Profit watch: A new listing is hitting the JSE on 14 October
For the July issue of the South African Investor, I took a deeper look into the JSE's Kudu Horn.
If you don't know what that is, I'll give you a brief update. It's simple: Every time there's a new listing on the JSE, the Kudu Horn is blown.
There have been over 80 listings on the JSE over the past 10 years. And while some Initial Public Offerings (IPOS) have helped investors make a fortune, others not so much.
Don't get me wrong, it's risky to invest in an IPO. Then again, investing in general has its own risks.
But the reason why I'm bringing up IPO's is because the JSE is seeing more new companies listing this month.
And one IPO that I've had my eye on for some time now, is about to list.
In fact, the listing is happening this week, on 14 October to be exact.
And I couldn't be more excited. Let me explain why…
Could this have the same success as Anchor Group’s 2014 listing?
The new listing that's got me so excited is asset management firm, Sygnia Group.
Sygnia is a diversified financial services business with R120 billion in assets. Its offering includes stockbroking, exchange-traded funds and unit trusts.
“The primary reason for the listing is to enhance the group’s public profile, brand recognition and public awareness, particularly with regard to its index-tracking capabilities. It also wants to strengthen its balance sheet to facilitate faster growth, access capital markets if required, retain key management and pursue its systems development strategies faster,” MoneyWeb
The thing that I’m most excited to see is if it can play out similar to Anchor Group’s IPO, which has done extremely well since listing last year.
Anchor group only raised about R60 million and had more than R5 billion in assets when it listed – which is nothing compared to Sygnia.
Anchor group listed for about R3 per share. And in just over a year, it’s returned 311.43%.
So Sygnia's IPO could potentially be a huge payday for you.
But this isn’t the only reasons why I’m excited.
I think Sygnia is a great company that offers a fantastic range of investment products. It easily competes with its rivals that operate in the same markets.
Between Sygnia’s Skeleton Fund, Coronation’s Balanced Plus and Allan Gray’s Balanced funds:
A solid business at an attractive price is usually a great buy!
Sygnia’s Skeleton fund outperformed both competitors over the past five years.
Sygnia’s costs are way lower than both competitors.
Even if say all three of the funds had equal performance @ 15%, Sygnia would beat them by a massive margin – because its costs are so low!
According to Sygnia's SENS announcement, the group is looking to list at around R8.40 per share. I think this is an attractive price considering analysts expected the listing price to be around the R10 mark.
Sygnia’s CEO Magda Wierzycka mentioned, "All I can say is that we are looking at listing the business at a price: earnings ratio of between 10 and 12."
If you look at its competitors like Anchor Group and PSG Konsult, they're on P/E's of 41 and 26.28 respectively. So a P/E of 10-12 for Sygnia sounds very attractive.
The only thing you have to do is keep your eyes peeled for Sygnia's listing on Wednesday – I'll definitely be following how it pans out.
And it's definitely the kind of company that I'm happy to put my money in.
The group is going under the ticker name of JSE:SYG