This is a bunch of B.S. .....why are they only singling out PCNTF....ALL companies face competition...big deal!!!! I sure wouldn't sell just because of this crappy press....now @ 36 5/8 and climbing
PacNetshares over-valued, risky -analysts
By Angela Tan
SINGAPORE, Feb 8 (Reuters) - Internet service provider Pacific Internet (PacNet) has made a stunning debut on the Nasdaq market, but equities analysts cautioned on Monday that the shares could be over-valued.
Shares of PacNet, a subsidiary of diversified group SembCorp Industries Ltd , hit US$88 before ending at $48, up $31 against an
initial public offer price of $17 a share on Friday.
The euphoria from the share's long-delayed listing fuelled a rally in parent SembCorp' shares, which hit a morning high of
Singapore $2.22 on Monday, up 13 cents from its Friday's close.
By 0430 GMT, SembCorp was at S$2.06, down three cents on more than 12 million shares.
''Long-term, I am more bearish on the fundamentals for Pacific Internet, with its key market in Singapore facing increasing
competition,'' Merrill Lynch's analyst Arthur Chai told Reuters.(DUH!!!!!!)
''The shares are over-valued, with price to subscriber over the top. It is a bit too risky now. It is very sector-driven and the
Internet sector is very speculative,'' said another analyst with a European house.
''Because the Internet is borderless, anyone with better pricing will be able to dominate the market,'' said another equities analyst.
Analysts agreed it was difficult to say where fair valuations were for PacNet, given the excitement over Internet stocks.
''No one knows how to price these Internet stocks yet. In the early stages, their PE (price earnings ratio) will always be very
high. They are just beginning to make money. They are start-ups,'' said one analyst with a local bank.
He gave the examples of Yahoo! (Nasdaq:YHOO - news) and America Online (NYSE:AOL - news) which were trading at 555
times and 254 times their prospective 1999 earnings, respectively.
''There are very few Internet companies that are profitable at the moment. There will be more competition but the growth could
be very substantial. The pie is growing very fast,'' he said.
For the first half of 1998, PacNet, with about 40 percent of Singapore's market share, made a net profit of S$6.15 million
compared to a net loss of S$3.82 million in fiscal 1997.
Analysts who had a buy on SembCorp on the back of PacNet's listing said they were maintaining their call.
Fraser-Ammb Research's analyst Nua We Boon said his revised fair value for SembCorp was between S$2.54 and S$2.71, based
on an estimated 58 percent stake in the 12.3 million share capital of PacNet.
''A US$1 rise in PacNet's shares could effectively translate to 0.8 Singapore cents to SembCorp's revalued net asset value. We
reiterate a buy on SembCorp Industries,'' Nua said.
PacNet's contribution to SembCorp's bottom-line was estimated at S$8-10 million annually, or about six to eight percent of the
group's profit.
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