Singapore listed IPOs have an unfortunate perception of being underperformers, and as such, subscription rates tend to be lukewarm. Here we have 5 IPOs that actually performed well from the onset before falling below its IPO listing price due to weak broader market sentiments, some of these names may also have material adverse incidents occurring to them in its short timeframe of being listed, thus affecting its share price, and pushing them to trade below water.
5 recent Singapore IPOs that have fallen below listing price
| Company | Ticker | Current price($) | IPO price ($) | Decline vs IPO price (%) | IPO date |
| Daiwa House Logistics Trust | SGX:DHLU | 0.72 | 0.80 | -10 | Nov 2021 |
| Econ Healthcare (Asia) Ltd | SGX:EHG | 0.24 | 0.28 | -14 | April 2021 |
| Aztech Global Ltd | SGX:8AZ | 0.81 | 1.28 | -37 | Mar 2021 |
| Nanofilm Technologies International Ltd | SGX:MZH | 2.33 | 2.59 | -10 | Oct 2020 |
| Digital Core REIT | SGX:DCRU | US$0.85 | US$0.88 | -3 | Dec 2021 |
1. Daiwa House Logistics Trust (SGX:DHLU)
We first reviewed Daiwa House Logistics Trust’s (DHLT) IPO listing here. As DHLT has only been listed for 7 months, one should expect its listing to be uneventful, however, a 7.4 magnitude earthquake was reported in North East Japan on 16 March 2022 near two of its properties, namely DPL Sendai Port and DPL Koriyama. Thankfully, there were no casualties and no impact on operations. There was only minor physical damage sustained to certain parts of the properties such as shutters, drainage pipes and walls.
DHLT’s share price actually increased from S$0.81 on the day of the earthquake to a high of S$0.87 less than one week later, before coming down as the higher interest rate environment led to an overall decline for most REITs listed on the Singapore Exchange.
The higher interest rate environment should not impact DHLT significantly in a direct manner as the interest rate environment in Japan is still low. However, it has been negatively affected by the weakening yen as DHLT does not hedge its assets since it relies on a natural hedge for its borrowings. Moreover, it also does not hedge the income, which are derived in yen.
DHLT reported 1Q22 DPU that was in line with its IPO forecast but with the yen continuing its depreciation path this entire year, it leaves to be seen if DHLT can continue performing to expectations. DHLT also reported a decline to its NAV of 6.5%, mainly due to the depreciating yen against the Singapore dollar.
The outlook for DHLT is expected to remain strong as there is robust demand for logistics facilities in Japan, supported by e-commerce trends. Furthermore, DHLT has been engaging its sponsor on potential acquisition targets which will likely be accretive to the portfolio and provide for higher returns for investors.
2. Econ Healthcare (Asia) Ltd (SGX:EHG)
Econ Healthcare which was relisted after going private in 2012 is the largest private nursing home operator with 9 nursing homes in Singapore. It also has a presence of 3 nursing homes in Malaysia and 1 in Chongqing, China.
Unfortunately, despite its short listing period, Econ Healthcare was not without its own drama. On 31 December 2021, it made a disclosure announcement for an investment in a Hong Kong listed company. This was not ECON Healthcare’s first investment as it previously invested in stocks to obtain better returns on its free cash on hand. The investment turned sour in less than two weeks and the company sold its investment, incurring a $3.35 million loss. The disposal was made to cut loss and enable the company to focus its resources on its core business instead of being bogged down by this investment.
Operationally, the company has been growing well as since its IPO in April 2021, It has opened 2 nursing homes in Singapore and it expects to open a second nursing home with a 280 bed capacity in Chongqing. China in the second half of 2022. Looking at the longer term, it also has a 732 bed nursing home in Jurong East, Singapore in the pipeline. This will bring total bed capacity to nearly 2.7k beds.
Its financial performance has been relatively strong as well, with revenue growth in FY22, however its net profit was lower as there were higher government grants and rent concessions in the previous year as a result of the pandemic. Despite its investing mishap, the company’s balance sheet continue to remain robust with a net cash position of $19m or 31% of market capitalisation.
Due to its good operational and financial performance, the share price increased at the onset post listing before plummeting from its investing mishap. With a positive longer term outlook, the stock should gradually recover should investors forgive/forget the investing mishap.
3. Aztech Global Ltd (SGX:8AZ)
Aztech, which also relisted after going private in 2017 is a technology company involved in design and manufacturing of data communications, Internet of Things(IoT), electronics and electrical products.
In the years before it relisted, it recorded very strong compounded CAGR revenue and profits growth as presented in the chart below. This was due to its successful reorganisation and transformation from an Original equipment Manufacturer (“OEM”) to a full fledged manufacturer with Original Design Manufacturing (“ODM”) and Joint Design manufacturing (“JDM”) capabilities. This enabled higher production volumes of IoT and data communication devices which currently forms nearly 96% of its total revenue.
Its share price debuted well, rising above its IPO price before falling more than 40% from its highest point as the global macroenvironment weakened, with vulnerabilities foreseen in the global supply chain.
In spite of that, its orderbook remain strong with $713 million in back orders as at mid April 2022. The majority of these orders is scheduled for completion within this financial year which would mean that Aztech is likely to see higher revenue for this financial year, baring any unforeseen circumstances such as increasing supply chain disruptions.
The IPO has also allowed the company to raise nearly $190 million, leaving it with a net cash balance of $187 million which would be used to expand its manufacturing facilities and enhance its R&D capabilities. This would allow Aztech to expand and advance its IoT and data communications product range. Aztech is also considering inorganic expansion through mergers and acquisitions.
These reasons mean that Aztech has grown from its FY21 base line and could be one company to look out for.
4. Nanofilm Technologies International Ltd (SGX:MZH)
Nanofilm has been positioning itself as a tech company as opposed to being merely a manufacturing company and believes it warrants tech valuation as it viewed itself to be a highly innovative market leader with proprietary advanced materials and nanoproducts.
Nanofilm did extremely well from its IPO, increasing approximately 286% to $6.67 before gradually falling below IPO price as it was impacted by negative news in the last one year. We previously covered Nanofilm’s IPO and in August 2021 when it released its 1H21 results communicating slower growth rates amidst a slew of key executive resignations, with its CEO & COO both leaving in a span of under three months.
Since then, Nanofilm has tried to manage investors’ expectations, with its founder, Dr Xu saying that if the company grows 20%, they will feel very happy because it’s a sustainable growth for the long term as opposed to a 40% growth which looks great in the short term but is not sustainable and may cause the company to implode.
Despite an uncertain operating environment so far in 2022 (the COVID-19 lockdown in Shanghai this year has disrupted its production operations and supply chain flow coupled with inflationary cost pressures), Nanofilm has done well in 1Q22 with a 27% revenue growth for 1Q22 and expects to continue from its position of strength for the rest of the year. Its Advanced Materials Business Unit has a strong pipeline visibility of revenue with positive developments for new applications in the automotive segment.
Sydrogen Energy, Nanofilm’s joint venture with Temasek, who is also a substantial stakeholder of the company, has also taken off, with its schedule for initial production on track. Revenue contribution is expected in the second half of 2022.
With Nanofilm now trading at 65% below its all time high and delivering on its track record of sustainable revenue growth, this means that investors who were previously considering the stock now have a better reason than before to do so.
5. Digital Core REIT (SGX:DCRU)
Digital Core also did well on the onset from its IPO as share prices rose 42% to US$1.25 before falling to a recent low of US$0.82. Being the second pure play data centre REIT after Keppel DC REIT and having the largeset global data centre REIT, Digital Realty as its sponsor, Digital Core’s IPO was well received.
It was fully leased at IPO to big name and stable customers such as Microsoft and Meta Platforms. However, in April 2022, its 5th biggest customer, Sungard Availability Services, which contributed approximately 7.1% of its total base rental filed for bankruptcy protection.
Thankfully, Digital Core’s strong sponsor quickly stepped in to provide a cash flow guarantee to Digital Core while Digital Core backfills the space hence ensuring minimal impact to Digital Core’s bottomline during this period.
Due to its asset quality, its first earnings results post listing also did well, with a distributable income that was 1.9% higher than the forecast provided in the prospectus. Operating in a robust environment and being integrated into its sponsor’s global operating platform means that Digital Core is able to service the biggest of names who would likely be at the forefront of any growth.
With a low gearing of 26%, Digital Core’s significant debt capacity means that it is also positioning itself for substantial scale via acquisitions which one should expect are accretive to the REIT and bring value to its unitholders.
Closing statement
With these companies not only trading below all time highs but also below their IPO valuations, it may look like there is an opportunity to purchase these stocks. Some of these companies have fallen due to its own mishaps, while others due to the broader macro environment.
Nevertheless, these companies are worth dedicating some time to look into as they are operationally strong, have strong financials and have a positive outlook and may very well be a stock worth buying at a price lower than many other investors.