DNZ Property Ltd : Every Dog has its day

The debut of DNZ Property Ltd [DNZ.NZX] on the NZX yesterday while no means setting the world on fire did slightly better than I expected by finishing the day at 99c per share on good volume.

The issue price was 97c.

The true value of the company was hard to determine during the IPO process because of the Pro -forma figures used in the prospectus and the fickle value placed on real estate in the current environment but the market seems to have decided that value was there and bought additional shares on the stocks debut.

I personally don't think the company is worth as much as the market values it at (I am a contrarian bastard in most facets of my life!) and wouldn't want to do that until I saw a year or two of operating performance from the company.

Like most commercial property companies , DNZ is going to struggle in the current environment. Empty commercial space will put pressure on lease arrangements over the next year or two and I doubt whether prospectus promises will be attained.

There will be value in this stock but that will lie in a much lower share price given the uncertainty of the company and its future in the highly competitive commercial property market.

Related

DNZ Prospectus
About DNZ

DNZ Property @ Share Investor

DNZ Property IPO: It stinks

Discuss DNZ @ Share Investor Forum


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Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz





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DNZ Property IPO: It stinks

In an ideal world Initial Public Offerings (IPO) are a means of raising capital from the public to enable the company getting the proceeds of such an IPO to use it to grow and prosper into the future. The DNZ Property Ltd [DNZ.NZX] IPO (see DNZ Prospectus)that kicked off earlier this week is certainly one for either the blind, stupid or both or a broker if you haven't sold your allocation to the aforementioned and is far from ideal, in fact it has the rear-end smell of failure written all over it and you dont even have to glance at the glossy, expensive prospectus to get the full stench.

It wouldn't be so bad if the funds raised in the IPO were going back into the business but the big bad, bogeyman up front is that the $35-40 million raised will be going to two overstuffed suits to buy out their management contact.

As the basis for an IPO this has got to be one of the worst reasons to raise cash.

Even if the underlying company was worth you investing your hard earned, can you really trust management of a company and its directors that would allow two individuals to walk away with this much money without doing anything for it?

What kind of agreement was drawn up that this kind of money would be needed to buy out a contract like this of such a small business!!

With these kind of backroom deals going on you know you cant trust management at DNZ Property, now, or in the future - the business is very badly managed.

The big winner will be the brokers, they always are with these kind of turkey IPOs, but I suspect that the small investor like me will be avoiding this stinker like the plague. It will be pushed by your broker because they will get a commission to sell it to you but all you have to say is no I would rather set my money on fire than hand it over to DNZ.

It is sad that this, the highly risky Ecoya Ltd [ECO.NZ] and the heavily debt laden Kathmandu Holdings Ltd [KMD.NZ] IPOs have been the only three calls to the market for capital over the last year or so. The DNZ IPO just took IPOs in NZ to a new low.

Ecoya is at least well managed, Kathmandu has at least a good brand but DNZ is simply a shitty, cynical, little attempt to feather-bed two individuals pockets for doing sweet fanny adams.

No wonder the NZX is performing badly and small investors continue to buy houses instead of shares.

In case you are wondering where I stand, I am of the opinion that the DNZ Property IPO is excrement in the true sense of the word.

STAY AWAY.

Related

DNZ Prospectus
About DNZ

Discuss DNZ @ Share Investor Forum


From Fishpond.co.nz



Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz





c Share Investor 2010