let me attempt to make some sense of the valuation of $0.5bn.

Firstly, many make the mistake of valuing/comparing growth stocks using PE. As many finance textbooks will reveal, PE is usually used when earnings growth has more or less stabilised. Problem with growth stocks is that future earnings (growth or decline) are too difficult to forecast. Another problem that has surfaced with the emergence of internet tech firms like google, facebook, linkedin is that they have huge profit potential but the nature of the business model usually means financial losses in the early years. Which is why, growth IT stocks have been valued using Price-Sales ratio instead. read  http://education.investors.com/investors-corner/649913-ignore-pe-ratios-in-stock-investing.htm

A quick check on google revealed the following PS ratios of the following stocks near post-ipo:

• Facebook ~ 12  http://ycharts.com/companies/FB/ps_ratio  (14 when just listed)
• Google ~ 6  http://ycharts.com/companies/GOOG/ps_ratio  (if you see the chart, you will see Google was near 10 at once)
• LinkedIn ~ 18.5  http://ycharts.com/companies/LNKD/ps_ratio  (21 at one point)
• Zynga ~ 2 

Other than Zynga, the other 3 stocks had/have PS of > 10. Also take note that Google is no longer a growth stock per se, it's consistently generating profits now and it has been listed for almost 10 years. With YuuZoo's valuation of $0.5bn and estimated sales of $35m (based on FY12 sale growth of 35%) for FY13, the PS ratio is 14.2. Hopefully, the valuation doesn't seem so ridiculous now.

But you may ask, companies like Facebook, Google and even LinkedIn (if you consider it so) are well-known giants. Surely, an IT growth stock listed on SGX with less publicity/awareness shouldn't fetch a comparable PS ratio? Well I think this is a valid concern and on this point, a PS of 14.2 may seem a little overpriced. perhaps somewhere between the range of 10-12 seems more logical.

However, I do see a few justifications that may serve to push the PS ratio and valuation upwards:

1. YuuZoo, even before IPO, has accomplished what most other IT growth stocks have failed to do before IPO and even years after IPO - become profitable with an impressive profit margin of > 20% (assuming unaudited financial statements are right)
2. YuuZoo's presence in Asia means it is well positioned to capitalise on Asia's growth. Firstly, its business is based on commercialising online social media and no logical person will tell you that conducting commercial transaction via the Internet is the next big thing. Secondly, unlike traditional industries like research or manufacturing, consumer-driven e-commerce is something that Asia actually leads the world in, particularly Japan, Korea, Singapore, HK. Read the recent acquisition of IAHgames and this 2011 private equity factsheet  https://www.google.com/url?sa=t& rct=j& q=& esrc=s& source=web& cd=3& ved=0CD0QFjAC& url=http%3A%2F%2Fbluebridgecapital.com.sg%2Freadfile.php%3Fpdf%3DYuuZoo%2520Fact%2520Sheet%2520-%252030May11.pdf& ei=wleSUdydM8urrAfyx4HgBA& usg=AFQjCNH52i7mK2PXI-qcBazfcQ8Rfs0Ocw& sig2=-UuvC_nDyBA6ItPKaTFy4g& bvm=bv.46471029,d.bmk& cad=rja

Of course there are potential downsides. The valuation may really be too high. This RTO may be the current shareholders way of cashing out. The growth may not be sustainable. Another competitor may steal an edge of YuuZoo. Heck, despite all signs pointing otherwise, the RTO with contel may not even go through (though this really is a separate issue altogether from YuuZoo's valuation).

  Personally, I think what Contel/YuuZoo represents is a potentially great opportunity to capitalise on a rare opportunity on sgx and in singapore. There is no sure gain and even if things go well, it may take years before really attractive gains are realised. Google took > 5 years but increased by more than 10x. Are there short-term gains? Sure. There are always short-term gains to be had but I think the real money is in the long run. but it is still a bet, though a good and rare one. At least I hope the valuation of $0.5bn doesn't seem so insane now.