[Investing] Netlink NBN Trust Debuts Today - Did You Huat?

So, the very hyped Netlink NBN Trust debuts today. The ticker is CJLU.

"NetLink opened trading at S$0.815 per unit before edging down to S$0.810 on its first day of trade." - From CNA (link above)

All in all, it went up half a cent, or abt 0.6%. By the way, this 0.6% will be wiped out by transaction cost during sell-offs.

Sparked by curiosity, I found out that Shareinvestor has a wealth of information. I found data on the historical IPOs and their performance. There are impressive winners, like those with stock price increase more than 100% (e.g. UnUsUal, Samurai); of course there are impressive losers too. It seems that, by eye-balling (i.e. not validated), there are more losers than winners.

I regard IPOs as a form of speculation. Firstly, there are market participants with the aim to flip some profits from that fact that IPOs generally will gain a decent amount during the first week of opening. This usually works if one has a lot of capital. It does not make sense for small timers like me. For example, if I could only afford $1,000. A 45% increase would just be $450. On the other hand, it would be $45,000 for a person with $100,000. Sometimes absolute numbers are important.

Secondly prospectus are always very optimistic, but always remember that prospectus are a way to gather capital. They are no different from a sales brochure. There will be much ha-has about how their business is going to do well, how good their leadership is, and so on. Fortunately, the only good thing that come out from the prospectus is the numbers. Numbers do not lie. Analyse the numbers carefully to see if the investment is worthy.

Finally, there is no certainty that the IPO will flip say 20% or 40% or even -10% when it opens. We can hope. But there is no certainty. I wonder how it will do for the next few days, especially there could be a massive sell-offs by opportunists who hope to profit from a spike from an IPO during opening day.

Since we are talking about certainty. In the link from CNA, there is a line I quote:

"As a business trust, the future cashflow is predictable, so there is a lack of imagination on this kind of IPO,"

Just to note: As an long term value investor, I appreciate certainty and predictabiluty; I do not need/want to be imaginative. I look for stocks that is profitable, financially strong and sustainable with a healthy cashflow.

For CJLU, my view still holds: I am not going to consider it for sometime, even it means a missed opportunity. You can read about my opinion in the previous blog.

~Huat