Discerning investors will study or carry out due diligence on the businesses of companies raising fund through IPOs (initial public offerings). There are factors that predict and sustain good returns of particular investment and most investors make decision to go in based on their interplay. Retail investors most of the time would not have certain crucial information about these companies and may end up losing their hard earned money.
We have come across many market listings with IPOs on Bursa Malaysia over the last five years since the global financial crisis (GFC) in 2008. The best so far has been the Petronas-linked companies such as MMHE and Petchem. MSM, MAXIS, CMMT and IHH are good too in terms of their share price upside post-listing. I must admit I make money on the respective IPOs. These are all big companies raising hundreds of million through their IPOs.
For investors looking for short-term gain, the above companies are Godsend. As for me, I choose which company's stock to be purchased for dividend, long-term and short-term returns thus giving me portfolios which are diversified.
My most recently successful IPO acquisition is IHH at RM2.80 about a year ago and now the stock has appreciated to RM4.16, a capital gain of about 49%.
Among IPOs which are a disappointment surely is JCY . I noticed that JCY after years of being private and raking in much profit, then decided to list the company.
I remember the IPO was first put at 2.20 and after much talk of overvaluation, it went down to 1.60 and in less than a year the stock tumbled down to less than 50 sen due to negative news from HD makers mainly Western Digital and Seagate: production of HD was scaled down due to lack of demand, Eurozone crisis and entry of new technology.
The timing of the JCY going public and the bad news made me wonder whether the company's owners had prior knowledge of the impending loss of revenues leading to the sharp and sustained fall of its stock price.
The same goes for WPRTS touted to be the owner of Malaysia's busiest port and yet its post-listing stock price has virtually stood still nearer to the IPO's. Then we read in the news about a shipping consortium of some kind with ships which used to dock in Port Klang Western Port have now decided to move to another port for reasons best known to them. Had the news come out before the listing date, I probably would not apply for the IPO, period.
Despite reassurances by the company's top stakeholders, the Gnanalingham, the share price has refused to move upwards indicating the market's sentiment. Now it also makes me wonder whether the company's owners also had prior knowledge of this major move by the shipping coalition and thus they decide to share the cost of this change with the public? I really hope I am wrong. I will stick with the company for a while yet as it actually has strong fundamentals though the short-term prospects don't look encouraging.
The price of WPRTS is now about RM2.55, 0.05sen above its IPO's price ( a mere 2% increase), a highly disappointing early performance indeed. However, it will likely go up once the company announces its dividend in 2014. Interesting to see this stock just before April next year.
I am also sorry for those who acquired AirAsia X's IPO which I did indicate that people should stay away from it. My prediction was correct as it has gone down below its IPO price of 1.25 despite heroic support from Maybank Investment . It even went down below one Ringgit at one stage and now hovering around that figure, about 20% depreciation in less than a few months.
ASTRO's IPO also did not do well. I now have the feeling that after the company has raked up profit over those early years of growth, they then decided to list the company when growth has declined and share their meagre income with the public. There was some uneasy stories about ASTRO's share performance post-listing as the price kept on tumbling as if people who acquired the shares before the listing were selling off. An ugly situation.
I am encouraged though Caring Pharmacy listed on 13 November at an IPO of 1.25 has gone on to RM1.71 an upside of about 37%. Unfortunately, I was overseas during the important pre listing period and was unable to participate. But all the same this is one company which, though small has managed to attract new capital simply due to its business model of dealing with everyday necessities. Its prospectus could also be credible with promises of business expansion etcetera. I have to check whether it has big cornerstone investors (which I doubt).
There you go. The above IPOs give some indications on investors', particularly, big fund managers' sentiment. IPOs making money for investors? I would not be so sure and am certainly not going to rush into applying for them in the near future.
An article in the Edge on 25 Nov 2013 on IPOs in Malaysia mentioned the following :
"RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon recently said that investors should ride on the wave of Malaysia’s IPO market, but only after doing their homework on the new entrants."
We have come across many market listings with IPOs on Bursa Malaysia over the last five years since the global financial crisis (GFC) in 2008. The best so far has been the Petronas-linked companies such as MMHE and Petchem. MSM, MAXIS, CMMT and IHH are good too in terms of their share price upside post-listing. I must admit I make money on the respective IPOs. These are all big companies raising hundreds of million through their IPOs.
For investors looking for short-term gain, the above companies are Godsend. As for me, I choose which company's stock to be purchased for dividend, long-term and short-term returns thus giving me portfolios which are diversified.
My most recently successful IPO acquisition is IHH at RM2.80 about a year ago and now the stock has appreciated to RM4.16, a capital gain of about 49%.
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| If only you can spot them! |
I remember the IPO was first put at 2.20 and after much talk of overvaluation, it went down to 1.60 and in less than a year the stock tumbled down to less than 50 sen due to negative news from HD makers mainly Western Digital and Seagate: production of HD was scaled down due to lack of demand, Eurozone crisis and entry of new technology.
The timing of the JCY going public and the bad news made me wonder whether the company's owners had prior knowledge of the impending loss of revenues leading to the sharp and sustained fall of its stock price.
The same goes for WPRTS touted to be the owner of Malaysia's busiest port and yet its post-listing stock price has virtually stood still nearer to the IPO's. Then we read in the news about a shipping consortium of some kind with ships which used to dock in Port Klang Western Port have now decided to move to another port for reasons best known to them. Had the news come out before the listing date, I probably would not apply for the IPO, period.
Despite reassurances by the company's top stakeholders, the Gnanalingham, the share price has refused to move upwards indicating the market's sentiment. Now it also makes me wonder whether the company's owners also had prior knowledge of this major move by the shipping coalition and thus they decide to share the cost of this change with the public? I really hope I am wrong. I will stick with the company for a while yet as it actually has strong fundamentals though the short-term prospects don't look encouraging.
The price of WPRTS is now about RM2.55, 0.05sen above its IPO's price ( a mere 2% increase), a highly disappointing early performance indeed. However, it will likely go up once the company announces its dividend in 2014. Interesting to see this stock just before April next year.
I am also sorry for those who acquired AirAsia X's IPO which I did indicate that people should stay away from it. My prediction was correct as it has gone down below its IPO price of 1.25 despite heroic support from Maybank Investment . It even went down below one Ringgit at one stage and now hovering around that figure, about 20% depreciation in less than a few months.
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| Really bad post-listing performance |
ASTRO's IPO also did not do well. I now have the feeling that after the company has raked up profit over those early years of growth, they then decided to list the company when growth has declined and share their meagre income with the public. There was some uneasy stories about ASTRO's share performance post-listing as the price kept on tumbling as if people who acquired the shares before the listing were selling off. An ugly situation.
I am encouraged though Caring Pharmacy listed on 13 November at an IPO of 1.25 has gone on to RM1.71 an upside of about 37%. Unfortunately, I was overseas during the important pre listing period and was unable to participate. But all the same this is one company which, though small has managed to attract new capital simply due to its business model of dealing with everyday necessities. Its prospectus could also be credible with promises of business expansion etcetera. I have to check whether it has big cornerstone investors (which I doubt).
 |
| Before you decide to ride with any of them , please do your homework . |
There you go. The above IPOs give some indications on investors', particularly, big fund managers' sentiment. IPOs making money for investors? I would not be so sure and am certainly not going to rush into applying for them in the near future.
An article in the Edge on 25 Nov 2013 on IPOs in Malaysia mentioned the following :
"RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon recently said that investors should ride on the wave of Malaysia’s IPO market, but only after doing their homework on the new entrants."
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