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Sri Lanka Equity Forum » Stock Market Talk » ACCESS ENGINEERING PLC (AEL.N0000)

ACCESS ENGINEERING PLC (AEL.N0000)

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1ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty ACCESS ENGINEERING PLC (AEL.N0000) on Wed Mar 09, 2011 8:47 am

CSE1

CSE1
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
By Jithendra Antonio

The engineering arm of Access Group, Access Engineering, owned by top businessman Sumal Perera is planning to go public to raise Rs. 5 billion in an Initial Public Offering. The company is currently contemplating on a pre-IPO private placement.

Speaking to Mirror Business, Access Group Chairman, Sumal Perera said, the company will be launching the IPO second half this year towards the end of March.

“Still, we have not decided the exact dates. But we are planning to come up with the IPO probably towards the end of May this year after the private placement” Perera added.

However, he refused to disclose on what the proceedings of the IPO will be utilized.

Sri Lanka’s market regulator recently had said that they were expecting around 50 new IPOs in 2011 with at least two IPOs valued at Rs.5 billion. The biggest IPO in the recent history of Colombo bourse was Laugfs Gas which raised Rs.2.5 billion.

The other IPO that is expected to raise around Rs.5 billion is Sri Lanka Catering, which is expected to come into the market this year.

Most of the post-war IPOs that came into the market to raise funds in the recent times ended up being oversubscribed by over 100 times. The nearest examples were IPOs of Singer Finance and Union Bank of Colombo.

Meanwhile, Access Engineering will be the second largest IPO entering Sri Lanka’s Capital Market after Dialog that raised nearly Rs.8 billion and will surpass expected IPOs such as Vallibel One, Softlogic and Expolanka.

Since its inception in 1990, Access Group ventured into the construction sector in 1994 to secure itself a niche market for providing turnkey engineering services for Gabion related structures and has formally established Access Engineering Ltd., in 2001.

With a vast portfolio of completed private sector and government projects, Access Engineering is one of the entities in the forefront of the civil engineering in Sri Lanka. It has a work force of 1400 employees including over 100 engineering professionals, an in-house design office and a modern fleet of specialized machinery and equipment.

Access Engineering is specialized as contractors for Design and Construction of Infrastructure development projects in the fields of Irrigation & Land Drainage, Water Supply, Highways, Bridges  and suppliers of Engineering related products such as Gabions, Geotextiles, High Density Polythene liners, Bridge Bearing Pads, Bridge Expansion Joints, DI Pipes and fittings, Construction Chemicals, Water Stops, Metal Arch Underpass and Mechanical Stabilized Earth Wall Structures, Water & Sewerage Treatment Plants.

source - www.dailymirror.lk

2ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Access Engineering IPO - Research on Wed Feb 29, 2012 8:04 am

Quibit

Quibit
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

3ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 8:07 am

Chanuque

Chanuque
Manager - Equity Analytics
Manager - Equity Analytics
Directors' and Employees' holding of AEL ( Access ) is about 80% and their cost is LKR 5.00 per share. IPO offers you at LKR 25.00 per share, means 500% more of the principal stake cost. What will happen, is that there will be an enormous selling pressure since the day 1 of trading as the AEL employees are going to take the opportunity to dispose their holdings to make profits. Price will decrease definitely and you can buy AEL from the market less than the introductory offer that of LKR 25 ( Predicted price when it settled in the market : between LKR 15 and LKR 19 ) .. !

4ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 10:23 am

manula


Vice President - Equity Analytics
Vice President - Equity Analytics
Better to buy from the secondary market... all the IPO prices are coming down and here we have millions of free share of AEL working staff also waiting to come to the market..

5ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 10:54 am

wiser

wiser
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
but employee can't sell, since one year locking period applied for them. anyway it seems this is a good company otherwise who gave share for employees free. They are treating to employees in better way. So future seems good.

But I'll not subscribe this , wait for secondary market.

6ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 11:05 am

wiki


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Thanks for the research report
I will wait to buy in secondary market.. nothing to loose

7ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 11:17 am

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
I,m sure once the employee's start to dispose we will be able to buy this below 1.00 rupee Razz [quote]

8ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 11:33 am

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
This is an awful IPO. it's coming to the market with a PE of 25. there is no way they can justify that valuation

9ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 1:09 pm

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Agree with most above comments.
If someone does not like to apply for this IPO, then all he/she wants to do is just ignore..!!
It's pointless to blame the authorities or a 3rd party later.
Overall its a really good point to see more n more IPOs are coming to the market.

10ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 1:11 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
I suppose one thing working for access are the favors mahinda owes them

11ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 3:00 pm

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
SEC must ban these kind of IPOs
If IPO price is 25 and if it will hit 12 in the first day , it have a very bad impact on ASI

12ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 3:05 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@mono wrote:This is an awful IPO. it's coming to the market with a PE of 25. there is no way they can justify that valuation

I do agree with you.
But in CSE out of 270+ companies, how many companies - we can justify the current market price?
As UKBoy told if we are not interested not to participate in the IPO.

13ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 3:37 pm

econ

econ
Global Moderator
please do not subscribe these kind of IPOs.

14ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 3:45 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@Redbulls wrote:
@mono wrote:This is an awful IPO. it's coming to the market with a PE of 25. there is no way they can justify that valuation

I do agree with you.
But in CSE out of 270+ companies, how many companies - we can justify the current market price?
As UKBoy told if we are not interested not to participate in the IPO.

So, you don't hold any shares?

15ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 5:51 pm

snandasiri

snandasiri
Manager - Equity Analytics
Manager - Equity Analytics
@mono wrote:This is an awful IPO. it's coming to the market with a PE of 25. there is no way they can justify that valuation
I agree with you. A procedure must be introduced to calculate a share price of a IPO considering all factors.

16ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Wed Feb 29, 2012 5:54 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@mono wrote:
@Redbulls wrote:
@mono wrote:This is an awful IPO. it's coming to the market with a PE of 25. there is no way they can justify that valuation

I do agree with you.
But in CSE out of 270+ companies, how many companies - we can justify the current market price?
As UKBoy told if we are not interested not to participate in the IPO.

So, you don't hold any shares?

My question is how many?
That does not mean all are rubbish.
What I hold is not an issue.

17ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Thu Mar 01, 2012 2:50 pm

lamaya


Equity Analytic
Equity Analytic
check the conclusion of the research report done by Asia Wealth Management....
"It is noted that based on the financial analysis and the forecast we have done, AEL is clearly a fundamentally strong counter that we could recommend to “SUBSCRIBE”. However, it is fair to bring to notice the possibility of gifted shares to employees (Please refer to slide - Capital Structure) selling in the secondary market subsequent to initial trading. This scenario could bring downward pressure on the share price. Albeit, it is reiterated that
based on financial analysis and forecast , AEL is a fundamentally strong counter."

I think its very unbiased openion

18ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Thu Mar 01, 2012 4:07 pm

greedy

greedy
Manager - Equity Analytics
Manager - Equity Analytics

If one carefully notices, the purpose of this IPO is to increase the marketability of the 980Mn shares that have already been issued. And the main purpose is not to raise funds through the issue of 20Mn shares to the public. 980 million shares vs 20million shares. Cant they raise this Rs.500Mn through another private placement??

This is new way of raising funds now. First Bonus issues, Sub divisions, private placement and later issue of a small number of shares to give an opportunity to sell shares.

one more point to note that 600 million shares have been issued by way of bonus issue during 2011. The company did not have huge reserves to do the capitalization at the same rate of PP or IPO. Therefore, the rate of capitalization Rs.5 after taking into account of subdivision. if the capitalization was done at the same rate of Private Placement or IPO i.e at Rs.25, they could have issued only 120 millions shares as bonus issue not 600 million shares.

Price to Book Value

Book value per share before this IPO is ......

Net asset value as of 31/03/2011 4,344mn
Issue of shares after 31/03/2011 4,500mn
Total book value ignoring value
creation after 31/03/2011 8,844mn

Book Value per share Rs.9.02 (Rs.8,844mn/980mn shares)

Price to book value 2.77 times (Rs.25/9.02)


Price Earnings Ratio

Profit to equity Holders of the Parent Rs.962mn
Number of shares before PP 800 mn shares
EPS Rs.1.20 (Rs.962mn/800mn shares)
Price Earnings Ratio 20.83 times (Rs25.00/1.20)


However, if you notice 31/03/2011 accounts, there is a one off gain (Most probably one off/irregular) of Net Gain from Fair Value of Investment Property amounting to Rs.291mn.... If we exclude this from the net profit..

Profit to equity Holders of the Parent Rs.962mn
Less: Net Gain from Fair Value of Investment Property Rs.291mn
Profit excluding irregular profits Rs.671mn
Number of shares before PP 800 mn shares
EPS Rs.0.84 (Rs.671mn/800mn shares)
Price Earnings Ratio 29.76 times (Rs25.00/0.84)

(This one of gain has been ignored by the research person)

My reply does not constitute a subscribe/not to subscribe recommendation. It is up to the investors to make a informed decision. I'm have not commented on the Future prospects of the company that matters most. Few lucrative contracts can huge profits to the company. However, as it stands now, the price does not seem to be so attractive to me considering the selling pressure that comes in different dates from PP and employee shares.

19ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Thu Mar 01, 2012 4:19 pm

anubis


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Let's redefine the term "IPO" - An opportunity for a private company's shareholders to convert their shares to money.

lol!

20ACCESS ENGINEERING PLC - ACCESS ENGINEERING PLC (AEL.N0000) Empty Re: ACCESS ENGINEERING PLC (AEL.N0000) on Thu Mar 01, 2012 6:41 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@greedy wrote:

(This one of gain has been ignored by the research person)


Was it accounted in for most of the IPO research docs from broker up to now?

'tis purposely done to bring a valuation attractive IMO...

Finally this is also a mess..

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