Neo Group IPO - A Good Buy?

Introduction

Covered by the Hype and massive public advertisement/awareness over IHH IPO, there is another local firm which is also launching its IPO, starting trading even before IHH.

The local catering company is Neo Group Limited and it has launched an initial public offering (IPO) of  1m shares for public and 21m shares via placement at 30 cents each for a Catalist listing on Singapore Exchange.

The IPO closes on 9 July (Monday!) at 12pm and starts trading on 11 July at 9am. Check out Neo group prospectus here!

The invitation shares on its platter - which constitute 15.3 per cent of the group's enlarged share capital of 144 million shares - comprise one million public-offer shares and 21 million placement shares.

The placement shares "have already been oversubscribed", according to Neo Group's executive director Elvis Lee. He also said there were no cornerstone subscribers as the company "spread out its investors".

Background [i would like to give credit to http://singapore-ipos.blogspot.sg for the wonderful insight to the IPO too]

Neo group is started from MR NEO Kah Kiat, a self-made millionaire who drop out after Secondary 2 as he felt that a diploma or a degree would not guarantee riches and respect. 

He started his business at the age of 20 with $15,000 borrowed from relatives and friends after amassing useful experience by helping out at a relative's chap chye peng (economical rice) stall between ages 15 and 17 (Read his whole story here). 

Today, Neo group owns:

• 3 catering companies ("Neo Garden Catering", "Orange Clove" and "Deli Hub")
• A yacht chartering service (http://www.neogroup.com.sg/ny/services.html)
• A Umi-sushi chain with 16 outlets & expanding (http://www.neogroup.com.sg/brands/umisushi/index.html) 
• A wine cellar 

Reasons to Buy:

1. Ranked by Euromonitor as the no.1 events caterer in Singapore.
2. Too many awards :p (You can see for yourself here)
3. Net Profit increasing steadily from S$2.2m to S$2.8m to $5.4m from FY2010 to FY2012.
4. Intends to distribute Dividends not less than 60% of its net profits (equal to around 6% yield on $0.30) attributable to shareholders in each of FY2013, FY2014 and FY2015.
5. MORATORIUM - All existing shareholders have each undertaken to have 100%, 70% and 40% of their respective shareholdings in our Company moratorised in the first, second and third year from the date of admission of our Company to Catalist. (meaning they will not sell off their shares based on the % according to the year!)
6. Proceeds used to Expand and develop our Food Catering Business & Food Retail Business

Conclusion: 

If you look at market-changing companies like Microsoft, Apple, UOB etc; they always have a leader at the helm of the company.

And i seriously believe that Mr Neo, founder of the Neo Group, is a man of such calibre and able to lead the company to greater heights. Few people have the courage and the dreams to drop out at age 14 and worked as hard as he needs to achieve his wealth and success.

With only 1million (1000 lots) issued for the public, no. of shares being issued is quite limited & majority of it held by the existing shareholders (who are sticking to the Moratorium mentioned above), this stock should do well on its debut and may attract long term investors seeking for good yields. 

Seldom do you come across a company CEO with his rags to riches story and I personally have patronized his catering and Umi-sushi outlet before... I will buy the IPO and also go on a yacht trip with my friends or gf next time! :D


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