (listed 2005) - $1.240 15 Feb closing price compared to IPO offer of $0.68

And, for a tabulation of all SG-listed IPOs' performance since 2012, do visit "SG IPO Statistics" on this HealthyTrading blog. It presents an easy snapshot of all the IPOs at a glance for your analysis and comparisons.

For those of you gunning for this Mapletree Greater China Commercial Trust IPOs, check out my blog page on "Guide to IPO Investing" to help you navigate around especially if you are a new investor or new to the IPO bidding system of SGX. Do not waste time; time is ticking away to those offer deadlines!

Also, do bookmark this page // add Healthytrading blog to Twitter // subscribe to RSS feed // subscribe to email feeds to receive the LATEST IPO/market news that will move your money. Links are available all on the right of the page (at the navigation bar).

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