Analyst says public tranche investors appeared to be out for quick buck but rushed for exit after price failed to keep rising

AZTECH Global ended its first day of trading at S$1.29, just a cent above its initial public offering (IPO) price.

 

Some 57.62 million shares changed hands, making it the fifth most traded counter by volume on the local bourse for the day.

 

The tech products manufacturer, which debuted on the Singapore Exchange' s (SGX) mainboard on Friday, had started strong - opening at S$1.37.

 

But after hitting an intra-day high of S$1.42 at 9.02am, its share price steadily declined over the course of the trading day.

 

The closing price on Friday gives Aztech a market capitalisation of S$998.1 million, roughly 21 times its earnings for FY2019.

 

The company makes smart lights, GPS-enabled pet collars and other Internet of Things (IoT) devices.

 

It had received subscriptions for 18.4 times the 3.5 million shares available in the public tranche of its IPO - 4,143 valid applications were received for 64.4 million shares.

 

Demand for the placement shares was 16.4 times the 64.6 million shares on offer.

 

Jeffrey Halley, senior market analyst at Oanda, said that the oversubscription of the " small" public tranche suggested that there was " a lot of speculative interest in the IPO, not because of Aztech' s fundamentals, but to stag the opening day and lock in some quick profits" .

 

He added: " The price action today has all the hallmarks of a lot of investors looking to make a quick buck. When the price didn' t keep rising today, they rushed for exit door, pushing the price down to just above the IPO price."

 

Meanwhile, commenting on the IPO, Rajiv Vijendran, Maybank Kim Eng' s regional head of investment banking and advisory, said Aztech' s successful listing " further enhances the diversity of SGX-listed companies and demonstrates the receptiveness of investors towards a proven business that continues to innovate and grow" .

 

UOB and Maybank Kim Eng Securities were the joint issue managers for the IPO.

 

The two, along with DBS, were also the joint global coordinators, bookrunners and underwriters for the IPO.

 

CGS-CIMB Research analyst William Tng said investors wanting exposure to IoT via the Singapore market now have the choice to invest in Aztech: " As a market, it' s always good to have more choices."

 

In an earlier interview with The Business Times, Michael Mun, executive chairman and chief executive of the company, said an IPO seemed appropriate after Aztech had focused its business on IoT and data communications.

 

Mr Mun had in 2017 taken Aztech Group private. Established in 1986, the group started out as a personal computer manufacturer.

 

It was listed on the secondary board, then known as Sesdaq, in 1994, and transferred to the mainboard in 2006.

 

Net proceeds due to the company, at S$188.6 million, will be used to expand and enhance manufacturing facilities enhance its research and development capabilities explore further growth in the IoT market and expand through mergers and acquisitions (M& A).

 

Jeremy Mun, executive director and chief operating officer of the company, said the group hopes to strengthen its market position and " expand to new areas that are complementary to (its) existing business" , such as precision engineering.

Analyst says public tranche investors appeared to be out for quick buck but rushed for exit after price failed to keep rising

AZTECH Global ended its first day of trading at S$1.29, just a cent above its initial public offering (IPO) price.

 

Some 57.62 million shares changed hands, making it the fifth most traded counter by volume on the local bourse for the day.

 

The tech products manufacturer, which debuted on the Singapore Exchange' s (SGX) mainboard on Friday, had started strong - opening at S$1.37.

 

But after hitting an intra-day high of S$1.42 at 9.02am, its share price steadily declined over the course of the trading day.

 

The closing price on Friday gives Aztech a market capitalisation of S$998.1 million, roughly 21 times its earnings for FY2019.

 

The company makes smart lights, GPS-enabled pet collars and other Internet of Things (IoT) devices.

 

It had received subscriptions for 18.4 times the 3.5 million shares available in the public tranche of its IPO - 4,143 valid applications were received for 64.4 million shares.

 

Demand for the placement shares was 16.4 times the 64.6 million shares on offer.

 

Jeffrey Halley, senior market analyst at Oanda, said that the oversubscription of the " small" public tranche suggested that there was " a lot of speculative interest in the IPO, not because of Aztech' s fundamentals, but to stag the opening day and lock in some quick profits" .

 

He added: " The price action today has all the hallmarks of a lot of investors looking to make a quick buck. When the price didn' t keep rising today, they rushed for exit door, pushing the price down to just above the IPO price."

 

Meanwhile, commenting on the IPO, Rajiv Vijendran, Maybank Kim Eng' s regional head of investment banking and advisory, said Aztech' s successful listing " further enhances the diversity of SGX-listed companies and demonstrates the receptiveness of investors towards a proven business that continues to innovate and grow" .

 

UOB and Maybank Kim Eng Securities were the joint issue managers for the IPO.

 

The two, along with DBS, were also the joint global coordinators, bookrunners and underwriters for the IPO.

 

CGS-CIMB Research analyst William Tng said investors wanting exposure to IoT via the Singapore market now have the choice to invest in Aztech: " As a market, it' s always good to have more choices."

 

In an earlier interview with The Business Times, Michael Mun, executive chairman and chief executive of the company, said an IPO seemed appropriate after Aztech had focused its business on IoT and data communications.

 

Mr Mun had in 2017 taken Aztech Group private. Established in 1986, the group started out as a personal computer manufacturer.

 

It was listed on the secondary board, then known as Sesdaq, in 1994, and transferred to the mainboard in 2006.

 

Net proceeds due to the company, at S$188.6 million, will be used to expand and enhance manufacturing facilities enhance its research and development capabilities explore further growth in the IoT market and expand through mergers and acquisitions (M& A).

 

Jeremy Mun, executive director and chief operating officer of the company, said the group hopes to strengthen its market position and " expand to new areas that are complementary to (its) existing business" , such as precision engineering.