XMH

XMH: Diesel engine distributor XMH Holdings seeking to raise $18.85m after expenses. Offering of 100.95m priced at $0.25 per share, of which 1.5m are public shares. Of the remaining 99.45m, 7.5m are reserved for independent directors and employees. UOB is the underwriter and placement agent for the IPO. 90% of 2010’s income comes from distribution of diesel engines and power-generating sets while 9.6% come from after-sales services and trading...

Primary business comes from sales of marine diesel engines but co also sells power generators to hotel and building owners. Order book stands at $72.4m. Diesel engine sales to be buoyed further by major mkt Indonesia, in coming yr due to cabotage rule and ferrying of natural resources from country...

Of which $7m is earmarked for expansion into Vietnam, Brazil and India, and $10m to acquire new premises. This is part of a move to ensure quality control by shifting projects in-house from subcontractors. Public offer opens at 9am today and close at 12pm Jan 24, to commence trading on Jan 26. We will issue a note on this IPO soon. On first-blush valuations using 400m shares outstanding and 2010 figures in prospectus, co trades at relatively reasonable P/E of 5.68x and P/B 1.39x