Wolf Money(OTS Holdings Ltd IPO review)

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Another day another IPO on Catalist, this time OTS Holdings Ltd. This IPO has nothing to do with elevator(OTIS). The company is known for their Made in Singapore, Taiwan Sausage and Luncheon meat under Golden Bridge brand. Personally I am not a fan of processed meat but I did try out their products, the black pepper luncheon meat is rather tasty. 

The company is offering 41m shares including 6m vendor shares through placement, only 1m is available for public subscription at 23c. I am a bit half hearted in writing this blog. The financial figures look all right but there are only 1m shares for public subscription which mean most people will get little or no share when they apply for the public tranche. The low number available for public tranche will ensure the IPO will be many times over subscribed. SGX should mandate any IPO aspirant to have a min size of at least 10 percent of newly issued shares to be make available for public subscription or else what the point of calling it Initial Public Offer, might as well call it Initial Private Offer. SGX need to do better if they are serious about improving retail participation. 1m for public tranche is just too patronising. 

The company made about 1.34c or 2.9m net for the first half of FY21. If first and second half is a mirror image of each other. The company eps will be around 2.7c eps but do take note, there is around 500k added to the profit from grant and jobs support scheme from government. If you strip off the 500k, earning will be coming in around 5.3m (excluding IPO listing related fees around 1m) which is around 2.5c eps. Base on the offer price, the IPO is priced at 9.2x forward p/e which compare favourably vs QAF 13-14x which is the closest food manufacturer I can find listed on SGX. The company share should have some upside when it opens for trading. My guesstimate 25c-28c.

The company is committed to paying 50 percent and 40 percent of net profit as dividend to shareholders for FY21 and FY22. The company growth is likely to come from emerging markets thus the IPO to raise capital for setting up a manufacturing facility in Philippine. Mature market like Singapore is likely to experience slower or no growth due to consumers switching to more healthy choice of fresh meat and produce.

I would have given the IPO a higher rating if they had more shares available for public. I personally will avoid the IPO due to that reason. Most people will be losing their 2 dollars application fee. Liquidity is something to consider for any potential investor due to low float. The application for IPO will closed on 15th June 12 noon. The link to IPO highlights sheet can be found below.

https://links.sgx.com/FileOpen/OTS%20Holdings%20Limited%20-%20Product%20Highlights%20Sheet%20dated%208%20June%202021.ashx?App=IPO&FileID=6288


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Disclaimers 

All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for information only. Buyer beware,do you own due diligence.

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