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April 26wk IPOs: PAA Nat Gas Storage (PNG) & Alpha Omega Semi (AOSL)

|Includes:Alpha and Omega Semiconductor Limited (AOSL), EPB, KMP, PNG, WPZ
PAA Nat Gas Storage (NYSE:PNG) $200mm IPO scheduled for Friday, April 30
PNG SUMMARY
. Limited partnership natural gas storage spin-off from $8.1bb market cap parent Plains All American in (NYSE:PAA)
. Compare to mid-stream limited partnerships.  Notice the expected dividend rate of 6.75% is in the same range.
. On the other hand, PNG’s growth plan is visible & believable.  At the proposed IPO market cap of $1.1bb PNG’s value depends on achieving growth milestones

read more in PNG IPOreport

Alpha & Omega Semiconductor (NASDAQ:AOSL)
$91mm IPO at range mid-point of $18
Scheduled to trade Thursday, April 28
AOSL CONCERNS
> Very low, inconsistent gross profit margin
> DEC QTR -- 33% SHARE OF PROFIT FROM AN “ASSOCIATE”
. APM (Agape Package Manufacturing (Shanghai) Limited),
. $10mm pretax profit reported for the Dec, 2009 quarter BUT 35% came from APM & the reported income tax was less than 4%
> Abnormally low 3% tax rate
> AOSL "miraculously" earned almost $10 in each of the Sept & Dec 2009 quarters
Weakness in accounting controls
During the six months ended December 31, 2009, AOSL relied on APM (Agape Package Manufacturing (Shanghai) Limited), for 66% of packaging and testing requirements volume, BUT…
“Did not maintain effective controls related to the accounting for our equity method investment in APM. Specifically, we did not perform effective reviews to ensure that the earnings and losses from the equity method investment were completely and accurately recorded.”

read more in AOSL IPOreport




Disclosure: none
Stocks: AOSL, PNG, WPZ, KMP, EPB