Evaluation on research of listed IPOs

At the beginning of my investment journey, I read some articles mentioning that listed IPOs are not advised to be held or invested in the first few years in the view of value investing. I was like, Why not? That statement came vague to me at the first glance and I decided to clarify it myself with my own research on a listed IPO, finally China Saite (153) came to my mind.

After the primary review on China Saite, I have discovered a few problems that may be arose during the investigation at listed IPOs:

1. Uncertain use of the proceeds from listing
Though the use of the capital is listed in the prospectus, there is always a chance of going off the track. If the cash spent somewhere else which stockholders are not willing to (E.g. Vision Fame(1315) suddenly planned to develop the coal mining business), it must be harmful to the price movement.

2. Failure of DCF
No mention currently I don't have enough tools and skills to predict the future cash flow of a normal blue chip, the unstable effect of listing towards the factors of generating the predicted value of the company will even hinder the estimating process under DCF.

3. Financial position
It is hard to manipulate those ratios comprising of balance sheet elements such as the current ratio or even the PBR (In reality, part of the cash will be spent immediately), especially when the capital raised from IPO occupying a large proportional of assets afterwards. Even the most recent historical ratio or figure will significantly exaggerate or underestimate the current position of the company.

4. Insufficient of past information and impact from listing
There will be most likely 3 years of data being provided in the prospectus, but bear in mind that these information represented only the business environment of the company before listing. The impact from listing would not be appeared in short either. On the other hand, while the record of the dividend payout is too short to say anything about the sustainability of dividend income from holding the stock, a dividend-lover should especially beware of.

Does it mean that listed IPOs don't have the value to research on? Definitely NO, uncertainty can be tolerated by a comparable potential rewards. It is suggested to rate the stock at a higher risk level than it is apparent to be, lowering the estimated earning figure can also be one of the compromising method.