61.8% Returns on Sanli Environmental IPO: Go Big Or Go Home💰

*cues gansta-rap music*😎

Dear reader,

Even in the midst of a wonderful Korean vacay, yours truly has not forgotten the markets.📊

Sanli Environmental Limited’s Initial Public Offering (IPO) has come and gone, and if there’s one thing learnt from the whole experience of investing in this IPO, it’s truly a game of poker’s:

“All-in.”

One little investing trend I’d like to share today is something I call: “first day IPO“.

What is it?

A quick recap: An Initial Public Offering (IPO) occurs when a company goes from being privately held to publicly owned with shares trading on the stock market.

So…why first day IPO?

Often a new stock will go up significantly on the first day of trading, and investors who get in early can make a nice profit. The offering price and opening share price of an IPO are a big part of the first-day results.

Source credits: The Nest 

The offer price is the IPO share price: S$0.225 per share for Sanli Environmental Limited.

After reading Sanli’s prospectus (the offer document detailing the company’s IPO details and financials) and doing due diligence (market research), it was time to decide.

To invest or not to invest?

The next thing you should know about IPOs is that they can be tricky hard to even secure – meaning, just because you want to buy them, doesn’t mean you can (unless you’re a big institutional investor, not a little retail one like me). On occasions I’ve tried investing in IPOs safely, only to end up paying the $2 administration fee to the bank.

So I went in (relatively) big.

(Let’s just say I ended up emptying my savings account, steps away from shaking out the coins)

And did it pay off?

The morning the stock started trading, I contacted my broker, Tom. Here’s what he said:


I was really lucky- I got 7,000 shares of Sanli Environmental Limited!

And at the time of this conversation, the stock price of Sanli skyrocketed to S$0.38 per share.

Tom, on the cautious side, wanted me to be doubly sure on the no. of shares I had to avoid the penalties of short-selling – in the time it took to double-confirm while zipping through the streets of Seoul, the share price dipped to S$0.37 per share. I had to act fast.

Tom…the effect of first day ipo is dying – 

please sell now

And so he did.


How much did I make in that one trade?

Secured 7,000 Sanli shares x S$0.225 = S$1,575

Sold 7,000 Sanli shares x S$0.37 = S$2,590

How much did I profit?

S$2,590 – S$1,575 – S$40 (broker’s fee) = S$975😳

Total Return on Investment (ROI) : 61.8% 

So now you know how it’s done!

So next time someone says: Get 61.8% ROI in the markets – it’s a scam! Impossibru?🤔

It can just be a matter of knowing when to:

Go Big Or Go Home😜!

Live long and prosper,

Lynn

2 thoughts on “61.8% Returns on Sanli Environmental IPO: Go Big Or Go Home💰

  1. bhalimking says:

    Hi Lynn

    What if it goes the other way?

    Did you buy on the premise they were a good purchase or simply tikam with the hope it’ll surprise on the first day?

    Liked by 1 person

    • Lynn Han says:

      Hi bhalimking, that’s a good question! I use a few indicators e.g. offer price, no. of retail and institutional shares, strong government backing and good business models from the IPO’s prospectus to gauge whether or not an IPO’s share price will rise on the first day…a financial happenstance that traditionally occurs when there is strong demand and little supply of shares! There is a tikam element as the no of shares allotted depends on the bank and the amount of funds you’re offering to buy the IPO shares (the more the better!) Otherwise the $2 admin bank fee is quite like spending toto money

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s