The Star published an article "More explanation needed to justify high 7-Eleven valuations" on its website. Some snippets:
"Disclosures surrounding the toppish valuation of Seven Convenience Bhd, the owner of 7-Eleven stores, is the reason why its planned flotation has hit a snag, banking sources said.
According to the sources, Seven Convenience’s listing application did not sufficiently explain the justification behind the increased value of the 7-Eleven business, following its privatisation back in 2006.
“In cases where companies have been privatised before and are then being brought back into the market (via an initial public offering or IPO), disclosure rules dictate that a very clear explanation needs to be given to justify the increased value of the asset,” said one banker, adding that a similar issue had arisen in last year’s listing of Astro Malaysia Holdings Bhd. The issuers had to provide additional disclosures to justify the much higher valuation they were looking to get from the second listing of Astro.
Astro had been taken private in 2010, only to be re-listed, minus its overseas assets, in January 2012 at a price of RM3 per share for its retail portion, which was at a lofty price-to-earnings ratio of 24 times.
It is understood that this disclosure was lacking in Seven Convenience’s IPO documents. Various reports on Monday stated that Tan Sri Vincent Tan’s US$700mil (RM2.17bil) IPO of Seven Convenience had either been rejected or deferred by the Securities Commission (SC).
One source told StarBiz that the owners were looking to float the company at a massive price earnings multiple of more than 30 times historical earnings.
However, sources added that this disclosure issue could be eventually resolved and predicted that Seven Convenience’s listing would be deferred to next March, possibly when it shows a new set of earnings that justifies its high valuation."
As far as I know, the above is not confirmed by the Securities Commission, who normally doesn't comment on on-going cases. However, the above explanation does sound plausible.
Regular readers of this blog might remember the IPO of Astro, especially this posting (pointing out that much relevant information was missing from the draft IPO prospectus, especially regarding the delisting exercise) and this posting (noticing a much improved IPO prospectus).
Other (rather negative) articles about Astro can be found here. I am still bearish on Astro, I don't think TV has a bright future versus the combination of internet and mobile devices.