A LEAP in share price performances

Investors in the 7 counters listed on Bursa Malaysia’s LEAP Market at present have reason to cheer

By DASHVEENJIT KAUR / Pic By TMR File

The fast and cost-effective platform for fundraising, Bursa Malaysia’s Leading Entrepreneur Accelerator Platform (LEAP) Market, has been a boon for investors with the share prices of the companies listed under it increasing as much as 200% since last year.

The high risk, high return investments have outperformed the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI), which is giving a negative 7.3% return to date.

While returns from such counters on alike markets abroad have been poor over time, investors in the seven counters listed on the LEAP Market at present have reason to cheer.

Singapore-based information technology solutions provider Cloudaron Group Bhd, which was the first company to list on the LEAP Market, has thus far seen its share price appreciating over 218%.

The company — which specialises in providing technology solutions for cloud, workspace transformation and services for business entrepreneurs — currently trades at 24 sen higher than its offer price of 11 sen.

Cloudaron, listed on Oct 3, 2017, offered 50 million shares, or 6.4% of its enlarged share capital, to selected investors for a total value of RM5.5 million.

Meanwhile, shares in SL Information Bhd rose as much as 66% since its debut on the LEAP Market on May 21, 2018.

SL Information was the latest listing this year, rising 12 sen over its offer price of 18 sen.

The end-to-end enterprise business solution provider mainly operates in Malaysia and Singapore, offering its services to small and medium enterprises (SMEs) and mid-market and large corporations such as Astino Bhd, Tokio Marine Life Insurance Malaysia Bhd and UMW Corp Sdn Bhd.

SL Information’s listing entailed 10.5 million shares at 18 sen each via a private placement to raise RM1.89 million.

Of this, RM700,000, or 37.1%, is earmarked for research and development (R&D) expenditure, RM390,000, or 20.6%, for working capital and RM800,000, or 42.3%, for listing expenses.

Upon listing, SL Information’s expanded share capital stands at 127 million shares. Its market capitalisation as of yesterday stood at RM36.83 million.

The LEAP Market, the first of its kind in Asean, aims at addressing the SME financing gap by giving such companies an alternative and efficient fundraising platform through the capital market.

It became the third market of Bursa Malaysia after the Main Market and ACE Market.

Trading on the LEAP Market is limited to sophisticated investors, categorised as accredited investors, high-net-worth entities with total net assets exceeding RM10 million, or high-net-worth individuals whose net personal assets exceed RM3 million or a gross annual income exceeding RM300,000.

This includes a venture capital corporation, venture capital management corporation, private equity corporation and private equity management corporation registered with the Securities Commission Malaysia.

The prospective listing must have an identified core business. It cannot be an investment holding corporation with no immediate or prospective business operations, or an incubator company.

Plastic powder compounds manufacturer Polymer Link Holdings Bhd, which made its debut on Bursa Malaysia’s LEAP Market on April this year, is trading at a four sen premium from its initial public offering (IPO) price of 12 sen.

Polymer is the fourth company listed on the LEAP Market this year, which saw 79,000 shares traded as of April 27, 2018.

Polymer raised RM5.55 million via listing on the LEAP Market, of which 51.4%, or RM2.86 million, will be used for general working capital.

Out of the RM5.55 million, 27%, or RM1.5 million, will be used for shareholder advances, while 21.6%, or RM1.2 million, will be spent for the listing expenses.

Polymer last traded at 17 sen per share with a market capitalisation of RM78.69 million.

Listed on the LEAP Market on February this year, women healthcare provider Metro Healthcare Bhd has surged as much as 11 sen, or 47.8%, from its issue price of 23 sen.

According to Metro Healthcare’s listing information memorandum, the company had earlier placed 20.08 million shares to raise gross proceeds of RM4.62 million.

Of this, RM3.42 million is earmarked for business expansion to Johor Baru and Melaka, and RM300,000 will be used for its marketing and accreditation programme.

Educational counselling player JM Education Group Bhd and an engineering solutions company which focuses on pharmaceutical and biotechnology industries, Nova Pharma Solutions Bhd, rose as much as 20% and 15% respectively since their debuts.

JM Education, the third listing on the LEAP Market, opened at 45 sen and is now trading at 51.5 sen with a market capitalisation of RM36.27 million.

The group is primarily involved in the provision of educational counselling and student placement services.

It also offers technical and vocational education and training (TVET) services through Miraj Academy in Kuala Lumpur.

Based on its 2016 financial results, overseas markets contribute 76.5% of its revenue, while services for the local market contribute 5.7% and the local TVET segment contributes the remaining 17.8%.

Nova Pharma’s issue price was 20 sen per share and has increased three sen since then.

Nova Pharma’s issued 12.3 million shares represented 8.25% of the group’s enlarged issued share capital.

The biotechnology company is optimistic of its growth potential in Taiwan, with the continued development of the country’s biotechnology market.

Having established a presence in Taiwan since 2015, contributions from the market have increased.

As at the end of 2017, projects from Taiwan contributed 54% to revenue, while the remainder came from Malaysia (41%) and Thailand (5%).

The second LEAP Market entrant after Cloudaron, Red Ideas Holdings Bhd — which developed the private community platform Graaab JaGaApp — debuted on Bursa Malaysia’s LEAP Market on Nov 8, 2017, at 35 sen.

The counter climbed higher to close at 43.5 sen, up 24.29%, on its first trading day, but has since eased back to its issue price level.

Its information memorandum released on Oct 17, 2017, noted it will be raising RM7 million by placing out shares representing 20% of its share capital, equivalent to over 20 million shares.

Red Ideas’ business involves developing software products and solutions that are catered primarily to communities, be it residential or commercial, with the goal of enhancing security, communications and convenience.

So far, the group has deployed its services to 83 communities and has about 23,000 registered users.

Red Ideas plans to spend RM4.15 million, or 59.3% of the total proceeds raised, on general working capital.

The group will also allocate RM1 million each for R&D and office expenses, renovation and new branch offices.

The remaining RM850,000 is intended to be used for listing expenses.

While the LEAP Market segment has been active with listings this year, IPO activities on the broader market remain dull with only two listings.

The ACE Market, however, saw a total of six listings year-to-date. The next counter seeking a LEAP listing is Seers Bhd.

Seers is seeking to list by early July and raise RM5.15 million from the exercise.

According to an information memorandum filed to Bursa Malaysia, Seers plans to issue 64.41 million shares at an indicative placement price of eight sen per share.