BAGCO Initial public offer

[Jerry Duruiheoma]

Thanks Apache, one things you guys have to realise is that there are some of us here who are interested in long term investment. Writting of fthe share as not good for investment is not right.

My understanding is that this share is not profitable for short term investor.

cheers

[Apache]

Originally Posted by Avocado

Bagco Prospectus here

Details of FY end can be easily confirmed.

My point exactly, in the prospectus at the forecast section it clearly says forecast for the year ending December 31st 2008....
I just wanted a confirmation on this

[Apache]

Originally Posted by windywendy

Guys, seriously, after taking a closer look at the prospectus. reading every one of the 58 pages (no thanks to a certain Jehosaphat ) and doing some further research, I've come to a different conclusion on this deal. It's a BUY, at least for those interested in the medium to long term investment horizon. Yes, I still don't understand the Dividend computation for 08, and still am not impressed with the 10 for 1 bonus, but this deal is good. See further comments on the nairaland forum (sorry I don't know how to paste the link ). Cheers!

Hi wendy,

Could you through more l;ight on your analysis and how you came about the buy decision. you could just give us a not too detailed analysis on this similar to what you have done on other threads.
as regards the nairaland forum, just copy the all the text in the address bar and paste in your reply column

[Avocado]

The FSDH document on the BAGCO offer gives it a solid BUY; the analysis is comprehensive, perhaps not-so-easy to follow; but the executive summary makes a spirited, numbers/valuations-backed analysis. The 10 for 1 may appear unjustified, but in making all shares (including PO shares) settle on the same basis, some "bonus" issue was necessary; again, the FSDH document (which isn't online but is a public document) explains in easy-to-follow terms.

A small note: it's all fine to make BUY/SELL decisions based on trust (posters/stockbrokers, etc), bute there's no substitute to builing knowledge and experience by reading the document yourself. If you have access to the Internet and can type on this forum, there's little credible excuse.

Apache: You have a PM.

Cheers.

[Apache]

In the IBTC report, they had recommended a buy. they also valued the share price of Bagco post listing based on future earnigns etc, the targeted price post IPO is =N=5.52
Unfortunately, i don't have a soft copy of the report but you can find it in Yesterday's (Sunday Dec 02) edition of This Day newspaper.

I was initially interested in buying Bagco until i saw from there prospectus that investors who buy the IPO won't be paid in 2008. For me it didn't make sense bcos it states in the same prospectus "forecast for the year ending Dec 2008,...
But in this IBTC report, they sya the year ending is March. If IBTC is right, then it makes sense that they won't be paying dividends in 2008. If it was another broking firm that had stated it, i would have taken it as a mistake but for the fact that its IBTC, that's why i wanted to be sure that i didn'y misread the prospectus. Please can sum1 just answer this for me. When is Bagco's year end?. my "buy/Ignore" decision is based on this little question

[RethinK2.0]

Originally Posted by Apache

In the IBTC report, they had recommended a buy. they also valued the share price of Bagco post listing based on future earnigns etc, the targeted price post IPO is =N=5.52
Unfortunately, i don't have a soft copy of the report but you can find it in Yesterday's (Sunday Dec 02) edition of This Day newspaper.

I was initially interested in buying Bagco until i saw from there prospectus that investors who buy the IPO won't be paid in 2008. For me it didn't make sense bcos it states in the same prospectus "forecast for the year ending Dec 2008,...
But in this IBTC report, they sya the year ending is March. If IBTC is right, then it makes sense that they won't be paying dividends in 2008. If it was another broking firm that had stated it, i would have taken it as a mistake but for the fact that its IBTC, that's why i wanted to be sure that i didn'y misread the prospectus. Please can sum1 just answer this for me. When is Bagco's year end?. my "buy/Ignore" decision is based on this little question

bagco fye is march

[Avocado]

Page 6 of prospectus: all yr. end quoted at March. See Page 7 for comment on ** item, where the document states that the estimate for PO buyers is estimated at 25% of the 17 kobo.

Document says it'll be 3 months for the 90% portion of offer proceeds to be deployed in wiping out some (about 70%, my estimate) of loans and overdrafts. Question is, 23 months from when? If 3 months from receipts of proceeds (proceeds to Bago in February 2008), the 2008 PO dividend share is still unfair. But these're crumbs for Long-term investors. It'll be good to have a clarification of the numbers though.

Apache: I'm guessing you haven't scanned through the PO document? Your contribution is valuable; perhaps, you should.
.

[Avocado]

Page 6 of prospectus: all yr. end quoted at March. See Page 7 for comment on ** item, where the document states that the estimate for PO buyers is estimated at 25% of the 17 kobo.

Document says it'll be 3 months for the 90% portion of offer proceeds to be deployed in wiping out some (about 70%, my estimate) of loans and overdrafts. Question is, 3 months from when? If 3 months from receipts of proceeds (proceeds to Bago in February 2008), the 2008 PO dividend share is still unfair. But these're crumbs for Long-term investors. It'll be good to have a clarification of the numbers though.

Apache: I'm guessing you haven't scanned through the PO document? Your contribution is valuable; perhaps, you should.
.

[Apache]

On page 7 of the prospectus just under the forecast figure appears this text (just above the **item)

"Forecast earnings and dividend per share for the years ending 31 December 2008; 2009; and 2010 are based on the profit after taxation and 6,215,000,000 ordinary shares of 50 kobo each".

Can you explain this?

[Avocado]

Simply that the total number of shares after the offer shares are absorbed will be exactly 6.215B ordainary shares of 50 kobo each. The statement you quoted will ordinarily be interpreted to mean that all shares (6.215B) will be entitled to the estimated dividends. But the "**" comment clarifies that:

"2008 forecast dividend relevant to this Offer is estimated at a quarter of the full year forecast dividend figure..."

why do they say this? Because:

" ...proceeds are not likely to be received by Bagco before January 2008".

This reason sounds like - how to say it - nonsense. I've since asked stockbroker for a clarification. IF FY is March, and Offer proceeds reaches Bagco in February 2008, how long does it take to write off loans/overdrafts??

.

[crtide]

Originally Posted by Apache

On page 7 of the prospectus just under the forecast figure appears this text (just above the **item)

"Forecast earnings and dividend per share for the years ending 31 December 2008; 2009; and 2010 are based on the profit after taxation and 6,215,000,000 ordinary shares of 50 kobo each".

Can you explain this?

Vey interesting......gone are the days when these issuing houses think they can just do copy and paste and not do a proper reports. They don't know we have people who read the small prints these days.

[Avocado]

Well that's the spirit: everyone who's able to read ought to read the document rather than relying on the recommendation of "buy" or don't of any one institutional analyst or poster. And there's the advantage of being able to discuss items in the offer. It's one of the stockbroker's functions to clarify these things, and especially for investors who've account with the stockbrokers directly involved.

Plus, there's absolutely no revealed plan for growth in this document. Historical P&L shows there'll most certainly be some retention after paying dividends; but this document says nothing about how Bagco will grow the business.
.

[windywendy]

Originally Posted by Avocado

Well that's the spirit: everyone who's able to read ought to read the document rather than relying on the recommendation of "buy" or don't of any one institutional analyst or poster. And there's the advantage of being able to discuss items in the offer. It's one of the stockbroker's functions to clarify these things, and especially for investors who've account with the stockbrokers directly involved.

Plus, there's absolutely no revealed plan for growth in this document. Historical P&L shows there'll most certainly be some retention after paying dividends; but this document says nothing about how Bagco will grow the business.
.

What about Morpack billed to come onstream in 2008? Also, don't forget that the investment in production expansion has already happened . . .

[Apache]

Originally Posted by Avocado

Simply that the total number of shares after the offer shares are absorbed will be exactly 6.215B ordainary shares of 50 kobo each. The statement you quoted will ordinarily be interpreted to mean that all shares (6.215B) will be entitled to the estimated dividends. But the "**" comment clarifies that:

"2008 forecast dividend relevant to this Offer is estimated at a quarter of the full year forecast dividend figure..."

why do they say this? Because:

" ...proceeds are not likely to be received by Bagco before January 2008".

This reason sounds like - how to say it - nonsense. I've since asked stockbroker for a clarification. IF FY is March, and Offer proceeds reaches Bagco in February 2008, how long does it take to write off loans/overdrafts??

.

The explanation which i needed was is in the first sentence which clearly says - "for the year ending December 2008, 2009; and 2010".
If their year end is march, then why the above statement or is it a typo error?

[Avocado]

I suppose the Morpack business is already factored into this analysis in the turnover, no?

It's most likely not a typo, it bizspeak;or business-speak, or, fine print: 'we said it, and made a clarification'; just so that the document isn't contradictory.
.

[Apache]

Hi guys,
finally got the soft copy of the IBTC report sent to me. see attached

@Avocado,
thanks for the clarification though i must confess i am still not clear, but all the same i guess everyone can't be wrong.
i think i am beginning to like this offer. long term has always been my thing.