EXPOLANKA HOLDINGS PLC (EXPO.N0000)

My guess is 22...

With a drop in early june to about 17-18.

Dear All, Now the game is over, we all made their own decision regarding this IPO, of which lot of arguments and discussions took place, I feel it’s good to have a forum like this which puts all the factors into the lime light.

I was quite confident on this IPO and went for it under retailer category, further advised some medium worth (somewhere between high net-worth and Retailer category) investors to apply for this IPO.

Followings are the reasons I based my recommendation...

1. Basically Expo is a good share & a blue-ship also
­ Lucrative freight forwarding business
­ Possible Future growth in their strategic investments and core business areas.

2. Involvement of JKH
­ Most of us see the involvement of JKH as the whole reason for the blunder. but what I sensed was they value their reputation than the 8 rupee gain that they can make through selling their Placement shares at issue price.

­ If we look at this fact in a different way, Expo IPO first day trading price will be an issue for JKH reputation. If it close below 14 then JKH will face severe criticisms. On the other side if the share price manages to reach a reasonable level to give some good return; then JKH can up their collars.

­ So I assumed that JKH will try to keep the price up on the day one to prove what they have managed and promoted is a good investment.

­ I just tried to rationalize this thought...presently whatever the number of share JKH owns is at the cost of 6 rupees per share, which is way below the issue price of 14, so will not be at a loss until the market price reach 6 rupees.

­ Further they have indicated that they will be applying for the IPO also, which means they are not bothered about the average cost is going up.

­ So what I assumed is they will buy from the market to keep the price considerably higher than the issue price.

­ Say they are ready to buy from the market till their average cost equals to the issue price of 14; following can be expected
­ If they are to double their holdings (in-terms of no of shares) - the average price they would pay is would be 22 rupees.

I.e. Placement shares = 1000 X 6/=
Purchasing from the market = 1000
Expected average cost = 14, thus the total investment = 2000 X 14 =28000
Average cost of the share purchased from the market = (28000-6000)/1000
22/=

­ If the selling pressure is more than what is required to reach 22/=, then JKH may end up increasing their holding by more than double (while keeping their average cost below or equal to 14).

Each of us had a reason to go or not to go for this IPO, some people looked at this as an issue of Ethics, some others went behind the crowd, some dared to take the risk but at low exposure, some were prepared to go for it at high volumes.

Nobody knows who is going to be the winners, but we can share our reasons for our decisions on this non-conventional IPO.

This IPO is not for retailers. this is for institutions and hnwi guys.

What kind of a behavior can we expect from other share holders who got this share @6/-. Will they sell it on the first day with over 100% gain.

@Avilon, would you prefer to realize 100% gain when there is a potential for more than 200% gain,NO will be the answer, then why we should be feared of such situation. Infact those who got the shares are not retailers,but HNWI and institutions which has more than enough capacity to hold. Out of those few short-termers who got shares at 6 sold of on the gray market for 20-24 per share.

tinyman wrote:Dear All, Now the game is over, we all made their own decision regarding this IPO, of which lot of arguments and discussions took place, I feel it’s good to have a forum like this which puts all the factors into the lime light.

I was quite confident on this IPO and went for it under retailer category, further advised some medium worth (somewhere between high net-worth and Retailer category) investors to apply for this IPO.

Followings are the reasons I based my recommendation...

1. Basically Expo is a good share & a blue-ship also
­ Lucrative freight forwarding business
­ Possible Future growth in their strategic investments and core business areas.

2. Involvement of JKH
­ Most of us see the involvement of JKH as the whole reason for the blunder. but what I sensed was they value their reputation than the 8 rupee gain that they can make through selling their Placement shares at issue price.

­ If we look at this fact in a different way, Expo IPO first day trading price will be an issue for JKH reputation. If it close below 14 then JKH will face severe criticisms. On the other side if the share price manages to reach a reasonable level to give some good return; then JKH can up their collars.

­ So I assumed that JKH will try to keep the price up on the day one to prove what they have managed and promoted is a good investment.

­ I just tried to rationalize this thought...presently whatever the number of share JKH owns is at the cost of 6 rupees per share, which is way below the issue price of 14, so will not be at a loss until the market price reach 6 rupees.

­ Further they have indicated that they will be applying for the IPO also, which means they are not bothered about the average cost is going up.

­ So what I assumed is they will buy from the market to keep the price considerably higher than the issue price.

­ Say they are ready to buy from the market till their average cost equals to the issue price of 14; following can be expected
­ If they are to double their holdings (in-terms of no of shares) - the average price they would pay is would be 22 rupees.

I.e. Placement shares = 1000 X 6/=
Purchasing from the market = 1000
Expected average cost = 14, thus the total investment = 2000 X 14 =28000
Average cost of the share purchased from the market = (28000-6000)/1000
22/=

­ If the selling pressure is more than what is required to reach 22/=, then JKH may end up increasing their holding by more than double (while keeping their average cost below or equal to 14).

Each of us had a reason to go or not to go for this IPO, some people looked at this as an issue of Ethics, some others went behind the crowd, some dared to take the risk but at low exposure, some were prepared to go for it at high volumes.

Nobody knows who is going to be the winners, but we can share our reasons for our decisions on this non-conventional IPO.

I am sorry, little confuced about the following calculation. Could you please elaborate.

" Placement shares = 1000 X 6/=
Purchasing from the market = 1000
Expected average cost = 14, thus the total investment = 2000 X 14 =28000
Average cost of the share purchased from the market = (28000-6000)/1000
22/=
"

Simple,

Just assume they have got 1000 shares from placement at 6 per share, now to maintain the price levels I expect them to buy from the market also. So the maximum average cost they would prepare to have would be 14, assuming JKH to double their holdings by buying from the market while making their average cost equals to 14.

(Remember they have to make this IPO a good performer,otherwise it will result in negative publicity and reputation,thus they may try to jack up the price on the day one through buying from the market)

So if they have 1000 shares now at a total investment of 6000, and their decision is to double the no of shares at an average cost of 14, then their portfolio will have 2000 shares at the cost of 28000 (14x2000).

So the incremental investment required is 28000-6000=22000 to acquire 1000 shares,which means 22/= per share.

Thanks. The word incremental is crucial.

JKH has done it before. They sold huge amounts KHL shares bought cheaply at rights issue; which effectively killed any appreciation of the share.

So whoever buys would be sitting on a time bomb. JKH and others can chose their time.

well said gamaya........
it's a time bomb....

Expo Lanka oversubscribed by 5 times

http://www.ft.lk/2011/05/13/expolanka-exceeds-expectations/

anybody has inside information on how companies who go for IPOs arrange over subscriptions through bank guarantees just for the publicity? this time it is restricted because of the limitations.

duke wrote:anybody has inside information on how companies who go for IPOs arrange over subscriptions through bank guarantees just for the publicity? this time it is restricted because of the limitations.

Still very easy, JKH and CARS both have more than 10 subsidiaries. All that's needed is 10 Bank Guarantees. And which bank is going to refuse to offer them a guarantee?

It's like as TFC

Pichchiya wrote:Do not make misleading comments without any facts.Same said for FLCH,UBC as well.Retailers, pls do not allow others to play with the little money you have

Agree.

The following is a figment of my imagination:

EXPO will open at 100. It's quite easy. Someone has to enter a sell order at 100 and someone else has to enter a buy order at 100, and those orders will be matched and open will be marked as 100 (See how SLTL opens at 60 or 61 almost everyday while it's trading range is 55-58)

When EXPO opens at 100 the kind of people who bought WAPO at 10,000 and ALUF at 192 will barge in and buy like crazy while WAPO themselves start selling their stakes. This will probably drive the price down to about 80.

At 60, another bunch of investors, the kind of people who bought TAFL at 240 will wade in thinking 'damn, this looks attractive it's trading 10 bucks lower than the open'. Then JKH will start selling driving the prices down to about 60 (1000% profit).

When price reaches 60, the kind of people who paid 350 for JKH shares last year will enter the share ('damn 40% down from the open right?'). By now those who bought above 90 will be really worried. Other people who subscribed to the IPO will now start selling, driving the price down to about 30

At this stage normally sane investors who refuse to touch CARE at 250 or CSF at 15 will think, damn this is down 70% guess it's safe now. But their buying will not be enough to hold the prices steady. People who bought in the first half hour are now on the verge of jumping out of building. Meanwhile the market closes at 20

Over the next few days the share price gradually declines to 14. All those who bought above 75 will now sell absolutely disgusted, wowing never to buy on emotion again. The price will now drop below the IPO price. Suddenly JKH, WAPO etc will start buying back the shares they sold at 100 or even 50. The price will then start moving up and the retailers who bought at 90 and sold at 15 will scramble to get back on board. The cycle will continue once again.

tubal wrote:The following is a figment of my imagination:

EXPO will open at 100. It's quite easy. Someone has to enter a sell order at 100 and someone else has to enter a buy order at 100, and those orders will be matched and open will be marked as 100 (See how SLTL opens at 60 or 61 almost everyday while it's trading range is 55-58)

When EXPO opens at 100 the kind of people who bought WAPO at 10,000 and ALUF at 192 will barge in and buy like crazy while WAPO themselves start selling their stakes. This will probably drive the price down to about 80.

At 60, another bunch of investors, the kind of people who bought TAFL at 240 will wade in thinking 'damn, this looks attractive it's trading 10 bucks lower than the open'. Then JKH will start selling driving the prices down to about 60 (1000% profit).

When price reaches 60, the kind of people who paid 350 for JKH shares last year will enter the share ('damn 40% down from the open right?'). By now those who bought above 90 will be really worried. Other people who subscribed to the IPO will now start selling, driving the price down to about 30

At this stage normally sane investors who refuse to touch CARE at 250 or CSF at 15 will think, damn this is down 70% guess it's safe now. But their buying will not be enough to hold the prices steady. People who bought in the first half hour are now on the verge of jumping out of building. Meanwhile the market closes at 20

Over the next few days the share price gradually declines to 14. All those who bought above 75 will now sell absolutely disgusted, wowing never to buy on emotion again. The price will now drop below the IPO price. Suddenly JKH, WAPO etc will start buying back the shares they sold at 100 or even 50. The price will then start moving up and the retailers who bought at 90 and sold at 15 will scramble to get back on board. The cycle will continue once again.

Tube you are breaking me in two . Have to admit most what you say is the current trend/mentality of the CSE game.

On a serious note if someone buys this at rs 100 he or she should be impaled. Even Rs 22-25 is for a flogging if one is aware about the current financials etc. But Can it happen ? Oh well nothing is impossible at CSE.

To me Rs 14 is like a fair value. Around Rs 18-19 might be decent starting price but who know you prediction of Rs 100 might come true

tubal wrote:The following is a figment of my imagination:

EXPO will open at 100. It's quite easy. Someone has to enter a sell order at 100 and someone else has to enter a buy order at 100, and those orders will be matched and open will be marked as 100 (See how SLTL opens at 60 or 61 almost everyday while it's trading range is 55-58)

When EXPO opens at 100 the kind of people who bought WAPO at 10,000 and ALUF at 192 will barge in and buy like crazy while WAPO themselves start selling their stakes. This will probably drive the price down to about 80.

At 60, another bunch of investors, the kind of people who bought TAFL at 240 will wade in thinking 'damn, this looks attractive it's trading 10 bucks lower than the open'. Then JKH will start selling driving the prices down to about 60 (1000% profit).

When price reaches 60, the kind of people who paid 350 for JKH shares last year will enter the share ('damn 40% down from the open right?'). By now those who bought above 90 will be really worried. Other people who subscribed to the IPO will now start selling, driving the price down to about 30

At this stage normally sane investors who refuse to touch CARE at 250 or CSF at 15 will think, damn this is down 70% guess it's safe now. But their buying will not be enough to hold the prices steady. People who bought in the first half hour are now on the verge of jumping out of building. Meanwhile the market closes at 20

Over the next few days the share price gradually declines to 14. All those who bought above 75 will now sell absolutely disgusted, wowing never to buy on emotion again. The price will now drop below the IPO price. Suddenly JKH, WAPO etc will start buying back the shares they sold at 100 or even 50. The price will then start moving up and the retailers who bought at 90 and sold at 15 will scramble to get back on board. The cycle will continue once again.

Exact CSE Behavior

tubal wrote:The following is a figment of my imagination:

EXPO will open at 100. It's quite easy. Someone has to enter a sell order at 100 and someone else has to enter a buy order at 100, and those orders will be matched and open will be marked as 100 (See how SLTL opens at 60 or 61 almost everyday while it's trading range is 55-58)

When EXPO opens at 100 the kind of people who bought WAPO at 10,000 and ALUF at 192 will barge in and buy like crazy while WAPO themselves start selling their stakes. This will probably drive the price down to about 80.

At 60, another bunch of investors, the kind of people who bought TAFL at 240 will wade in thinking 'damn, this looks attractive it's trading 10 bucks lower than the open'. Then JKH will start selling driving the prices down to about 60 (1000% profit).

When price reaches 60, the kind of people who paid 350 for JKH shares last year will enter the share ('damn 40% down from the open right?'). By now those who bought above 90 will be really worried. Other people who subscribed to the IPO will now start selling, driving the price down to about 30

At this stage normally sane investors who refuse to touch CARE at 250 or CSF at 15 will think, damn this is down 70% guess it's safe now. But their buying will not be enough to hold the prices steady. People who bought in the first half hour are now on the verge of jumping out of building. Meanwhile the market closes at 20

Over the next few days the share price gradually declines to 14. All those who bought above 75 will now sell absolutely disgusted, wowing never to buy on emotion again. The price will now drop below the IPO price. Suddenly JKH, WAPO etc will start buying back the shares they sold at 100 or even 50. The price will then start moving up and the retailers who bought at 90 and sold at 15 will scramble to get back on board. The cycle will continue once again.

Tubal you are eligible for a Phd.CSE for the knowledge you have on the market behaviour..

at 100, this will make Expo > JKH in terms of Market cap. i.e. making it the biggest blue chip in Sri Lanka.

Like someone said earlier, anything in possible- given recent trends.

I think we can collect this below IPO price if you wait few days after the initial listing.

I doubt whether the prices will drop below the IPO price, specially since that the IPO was oversubscribed by five times. This means that there's a huge buying pressure and a lot of people have a positive feeling towards this company.

Just remember that the retailers who normally jump in to IPO's looking for quick returns, stayed out of this IPO due to that private issue thing. So most of the people who subscribed for this IPO must be big investors, who won't sell their shares short term.

Therefore I think it'll remain somewhat above the IPO price, at least for a few weeks when people are still keen on this IPO. Once the new IPO's get in and people forget about Expo, prices may come down a bit..

I'm a newbie, so there's more chance for me to be totally wrong..

Prediction: Expolanka should settle at a trading range between Rs 25 - 30.

Reasoning:
In terms of turnover, Expo is 60% of JKH.
JKH Market Capitalization is Rs 186.47 billion.
Unlike JKH, Expo's growth prospects and ethical standards are questionable.
So, considering 30% of JKH Market Cap = Rs 55.94 billion.
Expo issued shares (post-IPO) = 1.955 billion.
Therefore Market price per share = Rs 28.61.

This is just one guesstimate, based on market capitalization - and there could be other views... Have a Nice Day!

econ wrote:I think we can collect this below IPO price if you wait few days after the initial listing.

I think so econ, agreed
But here in CSE we can't predict like that way because most of big playesrs change this "game"..! Few peoples making big profits when most of at a loss...!

tubal wrote:The following is a figment of my imagination:

EXPO will open at 100. It's quite easy. Someone has to enter a sell order at 100 and someone else has to enter a buy order at 100, and those orders will be matched and open will be marked as 100 (See how SLTL opens at 60 or 61 almost everyday while it's trading range is 55-58)

When EXPO opens at 100 the kind of people who bought WAPO at 10,000 and ALUF at 192 will barge in and buy like crazy while WAPO themselves start selling their stakes. This will probably drive the price down to about 80.

At 60, another bunch of investors, the kind of people who bought TAFL at 240 will wade in thinking 'damn, this looks attractive it's trading 10 bucks lower than the open'. Then JKH will start selling driving the prices down to about 60 (1000% profit).

When price reaches 60, the kind of people who paid 350 for JKH shares last year will enter the share ('damn 40% down from the open right?'). By now those who bought above 90 will be really worried. Other people who subscribed to the IPO will now start selling, driving the price down to about 30

At this stage normally sane investors who refuse to touch CARE at 250 or CSF at 15 will think, damn this is down 70% guess it's safe now. But their buying will not be enough to hold the prices steady. People who bought in the first half hour are now on the verge of jumping out of building. Meanwhile the market closes at 20

Over the next few days the share price gradually declines to 14. All those who bought above 75 will now sell absolutely disgusted, wowing never to buy on emotion again. The price will now drop below the IPO price. Suddenly JKH, WAPO etc will start buying back the shares they sold at 100 or even 50. The price will then start moving up and the retailers who bought at 90 and sold at 15 will scramble to get back on board. The cycle will continue once again.

Yes, This is it.

Antonym wrote:Prediction: Expolanka should settle at a trading range between Rs 25 - 30.

Reasoning:
In terms of turnover, Expo is 60% of JKH.
JKH Market Capitalization is Rs 186.47 billion.
Unlike JKH, Expo's growth prospects and ethical standards are questionable.
So, considering 30% of JKH Market Cap = Rs 55.94 billion.
Expo issued shares (post-IPO) = 1.955 billion.
Therefore Market price per share = Rs 28.61.

This is just one guesstimate, based on market capitalization - and there could be other views... Have a Nice Day!

I agree with your reasoning except your opinion on Expo's Growth prospects and Ethical Standards. Expo is a very well diversified Company, very strong in logistics both in Sri Lanka and Overseas. This sector alone is bound to grow tremendously. On Ethics, please do a little more research and you will find Expo ranked No. 1 in Ethical Standards.

econ wrote:I think we can collect this below IPO price if you wait few days after the initial listing.

Good Luck to you Econ. Wishfull thinking I would say

shar wrote:

Antonym wrote:Prediction: Expolanka should settle at a trading range between Rs 25 - 30.

Reasoning:
In terms of turnover, Expo is 60% of JKH.
JKH Market Capitalization is Rs 186.47 billion.
Unlike JKH, Expo's growth prospects and ethical standards are questionable.
So, considering 30% of JKH Market Cap = Rs 55.94 billion.
Expo issued shares (post-IPO) = 1.955 billion.
Therefore Market price per share = Rs 28.61.

This is just one guesstimate, based on market capitalization - and there could be other views... Have a Nice Day!

I agree with your reasoning except your opinion on Expo's Growth prospects and Ethical Standards. Expo is a very well diversified Company, very strong in logistics both in Sri Lanka and Overseas. This sector alone is bound to grow tremendously. On Ethics, please do a little more research and you will find Expo ranked No. 1 in Ethical Standards.

"No. 1 in Ethical Standards" ???

Did you personally write list up?
were there any on the companies on the list?

If you want to comment, quote the source of your information. It seems a bit pointless for you to come onto the forum and tell other people to do research.

shar wrote:

Antonym wrote:Prediction: Expolanka should settle at a trading range between Rs 25 - 30.

Reasoning:
In terms of turnover, Expo is 60% of JKH.
JKH Market Capitalization is Rs 186.47 billion.
Unlike JKH, Expo's growth prospects and ethical standards are questionable.
So, considering 30% of JKH Market Cap = Rs 55.94 billion.
Expo issued shares (post-IPO) = 1.955 billion.
Therefore Market price per share = Rs 28.61.

This is just one guesstimate, based on market capitalization - and there could be other views... Have a Nice Day!

I agree with your reasoning except your opinion on Expo's Growth prospects and Ethical Standards. Expo is a very well diversified Company, very strong in logistics both in Sri Lanka and Overseas. This sector alone is bound to grow tremendously. On Ethics, please do a little more research and you will find Expo ranked No. 1 in Ethical Standards.

@shar: After reading your response, I re-did my calculation - using Profit before tax (for 9 months ending Dec-10) instead of Turnover; I believe this is more relevant. This time, I did not discount for any reason.

Market price derived = Rs 24.96
At this price, Expolanka would have the same PE ratio as JKH does. Whether Expo deserves this PE ratio (or higher or lower) is left to your judgement.

shar wrote:

Antonym wrote:Prediction: Expolanka should settle at a trading range between Rs 25 - 30.

Reasoning:
In terms of turnover, Expo is 60% of JKH.
JKH Market Capitalization is Rs 186.47 billion.
Unlike JKH, Expo's growth prospects and ethical standards are questionable.
So, considering 30% of JKH Market Cap = Rs 55.94 billion.
Expo issued shares (post-IPO) = 1.955 billion.
Therefore Market price per share = Rs 28.61.

This is just one guesstimate, based on market capitalization - and there could be other views... Have a Nice Day!

I agree with your reasoning except your opinion on Expo's Growth prospects and Ethical Standards. Expo is a very well diversified Company, very strong in logistics both in Sri Lanka and Overseas. This sector alone is bound to grow tremendously. On Ethics, please do a little more research and you will find Expo ranked No. 1 in Ethical Standards.

@shar,
Which PLC as per your estimate in the number 2 and 3 rank in Ethical Standards. Just like to know.