Royal Wolf Holdings will list on the ASX on 31 May 2011. The lead manager and underwriter is Credit Suisse and the co managers are Commonwealth Securities and E.L. & C. Baillieu Stockbroking.
A number of institutional investors were falling over themselves to get stock in this company and I can see the reasons for their attraction.
Royal Wolf makes its money from leasing and selling portable containers. It has a large market share of this business in Australia and New Zealand.
While the business may sound boring, it’s precisely the type of business that investors such as myself like.
Why?
Because it’s a straight forward business that provides essential products that will never be made obsolescent by technology, the company earns attractive margins on its products, has good opportunities for growth, is a dominant player in its market and most importantly the IPO is reasonably priced. The estimated dividend yield will be quite acceptable too at about 4% (unfranked).
The other nice thing about Royal Wolf is that it has a very diverse client base, so there are no individual clients that account for significant amounts of revenue.
While Royal Wolf has the value of its lease container fleet at $103 million in its balance sheet, the independent valuation is actually $133.8 million. Conservative accounting is to be applauded.
The IPO price is $1.83 and I wouldn’t be too surprised to see it list at a premium to that price based on what I’m hearing regarding demand for the stock.
There haven’t been any Australian IPOs in the last three years that I have been interested in. Too many of the companies have been of average quality and the prices asked have generally been too high. Royal Wolf is different. It is a good quality company and the price is reasonable.
Only clients of the lead and co managers were invited to apply for shares.
Please note that as always, none of the above constitutes financial advice, as with any investment there are risks. You need to do your own research and consult appropriately qualified people for advice (where necessary).
Good Buy?? It's a company that will not be making money in 2011. While every international leasing company is ! Furthermore the value of the AUD is great for them at the moment , As they buy containers from Chinese factories and traders in USd. So when the Aud comes tumbling down so too will RWH. I have no doubt that GFN wants out so they will be selling as soon as they can ! If you check their past it is riddled with debt !
ReplyDeleteGood luck to those that have purchased shares
I actually sold the shares that I got on the second day the company listed and made a 17% profit.
ReplyDeleteI think you kind of missed the point of what I was trying to tell people - that the float price was a bit too cheap and that those who were able to get shares were likely to be in a position to make a very good profit (quickly). This happened exactly as I expected.
Having said that, I still stand by the comments I made. Your point about the $A is a valid one and while there should be some decline in the $A, the magnitude and timing of that decline is impossible to forecast.