Far East Hospitality Debut - Above Expectations

Far East Hospitality Trust listed on SGX mainboard on 27th Aug, 1 day ago, to a end day closing price of S$0.95. That represented a jump of 2cents from its IPO offer price. The 'pop' was also quite considerable considering that it reached a high of 0.98 before closing at 0.95. Today, the stock saw further buying pressure to close at $0.975 with a high of $0.98. That represents a 4.83% gain from IPO offer price of $0.93. 

Pretty impressive debut for a REIT-styled counter factoring into consideration that its IPO was priced on the top of the indicative range offered to the institutional tranche of $0.93, citing strong institutional and then, later, retail demand. Clearly, its Singapore-based hotel assets are a plus in gaining popularity with local investors.

Of course, the question is how did FEHT compare with the Ascendas Hospitality Trust? Both were marketed and packaged as stapled business trust and reit securities and the IPO response should give us a good picture to their future prospects and more importantly, as I always mention, market validation of their future earnings. On a side note, this comparison also value-adds to itself given the proximity of listing dates (exactly 1 month from each other) and almost similar market conditions (declining uptrend). 

The results of the comparison speaks for itself in the table below.

Of course, this is not the end to the comparisons of all IPOs in this year. Head over to "IPO SG Statistics" for a complete story of all IPO listings on the SGX this year.

Far East Hospitality Trust IPO Balloting Results

Far East Hospitality Trust IPO balloting results are finally out as of 9:08 PM SG time. A snapshot of the Public tranche offer balloting result is available below. For more information, the full balloting announcement is available via SGX website here.

Some key points summarizing this IPO exercise

1. 14.6 times subscribed
• 732,338,000 stapled securities was bid for
• 50,000,000 only available (an additional 1,800,000 shares on top of the 50,000,000 is also in the public tranche but only available for subscription by directors etc.)
2. 267,566,000 stapled securities offered to institutional and other investors via placement tranche.
• Approximately 30 times subscribed
3. DBS Bank is acting as the stabilising manager with over-allotment of 65,873,000 shares from the placement tranche.

Note that shares for FEHT will start trading on the SGX mainboard on 27th Aug 2012, Monday.

Compiled Table of IPO Statistics

Owing to the IPO scene heating up due to the biggest IPO this year by Far East Hospitality Trust, I have compiled a table of IPO statistics for investors to have a snapshot of current 2012 data, and hopefully formulate a good and optimal strategy for use during IPO applications. The table can be found via the navigation bar above under "IPO SG Statistics" or you may also click here for a redirect to that tab.

On a side note, the Far East Hospitality Trust prospectus and information can be found here through SGX. Do note that the deadline for application is 23 August 12 noon, Thursday.

HealthyTrading!

Attention on IPO Scene Again with Far East HT

The Far East Hospitality Trust is the latest IPO to heat up the local IPO scene and the 2nd hospitality trust to be seeking a listing in this year. In fact, Far East Hospitality Trust (FEHT) will be listing almost exactly 1 month after another hospitality trust, Ascendas  Hospitality Trust (AHT) got officially welcome to the SGX Mainboard. 

I have compiled a table of IPO statistics relating to all Mainboard and Catalist-listed counters for 2012. It can be found in the "IPO SG Statistics" section of this blog for reference. It also details the varying amounts of cash used for balloting and the percentage success rate and expected profits for the initial listing day 'pop'. Do check it out here.

Back to FEHT listing, certainly investors will be wary of the potential 'pop' with this IPO given the lacklustre performance of AHT a month ago. Well, lacklustre seems slightly too unforgiving given the fact that trusts and REITs often get pretty unceremonious welcomes into the listing fray. Indeed, AHT closed on offer price ($0.88) and has gone below listing price only to close at $0.875 last friday ostensibly due investors betting on its earnings report come Thursday in this week. 

Now the question is will FEHT outperform that flat result seen with AHT? 

From news responses and institutional subscription, FEHT does indeed look like a stronger proposition backed up with much better local presence and management leading up to this IPO. There was a slight blotch on the AHT scoresheet even before listing due to the pull of a considerable asset - its Korean hotel - from its portfolio.It seems smooth sailing with the FEHT so far. Of course, the drawback must be its premium that an investor must now pay for a visibly 'better' trust and management where it has been priced at the top of its indicative range at $0.93. Investors must also stomach the slightly lower dividend yield of 6% promised for this financial year as compared to that of AHT at 7-8%. 

I have honestly not immersed myself in the documents of the Far East HT yet and will be doing so tomorrow or the day after next. For now, I am not keen on taking this stock for a 'pop' given the history of AHT and its similarities. The premium further reduces the possibility of a 'pop' on first day. 

For those of you yet to subscribe for the Far East Hospitality Trust IPO, the deadline for application is 23 August 12 noon, Thursday.