Greetings! Think, you were looking forward to a post about the most anticipated IPO of recent years - the IPO of SPB Exchange. The collection of applications is about to end, therefore, the article is as relevant as possible at the moment. Find out firsthand, what are the advantages and risks of participating in this placement.
Saint Petersburg ExchangeSaint Petersburg Exchange
SPB Exchange is the leading organizer of trading in securities of international companies on the Russian financial market. When we talk about foreign stocks, then we mean their purchase on the SPB Exchange, although recently the Moscow Exchange has also been actively introducing foreign shares. In circulation at the organized trading of the SPB Exchange there are 1,7 thousand. securities of foreign issuers, including shares, depositary receipts and eurobonds.
IPO is planned 19 november, and the collection of applications lasts until 18 november. The price range is $10,5-11,4 per share, but you can buy from 100$, although some brokers have a higher minimum participation amount. Let's find out, Is the offered price expensive and is it worth participating in?
The structure of the analysis will be as follows:
1. Analysis of financial indicators (rates of growth)
2. IPO analysis and placement prices (expensive or cheap)
3. Prospects analysis (what to expect?)
4. Benefits and risks of participating in an IPO (participate or not)
I'll start with an analysis of the financial indicators of the SPB Exchange. For 2020 year the company has earned 3,3 billion. rub. proceeds, what in 4,6 Times (!) more, than in 2019 year. But only for 1 half a year 2021 G. more revenue, than for the whole 2020 a year already on 6%. Can you imagine the rate of growth?
In terms of profit growth, a similar situation. If in 2019 the company suffered losses, then in 2020 year earned 1,2 billion. rub. net profit. For 1 half a year 2021 G. profit is already on 19% exceeds all 2020 year and is 1,42 billion. rub.
Therefore, we can safely predict at least a doubling of indicators according to the results 2021 of the year.
It's fair to say, As for 2020 of the year, the company did not show shock rates of revenue growth, but in terms of net profit it was generally unprofitable. Only in the last 2 years with an increase in turnover, customers and expanding markets, the performance went up the hill. But this is more even the result of the work of the exchange itself., Unlike, for example, from mining companies of the Russian Federation, whose results are almost 100% depend on the market.
I also analyzed the IPO's proposed share price.. If we take the upper IPO range in 11,4$ per share, then knowing the number of shares and annual net income, you can calculate the PE of the stock. The number of shares is known and amounts to 114,086 million. things, this can be found in the report. Considering the growth rate of the company's net profit, I can guess, what is the result 2021 G., will be about 3 billion. net profit. In this way, forward PE is 31, which is twice as much, than the competitor - Moscow Exchange with PE about 15.
Answering the question, Is the IPO price expensive, you can safely say, what "yes, very expensive. You can buy Moscow Exchange at half the price and receive dividends in 7% per annum or SPB Exchange without dividends twice as expensive, but with cosmic growth rates.
If you guarantee, that the growth rate will continue, then the current estimate is a penny. Even next year, PE will be equal to the Moscow Exchange, and shares will cost twice as much. But no one will give you such guarantees..
Among the prospects for SPB Exchange:
1. Entering the international market (now foreign investors can access trading on the site through Russian brokers).
2. Increase the number of shares in 3-5 years, admitted to trading, with 1,7 thousand. to more 2,5 thousand.
3. Expansion of the offer of foreign shares from other international exchanges, such as the London, frankfurt, Asian and other European exchanges.
4. Commencement of work to launch stock options by the end of the year and launch trading in this instrument in 2022 year.
5. Increase in the number of traded Eurobonds from 64 to more than 1 thousand.
6. To the middle 2022 year plans to launch exchange trading in foreign ETF.
7. No dividend plans. Financing of business development and expansion is planned.
Benefits of participating in an IPO:
1. Cosmic growth rates, which in a few years, when the plans are implemented, will multiply the financial indicators.
2. Any exchange, it's like a casino, ie. they earn both on the growth of the market, so on its fall, from commission income. The greater the volatility, the more income.
3. The company is still quite small, there is room to grow. Comparing the revenues of St. Petersburg and the Moscow Exchange. St. Petersburg in this regard is inferior in 16 times following the results 2020 of the year. By capitalization, St. Petersburg Exchange is less than MosEx by more than 4 Times.
4. Crazy hype around the IPO, demand exceeds supply in 2,5 Times. The most anticipated IPO in recent years.
Risks of participation in an IPO:
1. Share price in 2 times more expensive, than the Moscow Exchange.
2. Strong market growth may end, which will reduce the growth in the number of private investors on the exchange. If a correction or crisis begins in the market, then the number of investors may start to decline altogether, and with it the income of the exchange.
3. Increase in Central Bank rates makes deposits more popular among the population. Why invest in an expensive and incomprehensible stock market, when will it be possible to receive 8% guaranteed?
4. The imposition of sanctions may have a negative impact on the development of international projects.
5. A couple of months ago, the preIPO of SPB Exchange from Freedom Finance took place. Then the shares were sold to investors at 13,53$, and now at the IPO they are offered at 10,5-11,4$. Ie. loss of investors about 20%. Do you think that an IPO will not be able to heat you up like that?? Yes, easily.
For the sake of laughter, it is worth mentioning separately, that now Freedom Finance itself wants to buy the entire IPO volume. Ie. sold first by 13,53, and now they buy at 20% cheaper on IPO. Not bad so, Yes?
Output: there are risks in any IPO, you can make money quickly, but you can get stuck in papers for a long time. I never invest large volumes at once. If u participate, then for a small amount. Probably, I will do so: I will submit an application for 100 or 200$. What to do for you is up to you. You can use my analysis, explore other sources and make your own decision.
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