Luck is not being with me since the missing of MPAY, SMARTAG, BOILERM, UOADEV and MSM IPOs. Now it's the turn for OLDTOWN. But guess what.

Oldtown Berhad is pricing its issue/offer price at RM1.25 per share for its initial public offering (IPO) of 96.4 million shares of RM1 each. The company, which owns and operates the Oldtown White Coffee chain, aims to list on Main Market on July 11.

According to its prospectus draft, the company is offering 63.4 million new ordinary shares for application by the Malaysian public, directors, eligible employees and business associates of Oldtown and its subsidiaries.

The IPO price is based on the historical price earnings ratio multiple for the financial year ended Dec 31, 2010 (FY10) of 13 times which is based on the historical net earnings per share of 9.6 sen and enlarged issued and paid-up share capital of 330 million shares upon listing.

Oldtown said the listing exercise would enable the group to gain recognition and enhance its profile through listing status and further augment Oldtown's corporate reputation and assist the group in expanding its customer base locally and overseas. “It will also provide funds for expansion of Oldtown's business and markets, as such increasing the overall capability of the Oldtown group,” it added.

According to its proforma consolidated statements, Oldtown registered a net profit of RM31.9mil with revenue of RM255.1mil for the financial year ended Dec 31, 2010. The company plans to raise RM79.2mil gross proceed from its IPO, of which it will utilise RM38.1mil for capital expenditure, RM10.5mil for working capital and RM5.9mil for repayment of bank borrowings.

The company's market capitalisation upon listing amounts to RM412.5mil, based on the IPO price and the enlarged issued and paid-up share capital of 330 million shares.

Based on the past 4 years earnings, it seems the revenue and profit growth are shrinking. It may due to limited fund injected to the business. Oldtown also targeting to open another 116 outlets in the mentioned 3 countries within 3 years. 

If it is fulfilled, the revenue and profit definitely will looks better on top of it's existing coffee products. However, I think Oldtown has mature enough in Malaysia & Singapore, I'm not sure about Indonesia. Those place with small population and low income may not benefits the outlet.

By looking at it's limited future outlook and the IPO price is based on PER 13 times of 2010 EPS, I would say the IPO price is too expensive to me. 96 cents or below would be just okay. This IPO is no go for me. 

Anyway, for IPO speculation purpose, perhaps it is a good try.

Good luck, folks.

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