IPOs give positive returns as market slumps on viral fears

LEAP market and ACE market listings outperform the sole listing on the Main Market despite the Covid-19 fears impacting investor sentiment

by NUR HANANI AZMAN/ pic by BLOOMBERG

THE smart money appears to favour IPOs with three of the four new listings on Bursa Malaysia this year in positive territory despite the benchmark falling 6.8% year-to-date.

The Leading Entrepreneur Accelerator Platform (LEAP) market and ACE market listings, which draw a smaller group of investors, outperform the sole listing on the Main Market this year and analysts expect the listing pipeline to remain healthy despite the Covid-19 virus fears impacting investor sentiment.

“While we believe the Covid-19 outbreak may not have a direct impact to companies listing in Bursa this year, it may affect investors’ sentiment. The outbreak may result in investors turning cautious and invest in more stable asset classes such as government bonds.

“However, we believe good companies will still be able to attract interest once listed. This is due to the fact that good companies have sound fundamentals, are stable and will be able to weather short-term headwinds. These companies should present value for investors,” MIDF Research senior analyst Imran Yassin Yusof told The Malaysian Reserve.

He advised investors to perform a thorough analysis and due diligence of companies they intend to invest in, taking into consideration that the returns should commensurate to the level of risk taken.

Four IPOs have been listed on the Bursa Malaysia this year.

InNature Bhd was the sole Main Market listing this year raising RM113.5 million with 705.9 million shares listed.

It closed yesterday at 51.5 sen, well below its listing price of 64 sen.

Supergenics Bhd made its debut on the LEAP market on Jan 6, raising RM5 million with 93 million shares listed.

Its closing price on Monday was 30 sen, 50% higher than its listing price of 20 sen.

Supergenics’s current closing market capitalisation is RM27.9 million.

Ace Innovate Asia Bhd is another LEAP listing that has risen some 34% to 36 sen from its listing price of 26 sen. The company raised RM10.14 million with 300 million shares listed.

Ace Innovate was listed on Jan 7 and now has a market capitalisation of RM108 million.

Another listing that has been actively traded is Powerwell Holdings Bhd, which debuted on the ACE Market on Jan 22, raising RM36.36 million with 580 million shares listed. It closed at 34 sen on Monday.

Powerwell’s current closing market capitalisation is RM197 million, increase 25% from RM165.5 million of first day closing market capitalisation.

The local exchange also saw the listing of new exchange traded funds as Kenanga Investors Bhd listed the Kenanga KLCI Daily 2X Leveraged ETF and the Kenanga KLCI Daily (-1X) Inverse ETF (KLCI1XI) (OneETF) on the Main Market of Bursa Malaysia Securities Bhd on Jan 13.

Bursa Malaysia’s CEO Datuk Muhamad Umar Swift (picture) expects 40 new listings on the exchange this year including 30 small and medium enterprises (SMEs). The number of IPOs in 2019 exceeded the number of IPOs in 2018. There were 30 IPOs in 2019 versus 21 IPOs in 2018.

ACO Group Bhd is scheduled to be the second ACE market listing this year on March 6.

Meanwhile, the IPO market in Hong Kong is reported to have suffered one of the worst starts to the year in a decade, in terms of performance, just as the coronavirus epidemic threatens to dry up the pipeline, according to Bloomberg.

The 20 companies that listed in the financial hub in January have fallen an average of 16% from their offer prices and only three are trading above them, data as of Jan 30 compiled by Bloomberg show.

In their first week of trading, they dropped by an average of 6%, making it one of the worst first-week performances of the past decade for this period. Newly-listed companies did worse than that only in 2019.