Wednesday, 21 May 2008

Pre-IPO deals

I received a few emails on how to 'get into' the pre-ipo deals and i am actually evaluating one pre-IPO deal right now and is doing a book-building exercise for this deal. Since i am on this topic of pre-ipo deal, i will first explain what a pre-ipo deal is and why companies do a pre-ipo round instead of going directly to IPO.

Pre-IPO investments are usually the 'fund raising' round just before the Company goes for an IPO. The IPO will usually occur 6 to 18 months after the Company receives the pre-IPO financing. You may wonder why Companies bother to do a "pre-IPO" round and not a "IPO" immediately. Well, the key reasons are as follow:

The Company usually needs cash urgently for expansion and for working capital, however, it is too time consuming to raise funds from an IPO and the Company can raise money quickly via a Pre-IPO round to help ease the cash flow.

In addition, by raising a pre-IPO round, the Company is raising the minimal amount that it needs to ramp up its sales and profitability. If it manages to ramp up its sales and profits by using the pre-ipo funds, it will be able to command a better valuation at the time of the IPO and that will be even better for the Company and its owners.

In some situations where the IPO market is 'dead' (like what Singapore IPO market is in right now), it is difficult to raise funds from the public due to weak sentiments. The Company may opt to do a pre-ipo round now to meet its needs and then try to go for a listing again when the sentiments turn better and when IPO valuation are higher (i.e. they can list at a higher valuation).

There are many technical terms in a pre-IPO deals which i will not elaborate further. I will discuss more on 'how to get into a pre-ipo deal' on another day.


Tat Hong

Today i entered Tat Hong at around 2.18. My entry could have been better at 2.14 but i was busy the whole morning and was able to look at the market only after lunch. Tat Hong is poised to announce its results for the Financial Year ending 31 March 2008 on May 28. With the Bollinger Band tightening and all the indicators cutting up, the first target is around $2.40-$2.50, followed by $2.80-$3 if the price breaks above the $2.50 resistance. The target prices of the investment houses are as follow:

5 May 08 Citigroup $3.15
23 Mar 08 Goldman $2.80
17 Mar 08 UBS $3.38
13 Mar 08 Credit Suisse $3.50
22 Feb 08 CIMB $4.43
14 Feb 08 DBS Vickers $2.70

CH Offshore - I missed this counter today although i wrote it down in my trading journal. :)

Biosensors - Hit my first target today.

Tuesday, 20 May 2008


Biosensors seemed to be showing interesting signs of a potential rebound. First target is 78c-80c and second target is 85c-90c and the cut loss is around 67c. Results will be out on 26 May and based on the UBS report, the results for year ended 31 March 2008 is likely to be a loss of US$28 million. There are 4 analysts that issued reports in 2008:

13 May 08 Citigroup $1.13
23 Apr 08 OCBC $1.23
22 Apr 08 UBS $1.25
4 Apr 08 Credit Suisse $1.20

While i have never like the Fundamentals of this Company, the Technicals are actually looking quite good.

Monday, 19 May 2008


Last week was an extremely frustrating week for me. The new OCBC platform wasnt 'ready' and i missed 2 trades which i had wanted to buy and even "alerted" my trading group to look at it. First it was Celestial at 77.5 cents on last Thursday and KS Energy at 1.87 on last Friday. Urggh... in any case, i have resolved my log-in issues and managed to log into the new OCBC platform with the new user ID and passwords over the weekend and i am all ready to start trading and investing again.

I had lunch with a "semi-retired" remisier on Friday. He made a few millions last year investing in just a few stocks and he is only in his early 40s. Seems like i have a long way to go but i am working towards it.... He told me that his secret is to 'whack big big' in that few stocks which he has confidence in the management and has done thorough due diligence on the Company.

One good news that i have received in May was that the pre-ipo "J" investment which i have made in early Jan this year has submitted to SGX for listing approval. Hopefully, it will receives the "ETL" letter soon. "ETL" stands for Eligibility to List.... My plan is that once "J" is listed in June on SGX, i will be investing in another pre-IPO company.
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