Malaysian IPO market to remain lacklustre for rest of 2018?

August 1, 2018 | By | Reply More

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PETALING JAYA: While the local initial public offering (IPO) market may not have much to excite investors for the rest of the year, recent new listings have been heartening with more than half of them trading above their reference prices.

The change in government, along with the weak sentiment, however, may continue to weigh on fundraising in the IPO market, according to analysts.

On Monday, Bursa Malaysia Bhd CEO Datuk Seri Tajuddin Atan said while the number of IPOs is expected to be higher this year, the fundraising value will be much smaller than in 2017 on the back of challenges in the equity market.

JF Apex head of research Lee Chung Cheng is of the view that the IPO market will remain lacklustre in the second half of the year with no signs of a pick-up in momentum due to the weak market sentiment.

“It’s more due to external issues such as trade war and the shrinking of market liquidity. The capital market is not doing so well, probably in the second half we’ll continue to see more listings on the ACE Market,” he told SunBiz recently.

Lee does not expect any big IPOs in the immediate term, but things may recover next year.

A total of 15 companies have been listed on Bursa Malaysia this year, of which Mi Equipment Holdings Bhd is the only Main Market listing, while the rest were listed either on the ACE Market or the LEAP Market. There were 12 companies listed in 2017.

Taking out those from the Leap Market, most of the new listings this year have seen their shares trading above the IPO prices.

The best performer is cashless payment solutions provider Revenue Group Bhd, whose share price has doubled its listing price of 37 sen, followed by Radiant Globaltech Bhd and Mi Equipment, which have gained 60.9% and 47.9%, respectively.

Moving into the second half of the year, some of the notable IPOs that are worth a look include the relisting of QSR Brands (M) Holdings with a targeted fundraising size of RM2 billion.

QSR, which is currently 51.85% owned by Johor Corp, operates fast-food chains such as KFC, Pizza Hut and Ayamas.
QSR and its subsidiary KFC Holdings (M) Bhd were taken private in 2013 following an RM5.12 billion buyout by Johor Corp, the Employees Provident Fund and private equity firm CVC Capital Partners via their special purpose vehicle, Massive Equity Sdn Bhd.

According to Johor Corp, QSR contributed RM4.56 billion to the group’s top line in 2017 versus RM4.24 billion in 2016.

Other potential listings in the pipeline include Tashin Holdings Bhd, DPI Holdings Bhd, Techbond Group Bhd and Securemetric Bhd.

Worth noting is that Tashin is the steel unit of Prestar Resources Bhd, which is involved in the downstream manufacturing of material-handling equipment.

For Rakuten Trade head of research Kenny Yee, the IPO market stands a chance to recover in the second half in anticipation of improved market sentiment.

“There aren’t many big IPOs, most of them are small-cap stocks. Those technology companies are okay so far. It is a good time to do listing. An IPO shouldn’t be valued too high because you need to let the investors make a little bit of money.”

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