Lets examine some fundamentals of other listed palm resources companies before coming to the valuation of this ipo.
1) Based upon price earnings ratio:
a) First resources - 9.3
b) Golden Agri - 8.5
c) Indon Agri - 14.9
d) Kencana Agri - 13.8
e) Wilmar - 16.4
The new ipo Global Palm is offering at historical price earnings of 8.5 times. Take the average of the above 5 listed firms, the industry average is 12.6, hence the upside is definitely there.
Based upon PE, Global palm should be trading at 68 cts, representing 22 cts upside.
Lets take a look at P/B ratio:
1) First - 2.2
2) Golden -1
3) Indon - 2.1
4) Kencana - 1.6
5) Wilmar - 2.7
The industry average for PB is 1.92, Global palm resources post ipo NAV is 27 cts, hence the ipo price of 46 cts is giving the ipo at 1.7 times, based upon PB the company is likely to open above water at around 52 cts.
Personally i would suscibe to the ipo based upon its low price earning ratio and reasonable PB ratio, but just purely for stagging the counter only.
Upside is quite limited if you were to take into consideration of PB ratio.
Just my personal viewpoint.
