New Issues Examined by Oliver Haill

Although not a penny of new money has been raised on AIM since mid-November, February did at least bear witness to one new arrival, while PLUS grows ever busier.

Two potential recent newcomers – Liberum Capital’s fund of funds Property Value Realisation and FinnCap’s serviced office hopeful Citibase – both refused at the first fence. This meant February’s sole AIM float was Singapore-based ship owner Yujin International, introduced by broker Seymour Pierce without raising any capital.

Port in a storm

Based in the world’s busiest port, Yujin plans to take advantage of the expansion of Singaporean port facilities as it expands its own flotilla of ships.

Of its current crop, half the ships are chartered out to provide ‘bunkering’, or ship refuelling services, for which management thinks demand is likely to grow in coming years as Singapore’s storage facilities and shipping flow increases. However, the lead times for building ships are exceptionally long and shipping is a highly cyclical and volatile activity, both in terms of charter rates and levels of profitability for the sector’s key players.

While it builds up its fleet, Yujin intends to busy itself by in-chartering vessels that become available, using its expertise to extract value. Joint managing directors Captain Joseph Ting and Captain Liew Chin Chye, having already shown their optimistic side by floating the company amid this current financial perfect storm, are upbeat about prospects.

They remind potential investors that despite current economic and stock market conditions, ‘goods must still be transported around the world and doing so by sea continues to be a cost-efficient means’.

Longer-term funding requirements would seem to be the main reason for listing, as the balance sheet was furnished with only US$643,00 at the June half-year stage, down from US$4.5 million at the beginning of the year.

Debt funding has hitherto been used to purchase ships and present debts – due to be paid by 2010 – amount to around US$15.6 million, with an additional US$687,000 due as soon as the company raises sufficient funds. In addition, Yujin plans to take on board a further US$11.2 million of debt in order to finance the building of its next two tankers.

Nevertheless, it is worth noting that Yujin is cash generative and profitable, having made $1.5 million before tax on $9.4 million revenues for the first half to June. AIM-focused investors, starved of new investment opportunities in recent months, have demonstrated early appetite for the shares, chasing the price up from 33p to 39.5p, where Yujin commands an £11.9 million price tag and offers speculative appeal.

Hon’s home on PLUS

While AIM has all but closed to new funding, PLUS followers have seen five floats in 2009, though only one company has raised accompanying funds.

Well-connected Hong Kong financier Johnny Hon, former chairman of scandal-hit Betex and founder of PLUS-listed Global Education and Global Entertainment, has brought a new vehicle to market in Africa-focused cash shell Creative Financial Technologies.

Broker Zenith managed to tap investors for £300,000 for the company, where UK-born but Nigeria-based entrepreneur Toks Kotoye is the driving force, with Hon lending his bulging contact book and City know-how.

The strategy at CFT involves buying one or more high-growth businesses in the financial services and technology sectors, with Hon and Kotoye having identified ‘a number of potentially lucrative opportunities’ in niche markets ranging from credit bureau services to biometric-based, smart card driven identity theft prevention and electronic payment solutions.

Hon, a Cambridge psychiatry graduate and former director of Cambridge United football club, has been instrumental in bringing numerous Chinese ventures to London for listing, though he left Betex under a cloud after some of its director’s were arrested. CFT is not one for widows and orphans, methinks. Steer clear.