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Neglected, Illiquid, Undervalue, Recovery counter
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Isolator
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23-Apr-2012 14:14
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Buy..... | ||||||||||||||||||||||||
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Isolator
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23-Apr-2012 11:24
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Is time to charge to 3ct now..... Cheong la... lol | ||||||||||||||||||||||||
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Isolator
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23-Apr-2012 10:25
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After doing your due diligence.... you will realise it is very cheap to buy now..... unlike those speculative penny which is very risky.... Anyway, trade at your own risk.... | ||||||||||||||||||||||||
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spices
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23-Apr-2012 10:22
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- yes.... dont be haunted by the past and go boldly forth... |
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Isolator ( Date: 23-Apr-2012 09:55) Posted:
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just for sharing with members here....
clarification from my broker on my query and I have been buying.... 
Looking at what you have highlighted for the last 3
months.
1) Disclosure in compliance:
Companies basically buy and sell stocks, and do investments. This article
basically describes how many the company has loss/gain after buying/selling the
investments. It has to be disclosed in compliance to SGX ruling. The company has
basically increased its market value after its investments.
2) Third Quarter Results: Every Quarter, every company is
required to report their quarter results to shareholders (ie. people like you,
who hold their shares). As ipco is a small company, it does not get covered by
analysts. But if it is a bigger company , say eg. GoldenAgr, this is where
newspapers report Goldenagr " Net Profit up 17% for Financial Year 2011" etc. (That's why we all have the job of
analysts and reporters to pull out the figures and analyze for us too).
3) Acquisitions and Disposals:
Basically this article tells us that Ipco has sold one of its companies called
Enigma Venture to another company called Inno-Pac. The effect of it is not big.
The stock has come into Top Volume, could be due to a couple
of reasons: it is penny (very cheap to buy and play up), it has recently turned
profitable. Your breakeven, please be
prepared to hold and pick up the stock to get to your breakeven price.
spices ( Date: 20-Apr-2012 11:42) Posted:
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Dont be haunted by the past.... Use your TA and FA now, and you will know why you need to LONG it now.... Future is very bright..... It is going to break the 3ct very very soon.... Charging there now... Enjoy....
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Elite
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Roger that - Thanks.
Just to share some open book. found online.
dowcog ( Date: 21-Apr-2012 12:21) Posted:
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wah lau.. history lesson... then cosco at $7 high n etc all the rest old timers kena burnt one all can drag out n put on show why cannot play stock liao.. lol
aiya, buy is buy, dont buy is dont buy lor. i duno y must $cow keep posting all these. Informatics i also say abit only.. but really.. i see a sense of bias here.. but dont we all who are vested in any counter??? think must have kena burnt bigtime on ipco or what.. but pls la.. as always mah, DYODD.. i read i also find it funny... relak la bro.. lol
if ipco cannot fly like sifu Iso say, i will also close position, already sitting on enough profits just to punt for fun on ipco. tikam stock like sifu Iso said... have exit strategy n loss only what you can afford... make $ n have fun.. that's all.. lol
take it easy la bro. enjoy wkend la...
Elite
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why is it no one mentioned about that one time $4 height. in Year 2000
That's about 12 years ago :)
many must have got 1st degree burnt playing this then.
moneycow ( Date: 21-Apr-2012 01:52) Posted:
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moneycow ( Date: 21-Apr-2012 01:50) Posted:
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Wow a bit of history not many actually knows. :)
Strangely, a steady flow of market news and imminent deals cultivates the speculative instincts in traders, and Ipco's share price surged from $1 to $4 within the space of one month in April 2000 (a move contrary to the market trend, given that the dot-com bubble burst in that month), then retreated even more quickly back to $1 within the next few weeks
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Whoever wants to be on it must know it really well. So that you know what you are doing and not simply follow the leader blindly :)
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Just for the reading
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Ipco is probably one of the more colourful stocks on the SGX. However, it is also one of the greatest destroyers of shareholder value over the last ten years. A shareholder buying in at $5/share in 1993 before the start of the 1994 bull surge would be left with < $0.10/share today (assuming he had not exercised a rights issue in 1997) --- a reverse 50-bagger over 13 years excluding opportunity costs.
The evolution of Ipco since its listing in 1993 may be divided into three stages: from 1993-99, 1999-2004, and finally 2004-now. The shareholding structure of the company, and its main business operations, underwent major changes through each of these stages.
The company was founded in the 1970s and at time of listing, its major shareholders were an Australian-listed group, Leighton group, and Malaysia-based Promet, an infrastructure, maritime engineering and construction group which was a stock market darling during its time --- veteran investors would be familiar with it. Ipco was involved in infrastructure, construction and oilfield services/equipment, and given its linkages with Promet it quickly became a hot stock during the bull run in late 1993-94, hitting a peak of $10 or ~25X trailing PE. However, a normalisation of market sentiment drove the price downwards to around $2 by 1996. The company was still profitable in its core operations, deriving S$7M profit on nearly S$300M revenue in 1996, although earnings growth was patchy.
The 1997 Asian financial crisis hit the company badly, a blow from which I believe it was never able to recover since. Most construction companies were hit, given that the heavily-leveraged property developers across Southeast-Asia bore the brunt of the currency shock. Over 1997-1999 Ipco accummulated losses of over S$100M. Promet itself was troubled due to its property commitments and in 1999 pared down its Ipco stake from > 70% to < 10%. Ipco's share price had dived to 60-70 cents by 1999, albeit having had an 8-for-10 rights issue in late 1997 (which apparently sparked a huge short-term spike to > S$3).
The second stage began with an Indonesian businessman Purwadi taking charge, and the landmark event being an amazing share issue of 650 million new shares valued at US$0.20 a share (existing share capital had been 70 million shares) for the purchase of a toll operator Spring Sun International which owned a stake in two China toll roads. Today it would be known as a reverse takeover. However, the seller appeared not exactly keen to hold on to the Ipco shares, as there was a subsidiary agreement to sell back the shares to Purwadi in stages subsequently. It appeared to be a way for Purwadi to gradually consolidate shareholding control over Ipco, except that he couldn't: according to " regulations" he was unable to hold more than 25% at any time, which of course meant he would probably place these shares out to the market eventually. Strangely, a steady flow of market news and imminent deals cultivates the speculative instincts in traders, and Ipco's share price surged from $1 to $4 within the space of one month in April 2000 (a move contrary to the market trend, given that the dot-com bubble burst in that month), then retreated even more quickly back to $1 within the next few weeks. There is reason to believe the stock had been cornered.
The deal eventually went through but Purwadi had rescinded his offer to buy back the shares. He was lucky, for Ipco languished at ~10-20 cents, way below the original issue price of US$0.20. Anyway, the SSI seller, Hi-Way Investments, probably eventually offloaded its huge stake in mid-2002 at a loss. But it had also, in turn, probably screwed Ipco in its own way: operating losses were actually incurred on the toll roads over the next two years, and eventually Ipco sold off its SSI stake at a S$80M loss, a 40% loss on its initial investment (which admittedly cost no money, but destroyed shareholder value through massive dilution). Ipco had somehow managed to contrive a deal where all parties were made to feel that they had lost big-time.
In-between, there were so many miscellaneous deals here, there, everywhere that the minority shareholder must have been bedazzled. There were oil-and-gas deals in Thailand which ended in litigation, new share placement deals (again!) to acquire an explosives company (never went through), and attempted listing of a subsidiary Insitu (also never went through). Finally, under new management in 2004, Ipco decided enough was enough, and restructured yet again, selling off all its core infrastructure and construction assets and acquiring yet another set of assets, comprising stakes in companies doing electronics , property, oil and gas, gas supply, located in Malaysia, China, USA, Singapore (confusing, but in alignment with the company's " culture" ). This is the third stage. It is still evolving, and I shall not go into it further because I have already covered it in a Hotstocksnot article on Ipco recently.
One thing cannot be denied, and that is the speculative nature of the stock, which has made it a traders' favourite. It is interesting to note that starting 1994 when Ipco had its first price spike, it had had one every 3 years, in 1997, then in 2000. Since then, it has not had any real price surges of note. Traders, however, still believe in it.
But for what? It is a prime example of a management being distracted by too much dealflow and attempting to capitalise opportunistically on the stock market to grow the firm (through new share placements to finance acquisitions), but instead losing focus and missing the forest for the trees. Most importantly, it continually compromised the minority shareholders. This was especially apparent in the SSI deal. Those who believe they can still ride on the stock when it recovers might end up being trampled by the vagaries of its management.
Original link :
http://stocktaleslot.blogspot.com/2006/07/crash-stock-ipco.html
Master
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*like*
ipco will chiong soon...=)))
CrazGreed ( Date: 20-Apr-2012 23:25) Posted:
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Re arrange- to make it easier to read :) some deep analysis of a former investor t\of this stock back then. The history and skeletal structure still remain true to day. In fact this one was wrote a few years back by the writer . See just for some history, flow of businesses and miscellaneous info in case you don't know.. Hope you have a btter insight of what IPCO does back then,. Its re structure, progress and digresses as well ::)
===============
I have vague memories of Ipco. It was one of the first investments I had made when I first started out (see " My Investing Journey: The Construction Stocks" ) and it was involved then in trenchless construction for Southeast-Asian infrastructure.
My investment did not have a happy ending, because I had underestimated the effects of the 1997 financial crisis whose effects eventually filtered down to the order books of construction companies towards the end of the millenium. Anyway, Ipco today is a totally different beast, and I'm not sure it's the better for it.
Over 2004-05 the company restructured under Managing Director Quah, divesting its infrastructure arms and capabilities acquired over the last two decades, to focus on opportunistic investments with near-term potential for listing on regional stock exchanges. In 2004 Ipco's NTA was $0.20. In 2006 it is still around $0.20 due to negligible profit over the restructuring period, but the composition of assets is totally different.
The attraction to many investors is the huge 50% discount to NTA, and I'll approach an assessment from this angle. First of all, as an investment holding group with no real core business, I would apply a 20% discount to the NTA, similar to the treatment for a closed-end fund. That reduces the attraction a bit, as NTA then becomes $0.16. Next we take a look at the asset composition under its balance sheet. Singling out the big items on the balance sheet, I can summarise that the assets go into three main categories: 45% intangibles ($80M), 35% other receivables ($60M), 20% net current assets ($40M). Intangibles in this case refers to goodwill, from acquisition of current subsidiaries (mainly ESA, IES and Asian Plan) at above book value I shall explore these separately below to assess the value of these intangibles. But it is worth noting that Ipco's assessment of the value of the subsidiaries might be skewed in its eagerness to invest that's why accountants use historical book value for NTA: for conservativeness. The 35% " other receivables" is mainly cash advances to Excellent Empire, a gas supply company in China, which the company is planning to convert to equity.
I shall examine the individual main investments below. There are five of them. ESA: 60% subsidiary, involved in semiconductor backend equipment. Ipco's $9.4M for 60% of ESA in 2004, with ESA promising pre-tax profit of > $7M over two years, suggests a valuation of ~5-6X PE (assuming 20% tax, $3.5M pre-tax profit per year), a fair but not cheap valuation for a private entity. The subsidiary seems to have achieved the target, but semiconductor industry outlook is mixed. Ipco has been talking about a listing for this subsidiary since 2004 but nothing has transpired. It is interesting that goodwill paid for this subsidiary was estimated at $15M. Ipco's valuation for ESA, if extrapolated to 100%, is 9.4/60% = $15.6M. This suggests that ESA's book value assets were negligible! Red alert. IES: 90% subsidiary, involved in oil and gas engineered products. Ipco's $5.6M for 90% of IES in 2005, with ESA promising pre-tax profit of > $2.5M over two years, suggests a valuation of ~6X PE (assuming 20% tax, $1.25M pre-tax profit per year), again not cheap (we should note that where profit guarantees are given, they tend to be fulfilled, but with poorer results being filtered downstream). Goodwill should be negligible, say ~$3-4M. CNA (formerly APMI): 40% associate, involved in automotive harnesses and seats.
Ipco spent about $11M for a 40% stake in 2004, and its FY06 profit share was $1.3M, giving a PE of 8.5X basing on Ipco's buy-in valuation.... Another investment which has yet to fulfil hopes of a listing. Asia Plan: 70% subsidiary, residential property development in Washington, USA. I estimate the bulk of goodwill to be in this subsidiary, ~$60M. Although Asia Plan seems to have been able to sell off its plots at significantly higher prices over purchase price, it mystifies me how much premium the original purchase price was over the book value, looking at the goodwill. Note that the company was unable to sell off any plots in FY05. There is widespread opinion that the US property market seems to have peaked as interest rates rise relentlessly, and Norris Homes' purchase recently of 50 lots might be an Indian summer.
Excellent Empire: 20% investment on natural gas supply in China. Ipco does not expect any significant profits in the short term from this investment indeed further start-up costs might be needed. Hence it is extraordinary that it is willing to inject another $45M into Excellent Empire (through conversion of a previous loan into equity) .... which accounts for about a quarter of Ipco's NTA. A common thread of my discomfort running through all these investments is the total lack of theme connectivity between the five investments. Electronics, oil and gas, automotive, property, gas supply: Ipco has no prior expertise in all these, with the probable exception of Excellent Empire's gas supply/infrastructure business.
Where is the competitive advantage? Where is the synergy? The management would hardly be able to add value even if they owned a majority of the companies. Secondly, the lack of transparency regarding the main investments, as well as the lack of track record, leaves the investor with tremendous risk and it is not as if Ipco had picked up bargains in the various investments, on retrospect. The ESA, IES and CNA arms seem to be relatively benign, but I do have major doubts about realisable value for Asia Plan's land plots and Excellent Empire's long-term execution risks which still have a long way to go. On a last note, it is a shame that Ipco exited infrastructure because this is the segment that has shown the most potential for the long-term over the last few years as Asia reflates. If Ipco has persisted, I am sure it would have shown greater prospects, given its incumbent capabilities in various past infrastructure projects.
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Elite
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Sorry pls ignore this one. Unconformable news. Might be a mistake.
Do have a good weekend with your love(s) one(s).
Cheers.
dowcog ( Date: 20-Apr-2012 17:43) Posted:
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gavinl ( Date: 20-Apr-2012 17:39) Posted:
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