The first thing that strikes you about Uni-Asia is not just the big fluctuations in its shareprice since listing August 17, but what now seems like an incredibly low price that it fetched during the listing process. It offered 65.4 mln shares at 55 cents, giving it a price-to-book ratio of just 1.06x, and a price-to-earnings ratio of 5.5x. When average volumes hit 36 mln, and the stock reached an intraday record of S$2.79, it was trading at a P/B ratio of around 4x, and a P/E ratio of around 22x.



Now, I'm not going to comment on the investigation by the Singapore Exchange into possible price manipulation, which was called for by 33 retail investors who had gone to see the Securities Investors Association (Singapore) about their concerns. I do not profess to have any knowledge of whether there was any price manipulation or not. The company has also said it also doesn't have any knowledge of what caused the price to fluctuate so much.

But it sure seems strange that they let the stock go so cheaply in the first place. For the answer to this question we have to go back to the original prospectus, in which they say:

Our Company presently has no intention of purchasing our own Shares after the listing. However, if we decide to do so later, we will seek our Shareholders’ approval in accordance with our Articles and the rules of the SGX-ST.

Our Company will make prompt public announcement of any such share purchase and has also given an undertaking to the SGX-ST to comply with all requirements that the SGX-ST may impose in the event of any such share purchase.

In relation to the existing major shareholders, the prospectus has this to say:

Uni-Asia was established in Hong Kong in 1997 by founders Motokuni Yamashiro, Kazuhiko Yoshida, Michio Tanamoto and Takanobu Himori who were Japanese bankers. Each of the founders has over 25 years experience in the banking industry working in corporate loan syndication and structured finance arrangement. Mr. Himori left our Company in March 2004. The other founders continue to lead the business and as at the Latest Practicable Date, they own, directly and indirectly, a significant aggregate equity interest in Uni-Asia of approximately 23.9%.

These have given their assurance (page 57) that they would not be selling any shares for six months from listing – a time period which has not yet expired. So even if they did give away the shares too cheaply during the IPO (but why would they do this?) they would still not be permitted to sell the shares at this time. At worst, it seems, the shares were just "coming off a low base".

What is your theory?


Mark Laudi

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Labels: IPO, Singapore Exchange, Uni-Asia