SunVic made a extremely impressive debut. Looks like the market is bullish about SunVic's potential. Its is however my opinion that this stock is over hyped, and over priced in a long run. With a poor showing in 1H 06, one must not forget a possible poor showing in FY06. That might cause shareholders to run.
In view of SunVic's good performance on day 1, I think it is possible in everyway for China Farm to perform as well as SunVic on day 1.
In the recent "Edge", SunVic was hailed as an IPO that would open at $0.60 on day 1 of trading. Thats 100% gain from its IPO of $0.30. But here is why i think China Farm is a better choice over SunVic.
From their prospectus, you can see that from FY03 to FY05, the company's profits has increased at a good rate, backed by increase in revenue. If you based your IPO choice based on that, it might seem as a good choice to put your money at. However, look closer.
For HY05 to HY06, there has been a decrease from $118.7M to $63.3M. From that, my bet is that the FY06 profits will not show a growth over FY05. Infact, there would be a shrink in profit.
"No growth? Move on."
Based on my experience on IPOs, prior growth is extremely important for its share's open price, and of course future price appreciation. For Eg, Sino Env opened at $0.40 (ipo at $0.33), and quickily went to $3.00 in half a year due to its prior growth records and sustained growth after IPO.
vs
Sunshine Holding that had inconsistant growth before IPO, and IPO at $0.3, opened at $0.4, now $0.345.
Thai beverage public co as well.
Its my belief that SunVic Chemical is a good stock to apply for in IPO, but my money goes to China Farm, with the intention to keep the share for 1 year. SunVic Chemical would be a day 1 play for me, if I have even applied for SunVic Chemical's IPO.
