Sozo? When I first hear this company name, it sounds very funny. It means it is crazy in cantonese. SOZO will be debut on tomorrow, which it's IPO has been oversubscribed 3.28 times by the public investors. CNOUHUA is the only KLSE China stock that is trading above the IPO price so far, which indicated a good start for China company to be listed in KLSE.
I'm looking good on SOZO debut and near future earning after CNOUHUA, due to the following 3 reasons:
(1) It is a food company. There is always a huge growing demand in food. And the best thing is this China company is catering it's products to local and export markets like Europe and Japan. China has dominated 92% where the rests go to export. The future growth for this company perhaps can be more scaring than wine company.
(2) This small-cap company able to draw some interests from the local big players. The best thing is, these pre-IPO investors will be locked up for 1 year post-listing. The total shares owned by pre-IPO investors and SOZO will be more than 80%. Thus, it will helps reduce the downside risk of the price.
(3) As usual, China company is unable to set the high PER in KLSE, due to lack of interest from the investors. As a debut, SOZO IPO price is trading at PER of 4.2. A cheap price to acquire for, compare to CNOUHUA of PER 6 and other local food companies. Needless to say, the huge potential market has outshined the local peers.
Since it sounds that good (of course it has some minor drawbacks as well), I've tried to apply SOZO IPO 10+ lots earlier, but to no avail. I don't even have the luck to hit 1 lot. I've no luck at all this time. Anyway, I would like to congratulate those who managed to grab some lots from this IPO.
Finally, I would say CNOUHUA and SOZO should be very potential for mid to long term investment, in view of the huge potential in future earnings and trading at low PER now. However, I would reserve some in hope that their management won't do anything stupid which can hurt the shareholders.
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