The initial public offer (IPO) price for JCY International Bhd, a hard-disk drive (HDD) maker, appears to be expensive, analysts say, although they conceded that the technology industry has a bright future.
JCY, to be listed on the Main Market at the end of this month, has priced its IPO at an indicative RM2 per share for retail investors.
"We think it's fairly valued and offers minimum upside.
"However, we think it's understandable. Naturally, the owner would want the best price possible," OSK Research head Chris Eng said.
ECM Libra said the IPO is priced at a historical earnings multiple of 19.7 times while a smaller peer like Notion VTec trades at a historical multiple of 11.8 times.
This makes JCY very expensive, ECM Libra analyst Lim Tee Yang said in a report.
The IPO, Southeast Asia's largest technology offer since 2000, is an offer for sale by its sole shareholder YKY Investments Ltd.
YKY will sell 25.9 per cent or 530.2 million JCY shares. About 11 per cent of that block is for retail investors and the rest for institutions.
The final retail price will be the lower of RM2 or 95 per cent of the institutional price. The book-building exercise for the institutions ends today.
The company plans to adopt a progressive dividend policy of up to 50 per cent of its net profit.
"Based on annualised financial year 2010 figures, dividend yields may go as high as 4.2 per cent assuming the maximum 50 per cent payout.
"However, as JCY has highlighted it will adopt a progressive dividend policy, we conservatively assume that JCY may pay out 20 per cent of its financial year 2010 earnings as dividends, implying financial year 2010 dividend per share of 2.2 sen or dividend yields of 1.7 per cent," said Lim.
JCY, which posted turnover of RM1.76 billion for fiscal year 2009, makes HDD mechanical components for Western Digital and Seagate.
"I think the demand for HDDs, especially the 2.5-inch HDDs, will continue to grow. I believe JCY has good future," said Eng. |
