Here are the latest new IPOs in Singapore – Should you invest in them?
Singapore has seen a good number of IPOs in the small to mid-cap segments as well as REITS for the past 6 months from the end of 2017 to current 2018. Companies undergoing IPO usually involves founder or co-founders or founding shareholders ceding control over a portion of their shares to the investing public in order to tap the funds from institutional investors and retail investors in order to raise funds for further expansion.
The benefits of going public include raising their public profile in the investing community for future ease of fund raising. Successful listing in Singapore indicates the company’s financials are prepared in accordance to international financial accounting standards which gives public confidence on the governance track record by the key management of the company. For investors, investing in companies that had just gone listing in recent years may give them the opportunity to ride on the future growth potential of newly listed companies.
Investors who have been monitoring the IPO market may be alerted to upcoming IPOs and they can very well subscribe the shares at IPO subscription price. In this segment, we bring to focus the new listed companies surfacing in the SGX market that are available for retail investors to consider investing through the secondary market as well as upcoming IPOs that have yet to see trading action.
RE&S Holdings
First up in the list is RE&S Holdings Limited. It is Japanese F&B retail player with over 72 F&B outlets, among them local favourite Kuriya and Ichiban Boshi outlets for Japanese cuisine. The IPO has garnered strong institutional investor support namely Temasek linked asset management arm Heliconia Capital Management and Lion Global Investors, whom had placed its IPO shares on behalf of its managed investment fund. A total of S$10 million was raised which are targeted for new F&B outlets opening both in Singapore and Malaysia. The share price is currently hovering around its IPO price of 22 cents per share, and trading at an undemanding valuation of 14 times historical earnings. 2nd quarter earnings for period ended 31 Dec 2017 was within projection, with revenue up 3% and earnings down 21% due to one off IPO expenses. The Group is in expansion mode with opening of new outlets in popular neighbourhood malls.
No Signboard Holdings
Next up on the list is No Signboard Holdings Limited. It is a seafood restaurant chain owner with 3 main outlets under the brand No Signboard Seafood. The F&B player has pledged to invest almost 60% of IPO proceeds, amounting to an absolute amount of S$10 million for opening a new brewery in Indonesia, solely for producing its specialty in house Danish beer Draft Denmark. 2 new restaurants are slated to launch in 2H 2018 utilising the balance 30% IPO proceeds. Its share price is currently trading at 20 cents per share, down from its IPO price of 28 cents per share. It is currently trading at around 10 times historical earnings. Investors with keen F&B insights may invest into the company’s future prospects at an attractive entry price well below its IPO benchmark value.
Clearbridge Health
Next up on the list would be Clearbridge Health Limited. The company made its debut in SGX on 18 December 2018 via placement method to institutional investors, where shares are made available for trading in the SGX Catalist Board but without any fund raising from retail investors. The company is engaged in specialized healthcare services, which include specialized health screenings and lab testing procedures for cancer detection. The niche healthcare service provider’s business model may be a turn off for many retail investors which deemed it complex with no clear revenue flows. Nevertheless, share price had been trending upwards at current level of 55 cents per share. Its full year loss for FY2017 was dragged down by fair value loss in its associate company. Armed with S$ 27million cash war chest, Clearbridge may be on the hunt for medical centres to grow its earnings and investors may take a closer look on this specialized healthcare player.
LY Corporation
Next up would be LY Corporation Limited, the first listed company to IPO on SGX Catalist Board in January 2018. It is a Malaysia based wooden bedroom furniture manufacturer, exporting to overseas markets such as US, Europe and Middle East. The IPO proceeds had been planned for expanding sales network in China, acquisition of new machinery and construction of new manufacturing facilities. The share price is currently trading at above its IPO price at 30 cents per share, at a P/E multiple of 10 times historical earnings. Investors may coattail on the strong institutional shareholder backing behind LY Corporation, namely Pheim Asset Management and Geo Energy Resources. 80% of sales originate from United States, which has been enjoying good economic growth and higher consumer spending.
Ayondo
Ayondo Ltd, one of the first public fintech companies to go public, made its appearance in SGX on 26 March 2018 at an IPO price of 24 cents per share. Its business model mirrors that of conventional brokerage houses which offers trading platforms and trading of financial products such as forex and CFDs, and sources revenue from trading commissions. However, a new social flavor is added where trading is made social, where customers are able to ride on other market participants trading history and track record. Its share price has taken a beating, down significantly from its IPO price at 15 cents per share. With higher financial literacy and larger young affluent customer coming onboard to financial trading, Ayondo Ltd may be able to prove its worth in distinguishing itself among the big boys of retail brokerage business such as Phillip Capital.
Sasseur REIT
Sasseur REIT is the latest addition to the large number of REIT listings in SGX. It is a pure play China retail REIT, with main properties comprised of 4 outlet malls in 2nd tier China cities. The REIT counts e-commerce giant JD.com as its anchor shareholder. Its annualized forecasted dividend payout will translate into an effective yield of 7.5% at current market prices of 80 cents per share, almost comparable to other top yielding dividend and REIT stocks, making it an attractive buy among yield hungry investors looking for stable income producing assets.
SLB Development
SLB Development, a spin off of listed construction outfit Lian Beng Group, is the first property developer to IPO on the SGX Catalist Board in 2018, where trading just began in 20 April 2018. The IPO proceeds were slated for new land acquisitions, general working capital and funding of property development projects. Its project pipeline is well diversified among varied sectors, namely residential and industrial properties. It has set sights on expanding to other overseas region, diversifying away from its main Singapore home market. The P/E ratio is undemanding at 13 times earnings, with health project pipelines to sustain earnings in the coming years.
Asian Healthcare Specialists
The latest addition to the SGX IPO family in 2018 is Asian Healthcare Specialists, debuting on 20 April 2018 at 34 cents a share. The healthcare service provider operates 4 clinics, with specialized medical practitioners offering orthopaedic and sports surgery related medical procedures. Healthcare services are in demand in the current ageing population scenario. The IPO provides investors an additional healthcare stock selection for investment.
Qualitas Medical Group
Upcoming IPOs that have yet to be confirmed include Qualitas Medical Group. The healthcare provider has ownership of 270 clinics, 27 dental clinics and 12 medical imaging centers across Australia, Malaysia, Singapore and India. It is another healthcare stock addition to SGX, joining the likes of Raffles Medical, IHH, Q&M Dental Group and Singapore Medical Group. Pricing details are unavailable at this juncture, but revenue and profits saw stable growth at about 6% respectively from FY15 to FY16.
Kinderworld Education Group
Another IPO that is coming onboard would be KinderWorld Education Group, a pre-school center with branches in Vietnam and across South East Asian countries. School operators and education sectors are thriving industries with higher education spending in this current information age. KinderWorld would be the latest addition to the SGX listing family, following on the heels of MindChamps pre-school.
Why invest in newly listed companies?
Investors considering shares that has just undergone IPO may be able to reap the benefits of post IPO coverage where investors under-appraise the future growth prospects due to limited analyst coverage or the absence of long shareholder-friendly financial track records.
However, It is best to go back the underlying fundamentals of the company by analyzing the historical financials as a basis for future growth. Investors with strong foresight may be able to reap the potential higher returns offered by these new listings and avoiding IPOs whose share price shot way above its peers and business fundamentals.
(By Chee Hoong Chan)
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