Still Not Easy To Trade With Current Sentiments?

It has been two weeks since my last posting. Currently looking at the share market performance, we have nothing to cheer about. It kind of mix market with the chances to make some gains seems to be very slim with some uncertainties surrounding the world equities market.

Looking at the current chart, the FBM-KLCI still stay above the supporting lines. It seems that the share market might be moving side way. If the supporting lines is not taken out, we might have some chances to play around the market but with limited counter to choose from.

What will I do at these moments? With the current volume and turnover still well below 1,000,000 (excluded Bumi Armada), I still prefer to watch and have a look on how our share market is going to move. Participating in the current share market sentiments didn't promise any good opportunities rather with chances to lose more of our investments. I'm staying at the side line.

Lately we can see lots of new IPOs listing and it seems that most of the new listing are doing well. Today we will be watching how Hibiscus Petroleum Berhad is going to fare and whether this counter can bring any profit to its investor? With 1 free warrant for 1 ordinary share held, there might be some chances that this counter could bring some gains to its investor.

Hibiscus Petroleum Berhad - To Apply or Not To Apply?

Hibiscus Petroleum Bhd, the first Special Purpose Acquisition Company (SPAC) to be listed in Main Market on 25th July 2011. This is something quite new in the Malaysian share market. If we really examine and we surf few of the blogger involve in share market, most of them responded saying that they are not going to apply this share. The main reason was this company have NO BUSINESSES and it is an EMPTY SHELL company.

Basically if we sit down and examine the prospectus of this company, it seems that this company have the ability to move higher on the ground that it will involve in an OIL and GAS exploration and production (E&P) businesses. No doubt they don't have any businesses at all at this moment but the team management inside it was well known for their ability and experience in oil and gas field.

Taking into the account of their Main Features of this IPO - certain things we need to look at it on why this share was worth of applying based on their few main features.

SPAC is a company which has no operations or income generating business at the point of IPO but undertakes an IPO with the intention of acquiring operating companies/businesses with the proceeds raised from the IPO.

The Initial Public Offering (IPO) consists of 200 to 400 million ordinary shares at an IPO price of RM0.75 per share at RM0.01 par value. It comes with 1 free detachable warrant for each share. 10 million shares are offered to Malaysian public.

The warrants will be listed and tradable from the date of listing, with an exercise price at a discount of approximately 33% to the issue price of RM0.75 per share. Upon the listing, Hibiscus Petroleum will work towards the acquisition of businesses or assets that would establish it as a junior independent oil and gas exploration and production (E&P) player in the near to medium term.

Hibiscus Petroleum does not intend to pay dividends prior to the completion of the Qualifying Acquisition (QA). The company has not generated any revenue since it has not commenced business operations.

Main features of this IPO?

1. Investor Protection – At least 90% of the IPO proceeds will be placed in a trust account managed by an independent custodian which is a trust company, a licensed bank or merchant bank. At least 90% IPO proceeds placed in a trust account - given it value at 0.75 sens X 90%, we still have a value of 0.675 sens place under trustee. The minimum proceeds of 90% will be placed with the independent custodian, Deutsche Trustees Malaysia Berhad which may only be invested in securities issued by the Malaysian Government, money market instruments and AAA-rated papers.

2. Shareholders who vote against a proposed Qualifying Acquisition (QA) are entitled to receive, in exchange for their securities, a pro rata portion of the amount held in trust account (being 90% of the IPO proceeds) if the QA is approved. Hence, the downside risk prior to Qualifying Acquisition (QA) is limited with the refund flexibility of 90% of an investor’s IPO subscription plus interest (net of distribution/liquidation expenses). The downside risk is limited with a refund of 90% plus interest - a good protection. If the Qualifying Acquisition approved by the share holders, we have the rights to ask for the refund if we are against it. It means that at least we will be still getting 90% of its initial value of 0.75 sens.

3. The downside risk may be further mitigated by the trading of warrants from the date of listing as this IPO comes with a sweeter of 1 free detachable warrant for each share. This is the best part of it - Free 1 detachable warrant. Exercise period - Anytime during the period commencing from and inclusive of the date of the completion of the QA up to and including the Expiry Date.

4. The warrants are tradable on listing date. Exercise price is 0.50 sens – a discount of 33% to the issue price of 0.75 sens. Taking into accounts - if the listing of Hibiscus share was below par around 90% (0.675 sens) from its initial value of 0.75 sens, the warrant will probably listed at around 0.25 to 0.35 sens a share - this was based on it exercise price of 0.50 sens plus a premium of about 0.10 to 0.15 sens a share for the warrant. (listing price 0.675 sens - exercise price(warrant) 0.50 sens = warrant share prices 0.175 sens + premium of 0.10 sens to 0.15 sens = probably listed around 0.25 to 0.35 sens a share.

5. The completion of the QA is within 3 years from the date of listing. If it fails to complete a QA within this time frame, the company will be liquidated and the amount held in trust account (net of taxes and liquidation expenses) will be distributed to shareholders. Refund flexibility : Investors will receive 90% of their funds with interest, (after deduction of relevant taxes and liquidation/distribution costs which are not expected to be substantial), if the SPAC fails to generate an acquisition within a 3 years period or if they vote against an approved qualifying acquisition. The Non-Independent Directors, Management and Initial investors are not entitled to any distribution. No other IPO structure limits investors’ initial downside in this manner.

Investment by Investor (per share) RM0.75
Minimum amount to be distributed (90%) RM0.67 *
Interest in Year 1 (3%) RM0.02
Total distribution – if at the end of Year 1 RM0.69
Interest in Year 2 (3%) RM0.02
Total distribution – if at the end of Year 2 RM0.71
Interest in Year 3 (3%) RM0.02
Total distribution – if at the end of Year 3 RM0.73

6. Opportunity to invest in a listed oil and gas Exploration & Production company at entry price. Under the SC guidelines, they are not allowed to talk to any vendors prior to being listed but after listing if there is some good announcements coming in the prices of this share will be totally different)

7. Board and Management team have extensive experience and relevant skills.
1) Former Shell Malaysia deputy chairman Zainul Rahim Mohd Zain is the non-independent non-executive chairman of Hibiscus Petroleum. He is also the Board Members of Petronas Carigali Sdn Bhd and Petronas Carigali Overseas Sdn. Bhd.
2) Former Sapura Crest Chief Operating Officer, Kenneth Gerard Pereira is the managing director. Pereira was in the Sapura group's oil and gas service business. He is also now the managing director of Mumbai-listed Interlink Petroleum Bhd, an independent oil and gas E&P company. He has 29 years of working experience of which 21 years have been in the oil and gas industry. Significant prior sector experience in the start-up and turn-around of companies engaged in the sector :- One of the founders of the oil and gas service business of the Sapura Group of companies in 1997, involved in the growing of the company organically and through acquisitions until 2008. Interlink Petroleum Ltd, a junior independent oil and gas E&P company listed on the Mumbai Stock Exchange. Under his stewardship, Interlink’s performance improved substantially, with a market capitalization increase from approximately USD3.7 million at the end of 2008 to USD35.5 million at the end of 2010.
3) Perisai Petroleum Teknologi Bhd’s managing director Zainol Izzet Mohamed Ishak who was former Sapura Crest Petroleum Bhd CEO also sits on Hibiscus Petroleum’s board. Held a CEO position for 16 years, out of which, 7 were in Malaysian public listed companies. Under his leadership, Sapura Crest became one of Malaysia’s leading oil and gas service provider.
4) Dr Rabi Bastia Padmashree (non Executive) - Involved in the oil and gas E&P industry for more than 30 years. Founder of the E&P business of Reliance Industries Limited, a member of the Reliance Group, India’s largest private sector enterprise. Credited with the successful exploration of India’s largest oil basins, many of them in deep water. Received several academic and state awards in India, the UK and the USA.

From my point of views. The risk is there but it would not be a great risk as most of the money invest are place in a trustee account and we have the rights not to proceed or to be a shareholder if the Qualifying Acquisition is approve and we are against it. At least we still receive 90% refund. Do remember we have another one sweetener - 1 free warrant for every ordinary share we hold in Hibiscus Petroleum Berhad. From here anything can happen with the warrant listing. Maybe it might move higher? There are few rumours stating that this share will be play once it listed in Bursa. How true is this story ????? No idea at all. Just make your own judgement.....

This statement was not an intention to ask or to persuade any of my readers to apply for this coming IPOs. It is just my point of views only.

"Sometimes when thing looks bad it turn out to be good or vice verse"

Star to Buy 4.99% of Catcha Media for RM4.97m

Catcha Media Berhad (“Catcha Media”) announced today that leading Malaysian media company Star Publications (M) Bhd (“The Star”) will be acquiring a stake in Catcha Media, in conjunction with the latter’s ongoing Initial Public Offering (“IPO”) exercise. Catcha Media is scheduled to be listed on Bursa Malaysia’s ACE Market on 22nd July 2011.

Catcha Media aims to raise RM17.25 million from its Public Issue of 23,000,000 new ordinary shares, each at an issue price of RM0.75 where 3,000,000 shares have been offered to the Malaysian public, while 20,000,000 shares are for private placement.

As part of Catcha Media’s private placement exercise, The Star has subscribed for 6,636,000 shares at RM 0.75 per share. This stake will represent 4.99 percent of the enlarged issue and paid up capital of Catcha Media upon listing, which represents the maximum equity shareholding in Catcha Media that The Star could possibly subscribe to, given the structure of the IPO.

The Star, currently listed on Bursa Malaysia’s Main Board, is Malaysia’s leading integrated media organisation, with group revenues totalling more than RM1 billion for 2010. It publishes Malaysia’s leading English language newspapers ‘The Star’ and ‘The Sunday Star’, which boast a million readers on average daily. The Star also has controlling interests in several radio stations and online portals.

Patrick Grove, Director and Founder of Catcha Media commented, “We are very excited to welcome the Star as a shareholder of Catcha Media, as we anticipate that this investment will be in line with the strategic interests of both parties. We are already in discussions with The Star’s team to explore potential opportunities for business growth synergy. We also appreciate The Star’s confidence in our business and future prospects.”

Ho Kay Tat, Group Managing Director and CEO of The Star said, “The Star views this
acquistion as a strategic move to add value to its current portfolio of high-growth media assets. Catcha Media is a regional leader in online media and advertising sales. We anticipate that Internet Advertising Expenditure (“Adex”) in Malaysia and the region will grow by more than ten times over the next five years. With our current new media properties and brands, The Star is positioned to benefit from this change in the advertising landscape. Our investment in Catcha Media as a market leader will further strengthen our competitive edge in this sector.”

Catcha Media is presently a media owner and operator of a magazine publishing business and an online media business. The magazine publishing business currently publishes 14 magazine titles, while the online media business sells Internet advertising space to Malaysian brand owners and advertising agencies. Catcha Media also has exclusive sales rights for leading Malaysian website, Lowyat.net. In total, media properties controlled by Catcha Media currently reach 9.78 million Malaysians. Catcha Media’s revenue in 2010 was RM35.42 million and its profit after tax (PAT) was RM8.1 million.

Catcha Media management intends to use the majority of funds raised from their IPO exercise for working capital required for business growth and to fund the research and development of online technologies in line with the growth prospects of the Internet Adex space.

According to Frost & Sullivan, online Adex in Malaysia is expected to grow at a compound annual growth rate (CAGR) of 56.63% per year for the next five years. Frost & Sullivan also estimates that Catcha Media captured a 26.62% share of Malaysia’s online advertising market in 2010.

Moving forward, Catcha Media seeks to expand by way of acquiring more representation and sales rights for local and international online properties, while leveraging its magazine publishing business to grow its online media business.

Ho Kay Tat went on to comment, “We see in Catcha Media a group of managers who, like The Star, have demonstrated their long-term commitment to becoming leaders in their sector. They have more than twelve years experience in the online media sector and their vision for the business fits perfectly with ours.”

Catcha Media launched its IPO prospectus on 30 June 2011. Subscription for the public placement is open until 8 July 2011. Catcha Media is due to list its shares on Bursa Malaysia’s ACE Market on 22 July 2011. A copy of the prospectus relating to this offering may be obtained from Bursa Malaysia’s website (www.bursamalaysia.com) or Catcha Media’s website (www.catchamedia.com).

8 IPOs Listing In The Month Of July !

The FBM-KLCI is creating an all time high but nothing to cheers about. The share market performance looks quite dull with the volume and turnover still at low. The only exciting thing happens right now in the month of July was flooded with full of IPOs application and listing.

Why everything being put together at one time? We totally disagree the way they handle this listing situation as everything being list together in two weeks span. It is unfair for the public in applying for the new IPOs listing as it would squeeze their fund and opportunities in participation in IPOs listing.

One thing for sure there will good and bad things happen. The good things are we might be easily get the subscription of the IPOs that we are applying as not many of them will apply in such a short time. The bad things are it will lower the rate for the oversubscription ratio. Which counters might face the same fate as UOA Development Berhad or XOX Berhad. Can we said that Eversendai Corporation Berhad facing the same fate as well?

This month of July IPOs application and expected listing date.

1) Eversendai Corporation Bhd 01/07/2011 (Listed) - RM 1.70
2) OldTown Berhad 13/07/2011 - RM 1.25
3) Inari Berhad 19/07/2011 - RM 0.38
4) Bumi Armada Berhad 21/07/2011 - RM 3.15
5) Catcha Media Berhad 22/07/2011 - RM 0.75
6) Hibiscus Petroleum Berhad 25/07/2011 - RM 0.75
7) PeterLabs Holdings Berhad 26/07/2011 - RM 0.30
8) Prestariang Berhad 27/07/2011 - RM 0.90