#3 A Mega GP's IPO Hitting in the Market
Where would you start with IPOs because so much whisper, momentum and speculation are in the market, all the talks we have right now about IPOs is like an IPOs Eid occurring in the month of November and December of this year which is a
best season ever in IPOs history in Bangladesh.
So many questions and excitement have been around and also carrying news to us about up-coming IPOs which are coming to appear in the secondary market at what price stocks will start bidding in a first hour of opening day, then second hour and
so on until end of the day. There are so many thinking going on and also speculation building up on all these IPOs especially Grameenphone’s price that is baffling everyone’s mind right now. It is unknown in a way what will happen, what price and with
what percentage of gains when GP’s stock hits in the market today.
Regardless of what is going to happen, a true investor need a careful evaluation process of stocks through analysis which means whatever information available at the balance sheet need to be studied thoroughly to match with your own investment principals and
make sound logic because there is no other information available for IPOs for charting. That will put you in a safe side of investment in order to secure own investment money.
Here is a leading cellphone company with Grameenphone’s $70 million initial public share offer is going to make its share market debut on Monday ( today) in both stock exchanges, has raised 13.51 billion taka with the offer of 69.44 million shares in
public and 65.5 million of shares in private placement at 10 taka with a 60 taka premium each. Investors are much hopeful than ever and exciting to tank GP’s share which is a biggest IPO ever in Bangladesh and expecting to play a significant role in
creating more weight in the index values. GP Company is so far ahead of capturing more market share over 45% than its competitors (Aktel, CityCell, Gulf-based Warid and Teletalk) by seizing 22 million permanent subscribers out of 50 million members
in a cell phone industry and in addition to, this industry will grow more rapidly than before in coming years.
It’s a fair question to ask you, would you give money to someone when who has no record of making money for himself? Of course not, only time I will give money for investment he/she has found an Aladdin magic lamps who can change things
over-night because having such a new cutting-edge technology, innovative ideas, completely a new market only one company leading, lots of cash available or when there is a proven record of making money which is so called a growth company whose
revenues increases at least 20% or higher.
Taking its total income in 2008 which ended December 31st in 2008, the GP’s earning per share is Tk. 2.46 and net asset value per share is Tk. 22.70 are calculated by considering 1.215 billion of shares instead of altogether 1.350 billion of shares.
Taking a consideration of a growth company who’s PE can go as high as 30 in any industrialized country which will be absurd to see such an average PE in GP’s stock price. On the other hand, company is earning only Tk. 2.46 every share of pre-IPO
placement and it is also guaranteed by GP to pay you premium of Tk. 60 for every IPO worth of Tk. 10 which tells that price has to start with at least Tk.70 and rest of pricing would be based on how much weigh investors want to add using either an average
growth of company’s PE times earning per share or average percentage of return (400%) which takes place in IPO adaption in secondary market or any other higher/lower percentage of return that we have not seen so far.
The best philosophy in investment is to study a company thoroughly and evaluate a stock with own safety principles and sound satisfactory rate of return and buy a stock at a price which defines the intrinsic value of a company in future prospects.
