Silver Heritage IPO a Jackpot for Investors?
Silver Heritage has an established and early mover presence in historically undeveloped gaming markets across Asia.
Hong Kong headquartered casino and gaming operator, Silver Heritage Group, seeks to raise $25 million in an Initial Public Offering (‘IPO’) that will value the company at $76.1 million.
Silver Heritage Group operates casinos in Nepal and Vietnam and manages electronic gaming operations in Laos and Cambodia. Silver Heritage currently builds a five-star casino resort, the Tiger Palace Resort Bhairahawa, in Nepal near the border with India targeting overseas visitors.
Silver Heritage has an established and early mover presence in historically undeveloped gaming markets across Asia. Revenue has increased for the past three consecutive years at an average rate of ~35 per cent. completion of the Tiger Palace Resort project could significantly enhance the company’s revenue profile if successfully executed.
However, Silver Heritage remains reliant on external capital to fund development and acquisition of numerous projects including the Tiger Palace Resort. There is a sovereign risk as the company operates in a number of foreign markets across Asia. Gaming is a highly regulated industry and failure to adhere to local laws could impair the company's license to operate.
Silver Heritage offers transitional exposure to demand for gaming in Asia. Wise-owl is attracted to the company’s presence and relationships in the market, early mover advantage and revenue growth trajectory. However sovereign and regulatory risks impair the potential payoff for investors. While the company is not expected to be in a position to return capital to shareholders via dividends in the near future, we believe that this listing requires a long-term speculative appetite.
Company: Silver Heritage Group Ltd
ASX Code: SVH
Shares on Offer: 62.5m
Listing Price: $0.40
Market Capitalisation: $76.1m
Listing Date: August 29
Author: Simon Herrmann
Aug 16, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.