IPOs on LEAP Market see strong 1H19 debuts

Bursa Malaysia has witnessed 17 listings YTD, with another 3 listings in the pipeline for the year


INITIAL public offerings (IPOs) that are not too richly valued are worth subscribing to, despite their lacklustre performance in the first half of the year (1H19).

Inter-Pacific Securities Sdn Bhd head of research Pong Siew Teng said investors, however, must make careful analyses or assessments of the potential price upside before subscribing.

“IPO successes depend on liquidity flows in the stock market, like every other share. In the past few months, liquidity conditions in the stock market have been very poor,” he told The Malaysian Reserve.

He said some listings are fully valued upon listing, leaving no further upside and leading to some investors selling the IPO shares right after listing.

Bursa Malaysia has witnessed 17 listings year-to-date (YTD), with another three listings in the pipeline for the year.

The smart money is in IPOs on the Leading Entrepreneur Accelerator Platform (LEAP) Market due to the growth theme the counters present and the limited access on the market.

Eight of the nine counters listed on the LEAP Market are trading at a premium, while four out of five on the ACE Market are at below their listing offer price, according to Bursa Malaysia data.

“The more exclusive nature of the LEAP Market makes it harder to trade. The small and medium enterprises listing (there) attract well-to-do long-term investors looking at the growth theme,” said a broker.

Set up in 2017, the LEAP Market has some 22 counters listed to date from 922 counters listed on Bursa Malaysia.

Nine companies have sought funding from the LEAP Market this year, with the latest listing recorded being digital marketing solution provider MCOM Holdings Bhd on July 3, 2019.

MCOM’s shares rose 10% on its debut to 31 sen from the issuance price of 28 sen per share.

Parking service management service provider Matrix Parking Solution Holdings Bhd saw its shares increase as much as 30% on the first day of trading. Its stock jumped to 17 sen from the issuance price of 13 sen per share.

Other listings on Bursa Malaysia’s LEAP Market are Uni Wall APS Holdings Bhd, Supreme Consolidated Resources Bhd, EquitiesTracker Holdings Bhd, Smile-Link Healthcare Global Bhd, TT Vision Holdings Bhd, Fibromat (M) Bhd and CE Technology Bhd.

The biggest listing by market capitalisation this year was the relisting of poultry and livestock feed producer Leong Hup International Bhd on the Main Market, with the company raising RM1.03 billion from the sale of 937.5 million shares at RM1.10 per share. The counter closed the trading day at 94 sen yesterday.

“Leong Hup was richly valued, so there was no real upside for the counters and many speculators have decided to sell as the underwriter was buying and providing price support. If not for that, the share price correction could have been much sharper,” an analyst at a local brokerage said.

On another note, UWC Bhd made its debut on the Main Board yesterday with its share price rising 70.7% to RM1.40. Brokers said investors saw its niche business as a value buy.

Another newcomer in the Main Market is metal wood manufacturer HPMT Holdings Bhd.

Its stock was down 11% on the first day to RM0.50 per share, dropping six sen from the listing price of RM0.56. The company has a market capitalisation of RM139 million.

A total of five ACE Market listings have been recorded for the year, with the recently listed Kim Hin Joo (M) Bhd — a baby, children and maternity products distributor — seeing its shares slump to RM0.35 on its first day of trading.

It saw a drop of nine sen from its issuance price of RM0.43 per share.

The group, which currently has 17 Mothercare outlets and 11 Early Learning Centre stores, is planning to open another five Mothercare outlets within three years of listing on the local bourse.

Another notable listing on the ACE Market is the entry of machine industry company Greatech Technology Bhd.

The group’s shares rose 21% on the first day to RM0.74 per share, from the listing price of RM0.61.

Greatech joined the stock exchange in June, and is valued at RM678 million to date.

Other listings for the ACE Market in 2019 are DPI Holdings Bhd, Gagasan Nadi Cergas Bhd and Mestron Holdings Bhd.