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Singapore IPO market2018 mid-year report

Singapore IPO market | 2018 mid-year report

02Report as of June 30, 2018

Key observations 03

Overview of Singapore IPOs in H1 2018 04

IPOs on the SGX in H1 2018 05

Upcoming IPOs on the SGX 06

Overview of Singapore IPOs: geographical analysis 07

Overview of Singapore IPOs: industry analysis 08

Singapore companies: SGX or HKEx? 10

SGX developments in H1 2018 11

Macro factors 11


03

Key observations

01. Real estate listings continue to be the main driver for IPOs on the Singapore Stock Exchange (SGX), with Sasseur REIT and SLB Development Ltd. raising S$422 million and S$55 million respectively in the first half of 2018 , accounting for 87% of total IPO proceeds on the SGX.

02. Foreign based assets have a dominant presence on the SGX, which is evidently a preferred international market for listing. In the past five years, foreign companies listed on the SGX from developed countries such as Australia, Europe, United States of America, Japan and in recent years, China, typically raised between three to seven times more funds when compared to Singapore counterparts.

03. The healthcare industry has been on a bullish trend. In the recent five years, healthcare IPOs have shown an increasing price earnings ratio on listing, and have delivered strong growth, of an average 24.5% share price returns since their IPO.

04. In the first half of 2018, Singapore companies that sought listing on the Hong Kong Stock Exchange (HKEx) increased more than two-fold, from three (2017 H1) to seven (2018 H1). Singapore-based construction companies continue to show a preference for a listing on the HKEx, with 10 out of the 12 local domiciled construction companies choosing the HKEx in the past 5 years.

Singapore Stock Exchange (SGX)

Total IPO Proceeds87%Real estate listings

Sasseur REITSLB

Development

S$422 million

S$55 million


04

886

2,564

56 456

1,608

655 464

4,195

548 2,000

4,000

6,000

2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1

8,081 7,221

412 1,476 2,238 2,157 2,144

6,339

1,982

-

5,000

10,000

2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1

(Source: SGX)

S$'mil

S$'mil

Overview of Singapore IPOs in H1 2018Singapore saw 7 IPOs in the first half of 2018, with S$548 million in proceeds raised with total market capitalisation of S$1.98 billion. This compares to the 9 IPOs in the first half of 2017, which raised S$464 million with market capitalisation of S$2.14 billion.

IPO amount raised from 2014 to 2018 H1

Average IPO market capitalisation and funds raised (2014 –2018 H1)

IPO Market Capitalisation from 2014 to 2018 H1

Number of IPOs: H1 vs. H2 trend

2011 2012 2013 2014 2015 2016 2017 2018

H1 11 7 10 9 3 7* 9 7

H2 10 15 17 20 10 9 11 ?

* Excludes secondary listing of Top Glove Corporation Bhd

SGX’s domestic IPO activity and performance remains stable and strong in comparison to previous half-years’ performance.

Looking at the key exchanges in the region, there have been a general year-on-year decrease in 2018 H1:

• The Shanghai Stock Exchange had 37 IPOs in 2018 H1 which raised RMB 64.8 billion, resulting in a 70% decline from the 120 IPOs which raised RMB 76.7 billion in 2017 H1, due to a fall in listing approvals.

• The Stock Exchange of Hong Kong saw a 8.6% fall in funds raised, despite seeing a 44.1% increase in the number of IPOs from 68 to 98.

527.68

145

274.74

424.15

211

-

100

200

300

400

500

600

Average Market Cap Average Fund Raised

2014 2015 2016 2017 2018

S$'mil

(Source: SGX)


05

IPOs on the SGX in H1 2018With a Mainboard REIT and six Catalist listings in the first half of 2018, the Singapore IPO market raised 18% more in IPO proceeds period-on-period.

# Company Listing

platformDate of listing

IPO amount raised (S$'m)

Price Earning

ratio

IPO Market

Cap (S$'m)

IPO Offer Price (S$)

Share price as at

30-Jun-2018 (S$)

Share Price % change

Industry Country of operations

1LY Corporation Limited

Catalist 31-Jan-18 19.72 8.76 127.18 0.26 0.25 -6%Consumer Business

Malaysia

2 Ayondo Ltd Catalist 26-Mar-18 21 .00 N/A 130.69 0.26 0.093 -64%Financial Services

Europe

3 Sasseur REIT Mainboard 28-Mar-18 421.6 N/A 1,340.22 0.8 0.73 -9% Real Estate China

4SLB Development Ltd.

Catalist 20-Apr-18 54.74 9.79 209.99 0.23 0.195 -15% Real Estate Singapore

5

Asian Healthcare Specialists Limited

Catalist 20-Apr-18 10.79 127.80 66.70 0.23 0.265 15%

Life Sciences

and Health Care

Singapore

6

Hyphens Pharma International Limited

Catalist 18-May-18 15.60 10.40 78.00 0.26 0.22 -15%

Life Sciences

and Health Care

Singapore

7 Jawala Inc. Catalist 1-Jun-18 4.50 42.60 29.62 0.25 0.26 4%Energy and Resources

Malaysia

Total 547.95 1,982.40 -12.8%

Worst Performer Ayondo is the Singapore's 1st listed fintech firm on the Singapore Stock Exchage (SGX). Ayondo offers social trading services and brokerage services to both business to consumer (B2C) and B2B (business to business) clients through two proprietary platforms: WeTrade and Tradehub. Traders can view one another's portfolios, trading performance, as well as share and follow one another's investment strategies on a real-time basis.

Top Performer Notwithstanding the decrease in general Singapore Trade Index (STI) amidst global trade tensions, Asian Healthcare Specialists Limited, a Company comprising of four clinics under The Orthopaedic Centre, specialising in a range of general and sub-specialised orthopaedic, trauma and sports services, have managed a commendable price returns of 15% since its listing in April 2018.

The largest IPO in 2018 H1

(Source: SGX)


06

Upcoming IPOs on the SGX

The following details the IPO lodgements/registrations up to 30 June 2018 details below:

Mainboard/ CatalistLodgement/

Registration Date Estimated Amount

Raised (S$’mil)

PropNex Limited Mainboard 28-Jun-18(Registration)

60

DLF Holdings Limited Catalist 22-Jun-18 4

Synagie Corporation Ltd Catalist 29-Jun-18 211

Koufu Group Limited Mainboard 28-Jun-18 74

1 Estimated using average amount raised for the six Catalist IPOs in 2018 H1. (Source: SGX)

(Source: SGX)

Following the successful listing of APAC Realty Limited in the prior year, with share price returns of 33% since IPO, PropNex was successfully listed on 2 July 2018, raised $60 million from the IPO, at a market capitalisation of S$251 million.

Mainly due to the listing of Netlink NBN Trust which raised S$2.45 billion in July 2017.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

S$'mil

2016 H1 2017 H1 2018 H1

Actual Lodgements/Registrations as at 30 June 2018

Amount raised in 2016 H1, 2017 H1 and 2018 H1 (including lodgements/registrations)


07

Overview of Singapore IPOs: geographical analysis

Country of operations of Singapore IPOs (2014 - 2018 H1) Percentage of foreign issuers listing on SGX (2014 - 2018 H1)

The SGX continues to be an attractive listing destination of choice for both Singapore companies and foreign companies. As a well-established capital market in Asia Pacific, SGX remains a preferred international exchange for listing. In the last five years, there were 45 Singapore companies and 40 foreign companies that listed on the SGX.

Between 2014 to 2018 H1, near 47% listing in SG are from overseas issuers:

For the period from 2014 to 2018 H1, a total of S$11.4 billion was raised on the SGX, of which 56% were from foreign domiciled companies:

Overseas issuers from developed countries such as Australia, Europe, Japan and USA raised between 3-7 times more funds per IPO listing than Singapore and Southeast Asia countries. This shows keen interest in investors of the SGX market to the increasing exposure to overseas companies, in particular, Deloitte noted that the bulk of the cross border offering on the SGX were from the real estate based industries.

Singapore53%

Overseas47%

(Source: SGX)

Japan2%

Australia8%

Asia28%

Southeast Asia34%

China13%

Europe7%

United States8%

(Source: SGX)

0

5

10

15

20

25

30

35

40

45

50

-

100

200

300

400

500

600

700

800

Asia Australia China Europe SoutheastAsia

Singapore Japan UnitedStates

Average amount raised by country of operations

Average Amount Raised Number of IPOs

No. of IPOsS$’mil


08

Overview of Singapore IPOs: industry analysisIPO amount raised - by industry (2014 – 2018 H1)

12

19

6

22

11

1

3

11

$6,145

$2,506

$1,552

$774 $213 $16

$133 $94

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

0

5

10

15

20

25

Real Estate Consumer Business

Energy & Resources

Life Sciences & Health Care

Public Sector Financial Services Industrial Products

2014 2015 2016 2017 2018 H1 Amt raised

(Source: SGX)

Technology, Media & Telecommunications

(S$‘mil)No. of IPOs

The Real Estate sector has been dominating Singapore's capital markets, having raised S$6.1 billion which accounted 54% of the total IPO amount raised in the past five years.

In 2018 H1, this trend has been relatively consistent, with Real Estate accounting for 87% of the IPO amount raised.

Technology, Media and Telecommunications and Consumer Business accounted for 22% and 14% of the total amount raised respectively.


09

Price Earnings

3.8 4.0 12.5

33.7

69.1

-50%

0%

50%

100%

150%

200%

0

20

40

60

80

2014 2015 2016 2017 2018

P/E ratio (on IPO)

% gain / loss

(Source: Bloomberg)

Price Earnings (on IPO): 2014 - 2018

2014-2018 Healthcare Sector - P/E ratio vs Price Return (annual)

Average Share Price Returns (%) since IPO

A further look into the healthcare industry:

Share price returns (since IPO): 2014 - 2018

IPO appetite is up among Healthcare firms, with at least 1 healthcare IPO every year since 2014, with all indicators out-performing the market.

The Life Sciences and Healthcare sector appears to be the industry most highly valued by investors, with the highest average PE ratio at IPO at an average of 20.8 times.

Since listing, the Healthcare sector has shown strength, outperforming most other sectors in share price returns, including traditional ones such as Financial Services, Energy & Resources and Industrial Products.

Generally, price earnings of healthcare companies on the SGX are traditionally listed at between 20 to 30 times earnings. The healthcare companies have performed well, averaging 24.5% return on share price return since their IPO. This compares with the real estate sector which performed slight below average at -2.3% return in the same period.

Healthcare companies such as HC Surgical Specialist Limited, Singapore O&G Ltd, and TalkMed Group Limited, listed in 2016, 2015, 2014, have share price return of 150%, 38% and 200% respectively. More recently, Asian Healthcare Specialists Limited, listed on 20 April 2018, had a high PE ratio as at IPO of 127x, which is an indication that investors are bullish on the Healthcare sector.

(80)

(60)

(40)

(20)

-

20

40

60

80

2014 2015 2016 2017 2018(Source: SGX)

-80%

-30%

20%

70%

120%

2014 2015 2016 2017 2018 (Source: SGX)

Real Estate

TMT ConsumerBusiness

Energy &Resources


FinancialServices

Industrial Products

Public Sector

Real Estate

TMT ConsumerBusiness

Energy &Resources


FinancialServices

Industrial Products

Public Sector

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00% 24.52%

-2.29%

Average Share returns for HealthcareAverage Share returns for Real Estate (Source: Bloomberg)


10

Singapore companies: SGX or HKEx?Since 2015, a total of 30 Singapore companies have been successfully listed on the Hong Kong Exchange (HKEx). The recent years have seen a rise in Singapore domiciled companies seeking a listing on the HKEx.

It is interesting to note that the construction industry played a key role in fueling this trend. Of the 30 Hong Kong listings from Singapore companies, one-third were construction-related companies. Of the 12 Singapore construction companies that went for an IPO in the last five years, 10 chose HKEx and two chose SGX. The average funds raised and market capitalisation for each IPO were similar in both exchanges.

Some reasons for Singapore construction companies to list in Hong Kong:01. the price-earnings (“PE”) of construction-related companies listed on the HKEx were usually double digit, while construction-related

firms listed on the SGX managed only single-digit PE;02. to facilitate plans to expand operations into the Greater China Market; and03. to tap on the multi-trillion-dollar institutional investor market in China.

0 0 01

2

43

13

77 7

1

5

3 3

78

4

0

2

4

6

8

10

12

14

2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1

SGX

HKEx

Source: SGX, HKEx and Bloomberg

No. of IPOs

In the first half of 2018, the number of Singapore companies that sought a listing on HKEx increased from 3 (2017 H1) to 7 (2018 H1).

SG companies listed on the SGX vs HKEx (2014 - 2018 H1)

Singapore company IPOs on SGX vs HKEx (2014 - 2018 H1) Singapore construction-related listings on SGX and HKEx (2014 - 2018 H1)

02468

1012141618

2014 2015 2016 2017 2018 H1

HK Total SGX Total HK Construction SGX Construction

-

5

10

15

20

25

SGX HKEX

Average market cap (S$ mil)

Average fund raised (S$ mil)

S$'milS$'mil

(Source: SGX and Bloomberg) (Source: SGX and Bloomberg)


11

“At Deloitte, we expect to see a continuing healthy pipeline of domestic and cross border IPOs in spite of global uncertainties in relation to the escalating trade tensions between US with China, Europe and Canada.

With the introduction of dual-class shares structures, SGX is now in a position to support high-growth companies and attract blockbuster listings from around the world, while broadening investment options for investors and adding to the vibrancy of Singapore’s capital market. We are cautiously optimistic that Singapore’s IPO market will continue to do well in 2018 H2.”

Ms Tay Hwee Ling, Global IFRS and Offerings Services Leader, Deloitte Singapore, 5 July 2018

SGX consults on proposed changes to quarterly reporting requirements -11 January 2018

SGX collaborates with fintech firm Smartkarma to roll out C-Suite Pilot Program - 12 March 2018

SGX RegCo launches SGX Fast Track programme for companies with good corporate governance standing - 4 April 18

SGX consults on Listing Rule changes consequential to Code of Corporate Governance Review - 16 January 2018

After two rounds of public consultation on proposed safeguards for dual class share listings, SGX rolled out the implementation on 26 June 2018.

Singapore Exchange (SGX) and Tel-Aviv Stock Exchange (TASE) Establish Partnership to Grow Cross-Border Capital Raising Opportunities for Technology Companies – 14 May 2018

SGX developments in H1 2018

Macro factors

Macro factors that may have an impact on the Singapore capital market

Uncertain policies and directives from U.S. administration

Singapore GDP is expected growth of 3% for full year 2018

Iran sanctions by the U.S. affecting oil prices

Trade Tariffs between USA and China, EU and Canada

Competition from regional and global bourses

Fed Rate hikes (two hikes in March and June 2018, with two more hikes expected in 2018)

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.

Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our network of member firms in more than 150 countries and territories serves four out of five Fortune Global 500® companies. Learn how Deloitte’s approximately 264,000 people make an impact that matters at www.deloitte.com.

About Deloitte Southeast AsiaDeloitte Southeast Asia Ltd – a member firm of Deloitte Touche Tohmatsu Limited comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam – was established to deliver measurable value to the particular demands of increasingly intra-regional and fast growing companies and enterprises.

Comprising approximately 340 partners and 8,800 professionals in 25 office locations, the subsidiaries and affiliates of Deloitte Southeast Asia Ltd combine their technical expertise and deep industry knowledge to deliver consistent high quality services to companies in the region.

All services are provided through the individual country practices, their subsidiaries and affiliates which are separate and independent legal entities.

About Deloitte SingaporeIn Singapore, services are provided by Deloitte & Touche LLP and its subsidiaries and affiliates.

Deloitte & Touche LLP (Unique entity number: T08LL0721A) is an accounting limited liability partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A).

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Singapore IPO market 2018 mid-year report · Real estate listings continue to be the main driver for IPOs on ... follow one another's investment strategies on a real-time basis. Top