World Class Global

[cyclone]

World Class Global’S IPO Attracts Strong Investor Demand
- 136,000,000 Invitation Shares @SGD 0.26 were 2.1 times subscribed
- Commencement of trading of shares is expected to be at 9.00 a.m. on 15 June 2017

World Class Global is a Singapore-based real estate company that undertakes property development and property investment in major cities in Australia and Malaysia.
Its portfolio includes:
* Australia 108, a freehold iconic 101-storey (including ground level) residential tower which is envisaged to stand at 319 metres tall
* AVANT, a residential development project  which is strategically located in the heart of Melbourne’s central business district
* The group owns a total of 28 land parcels in Penang, Malaysia.

Last year, it incurred a net loss of $6.3 million, or an adjusted loss per share of 0.7 cent.

More details in http://www.straitstimes.com/business/asp...-june-15-0

[desmondxyz]

looking at the opening price today, it will go under water soon....

[Contrarian]

> 136,000,000 Invitation Shares @SGD 0.26 were 2.1 times subscribed

Wah, still oversubscribed twice.

[Boon]

Very interesting IPO indeed !
-      zero revenue and loss making over the past 3 years
-      Over AUD 1 billion OTP sales achieved from its two development projects in Melbourne as at 31 Dec 2016.
-      What are the risks ?

Revenue:
FY2014= 0
FY2015= 0
FY2016= 0
 
Profit / (Loss) : (SGD , million)
FY2014 = (12.269)
FY2015 = (12.958)
FY2016 =  ( 6.341)
 
Off The Plan (OTP) Sales, as at 31 Dec 2016 :
Australia 108 (Melbourne) = AUD 949.7 m  (including GST)
AVANT (Melbourne)  =  AUD 270.6 m (including GST)
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[weijian]

That's weird. I remember IPO has a rule saying that there must be certain amount of profitability in the past X years (that's why all the dressing at the window) before it is eligible. The rules were been relaxed (with regards to profitability) in recent years but it is only applicable to resource/mining or tech startup type of companies. Would be interesting to find out why..

[Boon]

That's weird. I remember IPO has a rule saying that there must be certain amount of profitability in the past X years (that's why all the dressing at the window) before it is eligible. The rules were been relaxed (with regards to profitability) in recent years but it is only applicable to resource/mining or tech startup type of companies. Would be interesting to find out why..

SPONSORED: A listing on the Singapore Stock Exchange: Mainboard vs. Catalist 

http://www.legalbusinessonline.com/news/...rt-2/72106
________________________________________________________________________________________________________________________

[weijian]

Hi Boon,
Thanks! Have to register that there is a mile of a difference between mainboard and Catalist.

[Boon]

Hi Boon,
Thanks! Have to register that there is a mile of a difference between mainboard and Catalist.

Hi weijian,
 
Indeed, there is a mile of a difference between Mainboard and Catalist.
 
Catalist is a Sponsor-Supervised listing platform - the role of the Sponsor is an interesting one too.
_________________________________________________________________________________________
 
The sponsor
 
A company that wishes to list on Catalist must appoint a sponsor and, once listed, must be sponsored at all times.
 
There are two types of sponsors, Full Sponsors and Continuing Sponsors. Full Sponsors will be involved in bringing a new company to list on Catalist as well as advising the company on its continuing listing obligations and overseeing its compliance with these obligations. In contrast, a Continuing Sponsor will only be allowed to engage in activities relating to the latter. The SGX has stipulated the minimum contractual terms of sponsorship.
 
Sponsors will be subjected to a strict admission process, as well as on-going requirements, with Full Sponsors having to fulfil additional requirements. Sponsors have to submit annual audits so that the SGX may review the performance of and protocols adopted by sponsors. Sponsors have to declare their independence from the issuer and maintain such independence throughout their sponsorship.
 
The sponsors are required to keep in close contact with their issuers and be available to advise on all listing and corporate governance issues. On the admission of a new issuer, the sponsor has to conduct due diligence on the issuer, and determine and declare to the SGX, the suitability of the issuer to list.
 
Post-listing, the issuer must retain a sponsor at all times or face delisting. The sponsor bringing the issuer to list must sponsor the issuer for at least three years post-listing. If the sponsor intends to end the sponsorship within three years of the issue's listing, it must obtain the SGX's approval. Post-listing, the sponsor's duty is to advise and guide the issuer on compliance with its listing obligations. Where other professionals are involved, the sponsors have to be satisfied with their suitability and competence. A sponsor must also establish arrangements by which it would be aware of any unpublished price-sensitive information in the issuer's possession and advise the issuer on disclosure requirements. A sponsor is also to monitor the trades of the issuer's securities and alert the issuer to any leakage of sensitive information so that swift action can be taken.
 
Although the sponsor is laden with a multitude of responsibilities, it will not be penalised if the issuer fails to heed its advice. The sponsor is expected to "whistle-blow" to the SGX and ultimately terminate the sponsorship of an errant issuer.
 
http://www.mondaq.com/x/56908/Company+Fo...+Companies
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[Boon]

Very interesting IPO indeed !
-      zero revenue and loss making over the past 3 years
-      Over AUD 1 billion OTP sales achieved from its two development projects in Melbourne as at 31 Dec 2016.
-      What are the risks ?

Revenue:
FY2014= 0
FY2015= 0
FY2016= 0
 
Profit / (Loss) : (SGD , million)
FY2014 = (12.269)
FY2015 = (12.958)
FY2016 =  ( 6.341)
 
Off The Plan (OTP) Sales, as at 31 Dec 2016 :
Australia 108 (Melbourne) = AUD 949.7 m  (including GST)
AVANT (Melbourne)  =  AUD 270.6 m (including GST)
______________________________________________________________________________________________________________________

We consider the following to be the most important key risks which could materially affect our business operations, financial position and results, and/or your investment in the Shares.
 
 Our business is subject to the performance of the property industry in the countries in which we operate: Our property development business is subject to the performance of the property market in the countries in which we operate. The demand for properties could be adversely affected by various factors, which may adversely impact the demand and pricing of our properties. Further, all of our current and proposed property development projects are located in either Australia or Malaysia. A concentration of investments in these two countries may cause us to be susceptible to downturns in the real estate markets in these countries. This may lead to a decline in sales which will have an adverse impact on our business, financial condition, results of operations and prospects of our Group.
 
 Our financial performance may be volatile and fluctuate from period to period: The revenue we recognise between financial periods may fluctuate and may be inconsistent due to, amongst other things, the timing of completion and the volume of our on-going and future property development projects. Additionally, in the instance of our existing development properties in Australia and Malaysia, revenue from the sale of such development properties is recognised using the completed contract method when the risks and rewards of the ownership of units have been transferred to the purchasers. If we complete fewer property development projects or do not undertake any new property development projects compared to a prior period or should there be any delay in the progress of completion of any of the projects in our portfolio or the transfer of the risks and rewards of ownership of units to the purchasers, our revenue and profit recognised in a particular financial period will be adversely affected.
 
  We experienced negative operating cash flows and net losses in FY2014, FY2015 and FY2016 as we did not record any revenue from the sale of development properties: Property development businesses typically require substantial capital outlay during the initial land acquisition and construction stages. Our revenue from the sale of development properties in Australia and Malaysia will only be recognised at completion and handover of the properties to the purchasers. As such, prior to the completion of our property development projects and the handover of the properties, we may experience net losses and cash flow mismatches. In FY2014, FY2015 and FY2016, our Group experienced (i) losses of approximately S$12.3 million, S$13.0 million and S$6.4 million respectively as no revenue has been recorded since none of our property development projects were completed and handed over to purchasers, and (ii) net negative operating cash flows of approximately S$301.1 million, S$98.0 million and S$145.7 million respectively, due mainly to the acquisition costs of land and properties for development, development expenditure and losses from operations. 

 
  We are subject to risks associated with debt financing: Due to the large capital requirements for our property development business, we may finance a substantial portion of our property development projects from bank loans and credit facilities. In the event that we are unable to secure adequate financing on terms acceptable to us or if we are unable to service the principal and interest payments on the financing, we may be the subject of claims by lenders seeking to recover their loans and seeking to enforce the mortgage over our land or development property. We may also suffer losses if we have to stop construction and we may be the subject of claims by contractors as a result of the foregoing. In addition, in the event we are unable to secure financing for the construction of our projects on a timely basis or on terms acceptable to us, we may have to delay construction of the project which may in turn trigger certain cost escalation clauses in the contracts with our contractors, resulting in higher construction costs. We may also face claims from purchasers of our development properties arising from any delay or default by us in performing our obligations under the sale and purchase agreements for failure to deliver or complete the property on time and according to the specifications set out in the agreements. In addition, we cannot assure you that we will be able to obtain additional funding on terms that are acceptable to us or at all. If we are unable to do so, our future plans and growth may be adversely affected. Disruptions, volatility or uncertainty of the credit markets could limit our ability to borrow funds or increase our borrowing costs. We may be forced to pay high interest rates, thereby increasing our interest expense, decreasing our profitability and reducing our financial flexibility in the event we take on additional debt financing.
 
  We may be exposed to risks associated with fluctuations in foreign exchange rates and changes in foreign exchange regulations: We receive or will receive income and incur expenses in a variety of currencies, including Singapore Dollars, Australian Dollars and Malaysian Ringgit, while our financial statements are presented in Singapore Dollars. Consequently, our costs, profit margins and asset values are affected by fluctuations in the exchange rates among the above-mentioned currencies. Fluctuations in currency exchange rates could materially affect our reported financial results. We may also be subject to the imposition or tightening of exchange control or repatriation restrictions in the jurisdictions which we operate and may encounter difficulties or delay in relation to the receipt of our proceeds from sale of our project development projects and dividends. 

 
  Investments in our Company may be subject to Australia’s foreign investment regime: Under Australia’s foreign investment regime in relation to an ALC, a foreign person (and its associates) or a foreign government investor (including existing Shareholders) that acquires any interest in an ALC (such as an interest in our Shares) will be required under the FATA to notify the Australian Treasurer (through the FIRB) and obtain a prior statement of no objections (“FIRB Approval”) to such investment, unless an exemption applies. If we hold more than 50% of our total assets in the form of Australian land, we will be an ALC. A breach of the notification requirement and failure to obtain prior approval by a foreign person acquiring an interest in an ALC may be an offence under Australian law which could result in a fine to, or imprisonment of, the foreign person who acquired the interest, or both. It is the responsibility of any person who wishes to acquire Shares to satisfy themselves as to their compliance with the FATA, regulations made under the FATA, the Australian Government’s Foreign Investment Policy, guidelines issued by the FIRB and with any other necessary approval and registration requirement or formality, before acquiring any Shares. The failure by a person wishing to acquire Shares to obtain a FIRB approval does not have a direct impact on our Company as the sanctions under the FATA are imposed on the acquirer. However, secondary trading in the Shares may be impacted by the operation of the Australian foreign investment regime. If a Shareholder does not comply with the FATA or the Australian Government’s Foreign Investment Policy, the transaction will not be made void or illegal and will not be unwound. However, the Australian Treasurer has powers under the FATA to make adverse orders in respect of an acquisition if he considers it to be contrary to Australia’s national interest. The adverse orders include an order to prohibit a proposed acquisition of an interest that has not yet occurred, or to order disposal of an interest that has occurred. Although our Company is not currently considered an ALC, we may become one. The classification of our Company as an ALC may impact the market for the trading of the Shares including, amongst other things, affecting the liquidity and price of the Shares due to the potential risk of an offence regarding the acquisition of an interest in an ALC. Further, any person who wishes to acquire an interest in our Company that results in a change of control, is recommended to notify and obtain prior approval from the FIRB prior to such acquisition. If such prior approval is not sought and if the Australian Treasurer forms the view that such acquisition is contrary to the national interest of Australia, the Australian Treasurer may make an order ordering the 
divestment of the interest acquired.

The above are not the only risk factors that had a material effect or could have a material effect on our business operations, financial condition, results of operations, prospects of the Group, and ownership of our Shares. Refer to “Risk Factors” on pages 37 to 60 of the Offer Document for a discussion on other risk factors and for more information on the above risk factors and the “Notice to Investors” on pages 14 to 19 for more information on the Australia’s foreign investment regime. Prior to making a decision to invest in our Shares, you should consider all the information contained in the Offer Document. 
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[cyclone]

Will there be trouble down under for World Class Global?

By: Michelle Teo
30/06/17, 12:59 pm

SINGAPORE (June 30): Shares in World Class Global (WCG) were sold at 26 cents each at its recent IPO – more than twice the company’s net asset value (NAV) of 11.4 cents a share.  

Interestingly, while the company has three property projects in Australia underway, it has not posted any revenue for the last three financial years. For FY2016, it reported a loss of $6.3 million.

Still, the stock climbed as much as 7.7% above its IPO price when trading began on June 15. On Thursday, it closed at 26 cents.

According to WCG’s listing prospectus, it has recorded pre-sales worth some A$1.2 billion. Buyers of the properties it is developing have only put up an initial deposit, and are due to pay the balance only when they collect their keys. At end-2016, WCG had some A$124.6 million in deposits in an escrow fund. 

How is WCG funding its development if there is little cash flow coming from the buyers? 

The answer is, quite simply, by taking on lots of debt.

More details in http://www.theedgemarkets.com.sg/will-th...ass-global

Find out more in “World Class Global’s debt-fuelled growth spells high risks as well as high returns” on page 10 of The Edge Singapore (week of July 3), available at newsstands now.