Hits and Misses: Upcoming ASX floats

Hits and Misses: Upcoming ASX floats – part 1

We share our view on a number of upcoming ASX floats

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published May 19, 2015 12:21 pm AEST

The ASX has around 16 stocks on its list of upcoming IPOs, or companies planning to list on the ASX.

Here's our take on a number of them:-

1stAvailable Ltd (ASX: 1ST)

1stAvailable Ltd (ASX: 1ST) has some ambitious plans. The company wants to make it easy for consumers to find and book doctors and other medical practitioners online, 24 hours a day, 7 days a week. The service is free for consumers and offers a much easier and more efficient service than waiting for medical centres and doctor's practices to open, before calling in to book an appointment.

The company makes its money by charging health care providers a monthly flat fee, and also has partnership arrangements with other healthcare companies including NIB Holdings Limited (ASX: NHF). While not yet profitable, 1STAvailable is generating revenues and could be one to watch. The company is expected to list on the ASX on May 29, 2015.

Argo Global Listed Infrastructure Limited (ASX: ALI)

Listed investment company (LIC) Argo Investments Limited (ASX: ARG) is launching a new infrastructure LIC called the Argo Global Listed Infrastructure Limited (ASX: ALI). The Infrastructure fund is expected to invest in various infrastructure asset securities around the world, such as airports, water, pipelines, railways, ports, satellites, toll roads as well as different types of energy utilities.

What is a concern for low risk assets such as infrastructure, is that the manager of the fund wants to charge a management fee of 1% or more of the assets of the fund (as a minimum), with 50% of that payable to the portfolio manager.

That appears to be far too high in our opinion, particularly because the fund is not investing directly into infrastructure assets, but their traded securities. We'd expect much lower fees for that type of LIC and suggest Foolish investors might want to give this LIC a wide berth. There are several listed infrastructure ETFs on international exchanges that charge fees less than half that of the Argo Global Listed Infrastructure Fund if investors want specific access to infrastructure.

The LIC is expected to list on the ASX on July 3, 2015.

Airxpanders, Inc (ASX: AXP)

Airxpanders, Inc (ASX: AXP) is a US company that has developed the AeroForm tissue expander, which the company says could revolutionise breast reconstructive surgery. Funds from the IPO will go towards progressing regulatory approvals and commercial launch of its product.

Airxpanders is expected to list on the ASX on June 22, 2015, but without a prospectus it's rather difficult to determine whether it's worth a look or not.

Australian Finance Group Ltd (ASX: AFG)

Australian Finance Group is one of Australia's largest mortgage broking groups, with 2,300 brokers. The company has a loan book of more than $100 billion in December 2014, and originates around 9,500 applications for $4.4 billion in loan finance each month. Shares are expected to be priced between $1.20 and $1.38, giving a P/E ratio of between 14.4x and 16.6x earnings in 2015. That appears cheaper than its closest comparable company – Mortgage Choice Limited (ASX: MOC) on 17.5x. AFG is also expected to pay a fully franked dividend yield of more than 4.6%, and as such could be worth a close look. One thing to be aware of is the potential of a property bubble bursting, as AFG could see its business rapidly evaporate.

The company is expected to list on the ASX on May 22, 2015.

Keep an eye out for part II of the series on our website, which should be up later today.

Update: You can find part II here.

Admin Note: Previously we stated that Argo Infrastructure Fund had a performance fee. This is incorrect – there is no performance fee.

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