Declout (5UZ.SG) is up 10% to $0.275 from its $0.25 IPO price, landing the top-volume spot with 40.7 million shares traded on the SGX. However, orderbook quotes suggest the stock may struggle to top its $0.305 intraday high.
Declout’s niche technology-services business may be spurring some of the interest, while players’ recent exuberance over penny plays may also be driving the action. But traders may want to exercise some caution as valuations may be a bit stretched; Declout’s post-IPO FY11 EPS would have been 0.52 cents, according to the prospectus, suggesting the stock is trading at nearly 57x FY11 earnings.
Declout’s 31 million new shares, representing 15.2% of the post-IPO share capital of 204.6 million shares, were fully subscribed, raising $7.75 million. Proceeds are earmarked for the full launch of its first games cloud, or Vertical Domain Clouds, and for its already-profitable IT infrastructure services division. The VDC will offer payment infrastructure and a portal for game developers, publishers and players, including infrastructure for games hosting. Declout said its FY09-FY11 net profit CAGR was 324%.
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