10/2014-
According to SGX, the recent listing of Versalink Holdings have brought the number of IPOs in the current year to 11 as well as 2 RTOs on the Catalist Board. These 11 IPOs have a combined market capitalization of $1.8 billion.
The Catalist Board provides the avenue for fast-growing companies seeking to raise funds the capital market. There are no quantitative entry criteria required for listing, only that the company listing on Catalist must be brought to list by approve Sponsors. Sponsors determine the suitability of listing applicants, but what determine the success upon IPO for these companies?
I found it interesting when I scanned the performance of these companies post-IPOs. According to SGX data as at 24 Sep 2014, with the exception of Kim Heng Offshore & Marine, Terratech Group and SMJ, all other IPOs on Catalist Board have risen well above their IPO prices. In fact, the top 3 winners have posted fairly good returns – QT Vascular is up 50%, Alliance Minerals is up 52.2% while the star has certainly burst for Starburst Holdings which is up 91.9%.
Clearly, the smart investor can take a look at Catalist Board companies to pick a portfolio of winning stocks. However, the investor should be cognizant of a few important parameters –
The market capitalization of most catalyst companies are below $200 million, especially those listed in 2013.
The risk is certainly higher and thus one should incorporated higher risk premiums in calculating the fair values of these stocks.
Caveat emptor that comes with such endeavours certainly ring loud and clear as there is hardly any commonality in characteristics among the winners from 2014 and 2014 Catalist Batch. The industries that they operate in is as wide as kitchen ware to aerospace and defense.
Comments