Reasons for Buying CROWN

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After reading CROWN's prospectus, I came up with a list of reasons for buying this stock on its IPO day:

• Lower number of outstanding shares. The firm's total authorized shares is 1.3 B. Its present total number of shares is 472.8 M. Through this IPO, 158 M shares will be added. The total number of common shares will be 630.8 M after the IPO. This will increase the BVPS from 1.19 to 1.22. This is still small compared to other firms. This means that lesser number of stockholders will share with the firm's profit. 

• I see CROWN as an emerging growth stock. The firm has been growing since 2012. It is adding 62 new employees into its 246 existing employees, purchasing new land, and building new structures beginning April 2015 to March 2016.  

• Dividends policy is clear. Its 10% of net income.

• Strong financial ratios: D/E - 0.47; E/A - 0.67; BVPS after the IPO - 1.22; P/BV - 1.15; P/E - 10.07; ROE - 11.61%; DY - 1.04%, and; ROI - 12.65%.

• Reasons for capital raising: plant and equipment, debt retirement, modernization of plant, and working capital. Debt retirement will strengthen the firm's balance sheet.

• Competitive strengths. The firm has been in operation for 25 years and has been offering quality and USP products. The company considers DNL as compounds' leader. CROWN's total income is close to 1/3 of DNLs. Since DNL is trading @ 21.00/share, CROWN could potentially be trading fairly @ 7.00/share in the near future. In pipes, Neltex is the leader and CROWN is the fifth, but in terms of net profit, CROWN is the 3rd next to Emerald. 

• Impressive website and prospectus. These demonstrate that the firm anticipates something big beginning this April 2015. 

• Taking advantage of the opportunity in construction sector. 

• Favorite words of the company: quality, relationship, customization, modernization and increase. Great company culture.

• The firm has strong customer base.

• The firm owns 51 motor vehicles.

• Products and services. The company has 2 business groups, compounds and pipes. Compounds are used in wires, cables and bottles. Pipes are used in electrical, potable, telecom wiring and gas pipelines. The company is a pioneer in PP-R pipes.