I don't normally follow the IPO market because I would rather have the stockmarket, like an auction house, work a security down in price rather than pay a pre-determined price set by the owners before being exposed to market forces.
Here are three companies which have listed within the past 12 months and have good growth prospects.
Orora Ltd (ASX: ORA), the beverage packaging company, listed in mid-December 2013. After its demerger from Amcor Limited (ASX: AMC), it took on the packaging production for corrugated paper, cartons, sacks, as well as beverage cans and bottles.
It is off to a strong start with an 8% rise in pro-forma revenue for the first half of FY2014 and underlying earnings before interest and tax were up 24%. It declared an interim dividend of three cents per share.
In total the company has 36 manufacturing plants and 79 distribution sites in seven countries. Its North American business involves packaging distribution and some manufacturing. Since listing, its share price is up 16.4%.
Another new company, Recall Holdings Ltd (ASX: REC) is a spin-off from supply-chain logistics leader Brambles Limited (ASX: BXB). Listing in December 2013, the global information management solutions service provider handles physical and digital storage of data and information in 300 dedicated operation centres in 20 countries.
Its PE is 27 and the share price is $4.55, almost the same as the $4.50 closing price on its first trading day. In its pro-forma interim results, revenue was up 4.3%, yet pro-forma underlying profit was slightly down 0.7%, due to re-investment to support revenue growth.
In the period, it completed the acquisition of Recall Singapore. Its largest business regions are the Americas, Australia and New Zealand and Europe, yet Asia had the largest percentage growth.
Since listing in June 2013, the healthcare provider Virtus Health Ltd (ASX: VRT) has risen in share price 18% to $7.32. It deals in assisted reproductive services, specialised diagnostics and day hospitals across the eastern states of Australia. It has opened three new fertility centres in the last two years and currently has 34 clinics, 17 embryology clinics, 19 andrology clinics and six day hospitals.
In the first half of FY2014 it had a 7.8% gain in revenue compared to the pro-forma revenue of the previous corresponding period. Earnings per share were up 10.9% on pro-forma EPS. A 12 cents per share interim dividend was declared and its PE is 20.6.
Foolish takeaway
Companies spun off through de-mergers many times start off with ample businesses, stable balance sheets and good growth opportunities. They are usually set up by the original company to have a successful start and to be attractive to investors.
