IHH IPO - 60x oversubscribed by Institutions!

I believe you have read from the newspapers and saw from the other websites how IHH will be expecting HUGE.. (60x oversubscribed by institutions!) demand. 

I shall cut short the whole story and make it not repetitive as what you read from elsewhere. 

First up - IPO Details

IPO Prospectus (Mind you, it's 1390 Pages!!!) - http://info.sgx.com/webipo.nsf/a550a7e7a8393629482578f6002916ce/3a15fe76d40a099048257a320037428f/$FILE/P.Papillion%20(IHH)%20-%20SG%20Version%20dated%202%20Jul%202012.pdf

Indicative Timetable 

Allocation of Shares

Of the base offer of 2.23 billion shares, 62 per cent have been pre-allocated to cornerstone investors (Cornerstone stands for rock, kidding... it means they will not sell the shares for a long period of time, usually 6 months).

About 350 million shares will be offered to the public in Malaysia and Singapore.

Ok... let's go to the Pros n Cons everyone waiting for!

Upside

• IHH Healthcare Berhad is a BIG, leading healthcare provider in 8 countries, majority in Singapore, Malaysia and Turkey.
• Former Parkway Healthcare being de-listed by IHH and now IHH is coming back for a listing in a whole new and bigger way! 
• Management believes IHH will overtake HCA listed in NYSE as the number one healthcare service provider in the world in three to five years time.
• IPO being propped up by pre-election encouragement from the government and by cash-rich state funds
• IHH follows through the Great momentum set by Felda Global Ventures last week, and while Felda soars 20% in the first day of debut (http://finance.yahoo.com/news/palm-oil-giant-felda-soars-stock-market-debut-053631417--finance.html); it is the hype that brings many investors to think that IHH will have the same impact.

Downside

• 90% of the proceeds raised will be used to pay off bank loans! No money from the listing is used to expand the company at all! However, according to the management, they plan to lower the debt to lower levels using the IPO and then borrow higher again to expand the next time... Not really a wise move if they take on too much debt...
• Based on the prospectus, the EPS using the enlarged share capital was US 0.96 cents and US 0.64 cents for the year 2011 and 3 months to 2012 respectively. This translate into a historical listing PER of 93x for FY2011.

Conclusion

Although IHH IPO is there to pay off their high debts and listing at quite expensive levels, it will definitely have a strong impact on the price. This flurry of IPOs should be somewhat linked to the government elections because when the public subscribe to the IPO and earn money -> happy -> vote for them. (Hahaha! My way of thinking) 

You may not have to worry about the price since there are 22 cornerstone investors covering your backside as you buy into this listing... whenever there is selling on the stock, these big institutions will surely ask someone to "suck up the selling" and maintain the price as where it is.

I am following http://singapore-ipos.blogspot.sg/2012/07/ihh-healthcare-berhad.html and i will also do a Hit-n-Run if i am applying for it. 

Another perspective: When you look at all the forums and hear from your investing friends, they are ALL interested in applying for the IPOs => Over-subscription liao!!! Therefore, if you are just applying 1 - 10 lots, i don't think there is high hope of being balloted.

However, if you look at the indicative timetable, you will see that they will refund you on 23 July and trading will start only on 25 July. Therefore, play it both ways!

1. Subscribe for the IPO first (before 12 July!) & Test your luck
2. Keep track of whether they refund you the amount on 23 July. Be prepared to stick to the computer at 8.59am and buy at whatever price it lists! Sell at a profit margin you are comfortable with :)

Good Luck to All! HUAT AH!

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