Big Southeast Asian IPOs See Mixed Debuts On Outlook Worries

Shares in the Philippines’ second-largest IPO and Malaysia’s largest offering in more than three years had a mixed debut on Monday, as analysts pointed to expansion concerns in pandemic-hit markets.

Philippine fibre broadband provider Converge ICT Solutions Inc’s shares slumped as much as 11.2% and ended 9.4% lower, while Malaysian home improvement retailer MR D.I.Y. Group Bhd briefly fell as much as 6.25%, but later rose to trade above the IPO price.

The Southeast Asian IPO market has been hit by underperforming stocks and currencies, but companies in the region have raised $7.1 billion so far this year through IPOs, led by Thailand, up 21% from the same period a year ago, according to data from Refinitiv.

April Lee Tan, research head at COL Financial in Manila flagged Converge’s IPO price as expensive.

“I like the growth story of the company, except the IPO price. They are vulnerable to missteps, like if the execution is not as good as expected,” she said.

TA Securities’ consumer sector analyst Jeff Lye said MR D.I.Y. shares performed quite well amid domestic concerns about a rise in COVID-19 cases and tighter movement restrictions.

“If COVID-19 were to go out of control and they may be forced to close down or retail traffic in malls could decline substantially, that would hit their revenue,” he said.

Converge, which raised $600 million, counts Canadian pension fund OMERS and Macquarie among its cornerstone investors. MR D.I.Y. raised $362 million, attracting funds under BlackRock Inc, JPMorgan Asset Management and AIA.

Converge will use the proceeds to roll out its network to tens of thousands of local communities, while MR D.I.Y. aims to repay bank loans.

“Our funds are secured until 2025. We don’t need to come back to the exercise anymore, Dennis Anthony Uy, Converge CEO, told ANC news channel.

MR D.I.Y. CEO Adrian Ong told a virtual news conference that the company was on track to achieve a target of adding 307 new stores in the next two years to its existing 674 stores in Malaysia and Brunei.

Reuters