Bursa Malaysia's 2023 IPOs largely deliver gains without major exits

TheEdge Tue, May 07, 2024 08:00am - 1 month View Original

KUALA LUMPUR (May 7): Initial public offerings on Bursa Malaysia have largely delivered share price gains, offering hope to other companies seeking to raise funds while providing confidence to investors to bet on new listings.

By the end of April, 21 of the 31 stocks listed on the Main Market and ACE Market in 2023 have racked up gains of between 1.1% and 360% from their listing price, according to data compiled by The Edge. Underwater IPOs, meanwhile, lost 2.0%-43% over the same period.

Nationgate Holdings Bhd, an electronic manufacturing services firm, was the biggest winner with its share price more than quadrupling to RM1.75 from just 38 sen when it was listed in January last year.

The top loser was golf equipment retailer MST Golf Group Bhd's 43% decline to 46 sen from its IPO price of 81 sen in July 2023.

Even among those that declined, three companies — DS Sigma Holdings Bhd, MYMBN Bhd and KGW Group Bhd — still commanded higher valuations than the time when they were listed, as the trio reported weaker earnings in their latest results.

Most of the 21 companies that notched gains saw higher valuations along with their share prices, though four of them — Cape EMS Bhd, Vestland Bhd, Daythree Digital Bhd and L&P Global Bhd — saw their valuations decline or stagnant.

Cape EMS, a Johor-based electronic manufacturing services company that rose 1.1% since its IPO to 91 sen at end-April, saw its earnings multiple drop to 19.15 times from 31.6 times, based on its listing price of 90 sen.

Fortress Capital Asset Management (M) Sdn Bhd had in September last year cut its stake in Cape EMS to 2.4% from 16% upon launch of Cape EMS’ IPO. The fund manager is no longer among Cape EMS’ top 30 largest shareholders, according to Cape EMS’ latest annual report published on April 30.

Apart from Fortress Capital, Cape EMS’ executive director Tee Kim Yok halved her holdings to 6.8% from 13.8% when the group was listed in March 2023, and managing director Tee Kim Chin's ownership was diluted to 38% from 40.6%, following a private placement.

Business process management services provider Daythree Digital Bhd's share price appreciated 20% since launch of its IPO to 36 sen at end-April, but still trades steady at 23.1 times its earnings.

Construction company Vestland and industrial packaging firm L&P Global both saw decline in valuations as earnings growth outpaced share price gain since their listings, with no major change in their promoters' shareholdings.

Vestland delivered a 10.6% net profit growth for the financial year ended Dec 31, 2023 (FY2023), while L&P Global earnings grew by 40.4%.

Zooming in on the performances for the first four months of 2024, 18 of the 31 stocks listed last year recorded 1.45% to 117% gains while the remaining suffered losses ranging from 0.95% to 39%.

Among the year-to-date gainers this year, 14 of them beat KLCI’s gain of 8.3%, with the top performer being Synergy House Bhd, a furniture designer and exporter, which gained 117.4%.

At RM1.50 as at end-April, Synergy House, listed on June 1 last year, was trading at 27.44 times price-to-earnings ratio (PER), versus 12.93 times based on its IPO price of 43 sen.

Other top performers include accounting software company Autocount Dotcom Bhd’s 56.25% gain and enterprise planning software firm Panda Eco System Bhd’s 47.62% appreciation over the four-month period.

Underperformers were Mercury Securities Group Bhd, losing some 39% since the start of 2024, followed by DC Healthcare Holdings Bhd, which was down by 27.85% over the same period.

No major exit by promoters

Although most 2023 IPO cohorts have exceeded their six-month moratorium period for promoters or substantial shareholders to make divestments, there has been no major exit so far, except for consumer-packaged foods company Wellspire Holdings Bhd, which saw its French shareholder Besanger Serge Pierre sell the entirety of his 7% stake, while other substantial shareholders maintained theirs.

That indicates a high degree of confidence among promoters and substantial shareholders in their companies' prospects and share price outlook.

There were also partial stake reductions, with Khazanah Nasional Bhd paring its shareholdings in automated machine vision solutions provider TT Vision Holdings Bhd to 14% from 23% previously, and one of the substantial shareholders in construction outfit Kumpulan Kitacon Bhd, non-executive director Teow Choo Hing reducing his ownership to 14% from 29%.

Even with MST Golf and DS Sigma being the largest losers amongst the 31 IPOs last year, none of their promoters saw significant changes to their shareholdings after the expiry of the six-month moratorium.

For companies that launched their IPOs this year, only one out of the 13 newly-listed stocks ended April below its IPO prices.

The remaining 12 IPOs posted gains ranging from 1.6% (fertility care company Alpha IVF Group Bhd) to 147% (cable manufacturer Master Tec Group Bhd) as at end-April.

The sole loser was logistic company AGX Group Bhd, which fell 5.7% since its IPO on Feb 7 this year.

The early success of this year's entrants provides a shot in the arm for Bursa Malaysia as it aims to host 42 IPOs with a market capitalisation of RM13 billion this year.

Still, investors and analysts will be watching this space closely amid growing external risks that include global interest rates uncertainties, escalating geopolitical tension and potential supply chain disruptions.

Note: The article has been amended for accuracy.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.

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