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PANTECH – Another Cheap IPO Stock Worth Investing



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Feb 05 2007
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Main Board-bound Pantech Group Holdings Bhd is raising RM26.1 million from the issue of 20 million shares of 50 sen each at an issue price of RM1.18 per share and a rights issue of five million shares pursuant to its initial public offering (IPO).
Pantech provides pipes, fittings and flow control solutions to the oil and gas industry as well as those in the energy, refinery, petrochemical and chemical sectors, including palm oil and biodiesel. Pantech posted a net profit of RM21.6 million for the year ended Feb 28, 2006 on the back of revenue totalling RM169.77 million, with about 26% of its business arising from exports.
Pantech expects strong demand from foreign and local clients to boost revenue to RM216.06mil for the financial year ending Feb 28, 2007, representing a 27% growth from 2006. It also projects pre-tax profit rising 18.5% to RM34.77mil and a dividend payout of 3 cents for the year to Feb 28. According to Executive Director, Adrian Tan, 70% of Pantech’s customers were local companies and the rest were from the United States, Singapore, Indonesia, Australia, Japan and Thailand.
Based on the prospectus, the enlarged issued and fully paid-up upon listing totals 150,000,000 ordinary shares. Net EPS (earning per share) for financial year ended Feb-2007 is 16.34 cents yielding a net P/E (price to earnings ratio) multiple of 7.22. The forecast for financial year ended Feb-2008 meanwhile is giving a return of 18.37 cents net EPS translating into net P/E multiple of 6.42.
I would think this is rather cheap if I use Kencana Petroleum Bhd (KLSE: KENCANA, stock-code 5122) as a comparison (the closest I can find). Kencana is trading at RM 1.44 today which is 28 multiple of it’s earnings of 5.14 cents per share. Using the same multiple of 28 times, Pantech stock price should trade at RM 5.14. By the way, do you see some similarities between Kencana and Pantech?
Listing Schedule :
  • Prospectus Date : 29-Jan-2007
  • Closing of Applications : 5-Feb-2007 (today)
  • Issue Price : RM 1.18 (Main Board)
  • Listing Date : 15-Feb-2007

# TIP: I think Pantech is rather cheap looking at its’ earning per share projected for the financial year 2008. I would think it’s worth investing in its’ IPO stock. Subscribe it.

# TIP: Analysts have a fair-value of RM 2.26 on Pantech.

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