General election brings small IPOs to Bursa

The upcoming election has made most investors cautious, says an analyst


The impending general election (GE) has favoured small companies going public on Bursa Malaysia amid expectations 2018 will see a steady pipeline of new listings.

The first three months to date has witnessed three new listings on the ACE Market raising a total of RM144.7 million, and three listings on the Leading Entrepreneur Accelerator Platform (LEAP) Market raising a total of about RM10.14 million, but no large initial public offerings (IPOs).

“The upcoming GE has made most investors cautious. There are now two trends on Bursa Malaysia — retail investors are generally selling as reflected in the fall in small- cap stock values, while the benchmark FTSE Bursa Malaysia KLCI counters have risen in the past three months due to institutional support,” said a market analyst from a local brokerage.

He said part of the retail interest is focused onto the small new listings, while the appetite for large listing remains weak as reflected by poor demand in the listing of Lotte Chemical Titan Holding Bhd and the weak performance of Felda Global Ventures Holdings Bhd.

“The measures introduced by the exchange for the small-and mid-cap stocks recently aim to attract more investors to this universe. The big listings have generally underperformed,” the analyst added.

In 2017, there were six new listings on the ACE Market and five on the Main Market compared to 11 listings in total in 2016.

Presently, there are 927 listed companies on Bursa Malaysia, of which 805 are listed on the Main Market, 117 on the ACE Market and five on the newly launched LEAP Market.

The three companies to debut on the ACE Market this year include QES Group Bhd, Wegmans Holdings Bhd and Binasat Communications Bhd. Since its listing on March 6, telecommunication services provider QES has gained 2.5 sen above its issue price of 19 sen on good liquidity. QES raised RM43.22 million from its listing.

Furniture maker Wegmans, which raised RM43.5 million from its IPO, was last traded at 28.5 sen, marginally below its IPO price of 29 sen, despite its public tranche being oversubscribed by 16.35 times. Wegmans raised RM43.5 million from its IPO.

Binasat, listing for its first IPO of the year on Jan 8, has seen the rally in its share price upon the exercise, with the share price closing at 42 sen yesterday, below its IPO price of 46 sen.

Binasat raised RM57.95 million from its listing.

The three companies are to be listed on the LEAP Market this year.

The LEAP Market is a platform for startup and small and medium companies to raise capital from sophisticated investors without going for public listing.

The three companies that were listed under the LEAP Market so far this year are JM Education Group Bhd, Metro Healthcare Bhd and Nova Pharma Solutions Bhd.

JM Education Group made its debut on Feb 8, raising some RM3.06 million. The stock closed at 53 sen, well above its issue price of 45 sen.

Metro Healthcare’s share price has risen to 31 sen at close yesterday, a good premium over its IPO price of 23 sen when it was listed on Feb 26. Metro Healthcare raised RM4.62 million.

The latest to debut on the LEAP Market is Nova Pharma, which raised RM2.46 million and was listed last Friday. The company’s share price has risen to 26 sen, above its offer price of 20 sen a share.