Firms put plans for dual listing on hold

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Business Times - 03 Oct 2011

Firms put plans for dual listing on hold


Market volatility, unfavourable outlook prompt many to pull the plug

By LYNETTE KHOO

(SINGAPORE) With stock markets highly volatile, an increasing number of companies have started putting their dual-listing plans on the back burner.

Many of these had hoped that a dual listing would result in higher valuation for their stocks in the second market. But the experience of others before them have shown that this is not always the case.

A string of companies, mostly S-chips or Chinese firms listed in Singapore, are now back-peddling in their dual-listing track.

The latest to pull the plug is Combine Will International, which has decided to defer its plans for a dual listing given the market swings and unfavourable outlook.

The Chinese contract manufacturer said just over a week ago that it had no current plans to resume its dual-listing exercise. The conditional eligibility to list on Kosdaq in South Korea that it received in March has lapsed.

Last month, the China Fishery Group disclosed that it was delaying plans to seek a dual listing on Hong Kong's mainboard, again due to market conditions.

Sunmart Holdings, another S-chip, has postponed its dual-listing plans on South Korea's Kosdaq, citing 'the current fluctuating and unfavourable market conditions in Korea'.

Fuxing China, also an S-chip, said it has terminated its plan to issue Taiwan Depository Receipts (TDRs) in a secondary listing in Taiwan.

DMG & Partners Securities analyst Tan Han-Meng noted that the dismal performance of dual-listed counters have led to other companies shelving their dual-listing plans, and investors realising that these counters may already be fairly priced in Singapore.

So far, the attention shown by investors in the dual-listing markets has proven to be fleeting, dashing the hopes of traders who are out to make arbitrage gains.

Even the early birds such as China XLX and Z-Obee, which dual-listed in Hong Kong, have done poorly. Both their share prices and volumes have fallen sharply after a short-term surge on debut.

Roger Tan, vice-president of SIAS Research, does not think, however, that S-chips have given up completely on dual listings, especially since the negative perception of S-chips in Singapore is more entrenched than in Hong Kong and Taiwan.

'However, these markets have very active speculators and so the companies' stocks could suffer if they have not done enough to impress their brands on the minds of speculators,' he pointed out.

The cautious stance towards dual listing is not confined to S-chips.

Other non-S-chip companies are now also holding back their plans.

Lionel Lee, managing director of Singapore subsea services group Ezra Holdings, revealed recently that the company had planned for a dual listing in London.

It has now 'decided to hold fire for a bit' due to the market conditions, he said.

Singapore IT firm ECS Holdings is also not proceeding with its application for a TDR listing after assessing current market conditions and the expected take-up rate of its TDRs. Tech company UMS Group recently dropped its plan to pursue a dual listing in South Korea.

One group, however, is pushing ahead with its plans. CapitaMalls Asia (CMA), a unit of CapitaLand, is braving the bearish market conditions to proceed with its dual listing in Hong Kong by way of introduction of shares.

It is facilitating the transfer of shares traded here to Hong Kong via a batch transfer system, and trading in Hong Kong is expected to start from Nov 3.

Analysts note, however, that CMA is not raising equity. It is merely seeking to raise its profile and to be closer to China, which accounts for about 42 per cent of its total property portfolio.

'With or without the markets coming down, CMA has already committed their lawyers' fees and bankers' fees, among others. They are not diluting shareholders at this current price, so the decision to go ahead is probably based on that,' said CIMB analyst Donald Chua.

Mr Chua said he does not expect a major re-rating of CMA since the plan was already announced six months ago, and there is ample research coverage on CMA here.

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