Catalist index up 16% since January
While the big players are listed on SGX mainboard, Catalist is home to smaller and fast-growing companies
At first glance, it is puzzling to think that a China-based dental services firm, a large-scale concert organiser and a local coffee shop chain would have anything in common.
Aoxin Q & M Dental Group, concert promoter UnUsUal and coffee shop operator Kimly are the three newest companies to be listed on the Singapore Exchange's (SGX) Catalist Board this year.
Yesterday, Aoxin debuted at $0.23, up from its inital public offering (IPO) price of $0.20. It closed at $0.24, with more than 15.5 million shares traded.
The other Catalist board stocks listed this year have also got the attention of many investors. (See report at right.)
While the local bourse's mainboard is for established businesses to gain greater access to capital and liquidity, the Catalist is an option for smaller and potentially high-growth companies.
The FTSE ST Catalist Index - which tracks fast-growing companies listed on the junior board - has jumped 16 per cent since the start of this year, performing better than the 9.8 per cent of the Straits Times Index, reported The Straits Times yesterday.
The most recent 10 stocks to debut via IPO on Catalist have averaged 56.2 per cent returns from their respective initial offer prices, according to an SGX report on April 10.
Of the 10, there were nine gainers and one decline, and the median return of these 10 stocks was at 43.6 per cent.
Aoxin Q & M Dental Group, concert promoter UnUsUal and coffee shop operator Kimly are the three newest companies to be listed on the Singapore Exchange’s Catalist Board this year.
With the listing of Aoxin yesterday, the total number of companies listed on Catalist now stands at 192, with a combined market capitalisation of more than $12 billion, according to an SGX report yesterday.
The quotation, trading and settlement processes of a stock listed on Catalist are identical to that of a mainboard-listed stock.
But investors should also note that companies listed on Catalist may carry higher investment risk compared to larger and more established companies listed on the mainboard.
For one, local investors are not allowed to use their CPF funds to invest in Catalist firms listed after 2008.
The CPF Board had previously allowed its members to invest in firms listed on Sesdaq, Catalist's predecessor.
When the Catalist was established in 2008, the CPF Board extended this arrangement to Sesdaq-listed firms that crossed over to Catalist if their counters had already qualified as CPF trustee stocks.
But the CPF Board decided to adopt a wait-and-see attitude towards newly-listed Catalist firms, noting that these firms are "in their earlier stages of development with limited track record".
This uncertainty could arise from the lack of a quantitative entry criteria for a Catalist listing, compared to the stricter requirements for companies seeking to be on the mainboard.
For instance, a mainboard listing applicant requires a three-year operating track record, unless the listing is based on market capitalisation of not less than $300 million.
But a check and balance system still exists - businesses seeking a primary listing on Catalist must be brought to list by approved sponsors.
ADVISE & GUIDE
The sponsor's job is to assess the firm's suitability to list, and it will advise and guide the company through the listing process.
The company must also maintain the sponsor at all times after listing.
Quoting Catalist offer documents, an SGX report said: "Investors should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with professional advisers."
This year's Catalist stocks have strong track records and potential growth.
The three other stocks listed this year - UnUsUaL, Kimly and Malaysia-based paint company Samurai 2K Aerosol - have foundations that track back to the 1990s.
Aoxin is one of the leading providers of private dental services, and dental equipment and supplies in Liaoning province, in northern China, and is a spin-off from SGX-listed Q & M Dental Group, which will own 43.9 per cent of its shares.
An SGX My Gateway report on Tuesday also noted that the company will be able to ride on the wave of China's growing healthcare expenditure, which is projected to grow at an average rate of 11.8 per cent a year from 2014 to 2018, reaching US$892 billion (S$1,242 billion) by next year.
Dr Shao Yongxin, executive director and group chief executive officer of Aoxin Q & M Dental Group said in a press release: "As the first SGX-listed private dental group from the PRC, we believe that this will enhance our public image locally and internationally.
"With our continued progress as one of the leading private dental groups in northern PRC, we are committed to create long-term value to our stakeholders by providing superior dental services to our customers, as well as enhancing our capabilities in the distribution of dental equipment and supplies."
Their share prices have doubled
UnUsUal, which was behind the concerts of rock band Air Supply and Hong Kong superstar Jacky Cheung earlier this year, commenced trading at an initial public offering (IPO) price of $0.20.
After a vibrant session with 13 million shares changing hands, it closed at $0.435 by the end of that day, reported The Straits Times.
Yesterday, the shares closed at $0.465.
Kimly, the first kopitiam operator to list on the SGX with 64 food outlets and 121 food stalls across Singapore, had a bustling debut.
Its entire 173.8 million share offering was 8.3 times subscribed, with the public tranche of 3.8 million shares subscribed 336 times.
The IPO raised $43.5 million in gross proceeds, reported The Straits Times.
Yesterday, it closed at $0.45, nearly double its IPO price of $0.25.