My Views on Singapore O&G Ltd IPO

Do you know about the Singapore O&G Ltd IPO? 

If not, you can read it on the following links that I found and read:


A Path to Forever Financial Freedom - Singapore O&G Ltd IPO - Thoughts

Singapore IPOs - Singapore O&G Ltd

As well as, on forum threads like Valuebuddies and Hardware Zone.

After reading these posts, you should have an idea of what this Singapore O&G Ltd IPO is about. I will not be talking about all the facts stated in the blogs above as it will be repetitive. I will just be talking about my own views of this listing and my action.

I have heard concerns such as "Why do they want to list it if its so good?", "CEO only holds 4%" and "Dependable on the doctors", but I will still be BIDDING for this company because of:

(1) I believe this listing of the company is an exit strategy for the doctors. Imagine you are a very good doctor, but your son is an accountant, so who is going to take over your clinic? All these hard work will go into waste. Thus, with all clinics coming together as one, listing the holding company and the doctors getting their relative shares from the listing, will create an exit strategy for them. They will also be able to pass these shares to their kids or spouse in future (if they pass on). It's an excellent solution for them.

(2) With the holding company managing the accounts, the doctors just need to concentrate on their main work. This will create efficiency among the clinics.

(3) There could be referral as well. What a doctor do not know, another within the holding company maybe able to help. In this way, it acts like a "hospital" but its actually still a private clinic and the holding company is still earning the revenue.

(4) Doctors are the directors and shareholders. They will be working with the same view as the investors. The doctors that contribute the core revenue also holds more shares, so they will have more voting rights and dividends. Thus, they will not perform lower despite having a "shared" revenue business model.  

(5) Looks like almost everyone is having a go at this IPO. If I get it, the shares will definitely jumped. Even if I don't, the loss is only the ATM fee. The opportunity cost is too low.

Strategy

To Bid now and to continue to buy later (if dividends is able to hold above 5%). After 1 year, to consider selling as it is possible some of the doctors may leave the company (but still continue to be a shareholder). If that happens, the doctor will not be value-adding to the company but diluting the "dividends".

I know that being a value investor should not really think of buying IPO and consider to hold the stocks for only 1 year. But do not the strategy is tentative and nothing is decided yet. Just hope that I will receive some of the shares I bid.

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