Thanks for being patient, my dear readers. You guys are the reason why I keep coming back to post. Unfortunately the previous weeks were a mishmash of busyness and inability of my network provider to, well, provide my connection to the interweb. Inasmuch as I was busy then, the market has also been that way, there was a lot of action, including the long awaited (?) correction everybody was warning about.
I previously said that the next post would be a continuation of the IPO's, particularly on Nickel Asia. As fate would have it, the stock has already been listed on the board, passing by the time I should've and could've updated this blog. Anyway, it does make this post more interesting to write; and, hopefully more interesting for you to read also.
The offer price was in the lower end of the band, priced at 15 apiece. On its debut, the stock opened at 19, rose to 19.40 then went pft to close at 16.50. At the close, those who were lucky enough to get a chunk of the offering earned 10%. Not that bad considering that Cebu Pacific (Ticker CEB) opened at 132, to close at 133, with an offering price of 125, a gain of only 6%.
While the gain for CEB was quite modest at best, at least it still went up even though the offer price of CEB was at the high end of the price band.
NIKL had a price band of between 15 to 22. According to a broker friend, he said that pricing it at the lower end does not give a good impression. Think of it this way, if you were in an auction, and nobody was bidding up the art piece, then it means that people think the starting bid is already a good price.
On the other hand, setting the offer price at the lower end does give investors or investor-speculator-traders more upside, as proven by the 10-26% gain of NIKL compared to the 6% of CEB.
Now there's the IPO of IP Converge. The ticker will be CLOUD. While I do hope their IPO will point to the direction where clouds can be found, I do have my doubts. The local stock market is in a breather phase, and its parent company, IPVG, is not behaving as JGS did when CEB was about to list.
I checked the prospectus of CLOUD, IP holds 90% of its common shares. Price will be at 8.80. If you want to check out the prospectus, click here. It's 158 pages long, so you've been warned. Listing date is slated on December 9. Offer period is November 25 to December 2. Dividends were declared last Feb 3, but it's just at Php 5M or about Php .03 per 1 common share, if my vague remembrance and understanding of the definition of common and outstanding shares serves me right.
I hope with the above, you've had some basic info about the next IPO. IPO's are usually a way to make a quick buck. Unfortunately, making quick buck, at least in my opinion, is not about investing, it's more likely you're behaving like a speculator. So determine what you really are, before you partake of the IPO.
Nonetheless, there may be a speculative play in IP, I think. This will be similar to how ORE behaved because of NIKL. I was right with the ORE play, but I can't be right all the time. This is pure speculation. So again, buyer beware.
News came out recently that the IPO price of CLOUD has been reduced to 4.2, or half of the original price range. Here are the news take aways -
First paragraph -
MANILA, Philippines—Data services provider IP Converge Data Center Inc. (IPC), a unit of publicly listed technology IPVG Corp., has priced an initial public offering at P4.20 per share, cheaper than the earlier targeted price range.
You find the "incriminating" paragraph in the fourth paragraph -
The IPO was priced below the indicative range of P7.04 and P8.80 per share, seen to make the offering more attractive at this time that the stock market is undergoing a consolidation phase after retreating from all-time highs.
Key common sense questions to ask -
1. If you're confident with what you are selling, are you going to offer it for a bargain?
2. Why isn't IP moving up; or, at least showing some strength in the market? It seems the direction of the stock price has already "predicted" that this will be a lackluster IPO.
(I looked at the price chart of IP; and since October 26, it has not been doing anything but go down.)
Given this, IP may not provide the returns of an IPO play similar to JGS and ORE. I will however, review this stock in the days leading to the IPO of CLOUD. That's probably after December 2. Keeping my fingers crossed.
Until then, appreciate the risk, then appreciate the capital! In the meantime, why not read my previous posts? ;-)
By the way, closely monitor the tensions between the two Koreas. Geopolitical events often cast a shadow on stock markets. With this happening so close to home, stocks may either further correct or move sideways for some time. Buying opportunity? Perhaps, if you're an investor. But it's always good to stay liquid and wait for a better timing.
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