According to the ASX websites, www.asx.com.au, there are 270 new listings in the calendar year of 2007. However, even ASX makes mistake, I have picked 3 more companies listed during the year which was not included in its listing, Beadell Resources Ltd (BDR), Hexima Ltd (HXL), and KUth Energy (KEN). This makes total new listings to be 273 companies.
However, after a close scrutiny of these 273 companies, I have removed about a dozen companies from the list, as I do not consider them as a genuine IPO listing. These are either demerged companies spun off from another listed companies, or some other corporate restructure that do not require capital raising, sometimes is just a name change to be relisted.
For example, Crown Ltd (CWN) spun out from PBL, while it is a new listing, it was not an IPO in true sense. The relist of Macquarie Group Ltd, BBI EPS Ltd was set up by Babcock & Brown as part of purchase consideration for Alinta, and other similar corporate restructures was for my analysis to be excluded from the final list. The only exception I made was for demutualised of health fund NIB. The final number IPOs in 2007 is 260 companies.
I used close price of 31 December 2007 to assess the return. Out of 260 companies floated, 124 companies are trading above their issue prices, 126 companies are below the water, with 10 companies stayed at their issue price. So you have roughly 1 in 2 chances to make money.
Interestingly, if you sold your IPO shares on the 1st day of trading, 182/260=70% appreciated, with average return of a whooping, 44.84%, 17 remained steady or untraded; and 61 companies with negative return average of 11.80%, only 14 stocks depreciated more than 20% on the 1st day of trading.
With the assumption that if you could get into every single IPO, and then sold the shares on 1st day of trading, you will be making average of 28.62% return. If the average cycle of listings from taking subscription to your share disposal on the 1st day of trading takes 3 month, then annualised return is a whooping 114.48% return, fancy that performance as a fund manager. The year to date performance of all IPOs is average of 27.91%.
About 44 companies are in the energy / utilities sector, and 121 in metal / mining sector; or 165 (63.46%) companies combined (almost two thirds) have focus on resources / mining industries. They delivered an impressive average return of 44.04%. 8 biotech companies (-30.29%), 5 in healthcare equipment and services (23.68%); 6 IT companies (29.02%), 5 provides telecommunication/ ISP/ contents services (-24%). The industrial / capital good provides are often mining/resources industry related or focused. Most of these preformed very well in the IPO, 8/13 made an average return of 50.53%, the December listing has diluted average return for 13 companies to 28.86%, and I have included Metals Finance Corp (MFC) in the analysis.
An analysis on the timing of listing is very interesting. A whooping 51 companies were listed in the month of December to beat the Christmas/NY break. While 1st 3 months were quietest, only 11, 13 and 12 companies listed for Jan, Feb and March respectively. The August (21) market correction has reduced IPO activities for Sep and Oct to mere 15 and 16 respectively, compared to 30 and 25 companies listed in Jun and July. To analyse the monthly performance based on 1st day trading, of course August market crash which led September to be a miserable month for IPOs, with a mere average return of just 1.01% for 15 stocks, 7/15 made loss on debut. Whereas other months like January, February, April, October all delivered an attractive average return on 1st day of trading over 40%. December, August were flat months, delivered average return on 1st day of trading just 16.16% and 15.06% respectively.
The biggest float for 2007 is of course drilling contractor Boart Longyear (BLY), worth 2.335 billion, followed by RAMS (RHG) 695 million, Ellerston GEMS Fund (EGF) 600 million and Platinum Asset Management (PTM) 561 million. The smallest float was Metminco (MNC) 1.35 million. However, bigger does not necessarily mean better. 35 companies raised in excess of $50 million, delivered a dismal return of 4.41% on average. Whereas 108 companies raised $5 million or less, produced an impressive average return of 54.32%.
Finally, let’s have a look at IPO winners and losers in 2007.
Top 12 Star Floats in 2007 (All in the Mining & Minerals Industry except WHC in Energy (Coal) sector)
ASX Code|Issue Price|1st Day|31-Dec-07|Return (1st Day)|Return-Year End
WLF 0.20 0.84 2.15 320.00% 975.00%
CUR 0.25 0.62 2.03 148.00% 712.00%
RMT 0.25 0.85 1.8 240.00% 620.00%
YTC 0.25 0.77 1.25 208.00% 400.00%
DMM 0.20 0.3 0.93 50.00% 365.00%
PIM 0.20 0.58 0.9 190.00% 350.00%
CAV 0.20 0.26 0.9 30.00% 350.00%
NIP 0.20 0.22 0.85 10.00% 325.00%
TRJ 0.20 0.35 0.8 75.00% 300.00%
GXY 0.20 0.25 0.66 25.00% 230.00%
MAV 0.20 0.34 0.65 70.00% 225.00%
WHC 1.00 1.7 3.24 70.00% 224.00%
20 Dog Floats in 2007 (All have negative returns exceeding 50%)
ASX Code|Issue Price|1st Day|31-Dec-07|Return (1st Day)|Return-Year End
ENI 0.50 0.25 0.02 -50.00% -96.00%
RHG 2.50 2.49 0.295 -0.40% -88.20%
EOL 1.00 1.135 0.19 13.50% -81.00%
MRB 0.20 0.17 0.06 -15.00% -70.00%
AHI 3.81 3.96 1.35 3.94% -64.57%
HCG 0.20 0.135 0.071 -32.50% -64.50%
BVP 0.25 0.27 0.09 8.00% -64.00%
CCY 0.35 0.28 0.135 -20.00% -61.43%
LPM 0.20 0.22 0.086 10.00% -57.00%
IAW 0.50 0.38 0.22 -24.00% -56.00%
PUN 0.20 0.265 0.088 32.50% -56.00%
ROG 0.20 0.18 0.09 -10.00% -55.00%
LMP 0.20 0.21 0.09 5.00% -55.00%
EEE 0.35 0.3 0.16 -14.29% -54.29%
ACW 0.50 0.41 0.235 -18.00% -53.00%
AGU 0.20 0.16 0.095 -20.00% -52.50%
MNW 0.20 0.185 0.095 -7.50% -52.50%
CLD 0.20 0.16 0.099 -20.00% -50.50%
MSAS 1.00 1.02 0.5 2.00% -50.00%
AUQ 0.25 0.375 0.125 50.00% -50.00%
However, after a close scrutiny of these 273 companies, I have removed about a dozen companies from the list, as I do not consider them as a genuine IPO listing. These are either demerged companies spun off from another listed companies, or some other corporate restructure that do not require capital raising, sometimes is just a name change to be relisted.
For example, Crown Ltd (CWN) spun out from PBL, while it is a new listing, it was not an IPO in true sense. The relist of Macquarie Group Ltd, BBI EPS Ltd was set up by Babcock & Brown as part of purchase consideration for Alinta, and other similar corporate restructures was for my analysis to be excluded from the final list. The only exception I made was for demutualised of health fund NIB. The final number IPOs in 2007 is 260 companies.
I used close price of 31 December 2007 to assess the return. Out of 260 companies floated, 124 companies are trading above their issue prices, 126 companies are below the water, with 10 companies stayed at their issue price. So you have roughly 1 in 2 chances to make money.
Interestingly, if you sold your IPO shares on the 1st day of trading, 182/260=70% appreciated, with average return of a whooping, 44.84%, 17 remained steady or untraded; and 61 companies with negative return average of 11.80%, only 14 stocks depreciated more than 20% on the 1st day of trading.
With the assumption that if you could get into every single IPO, and then sold the shares on 1st day of trading, you will be making average of 28.62% return. If the average cycle of listings from taking subscription to your share disposal on the 1st day of trading takes 3 month, then annualised return is a whooping 114.48% return, fancy that performance as a fund manager. The year to date performance of all IPOs is average of 27.91%.
About 44 companies are in the energy / utilities sector, and 121 in metal / mining sector; or 165 (63.46%) companies combined (almost two thirds) have focus on resources / mining industries. They delivered an impressive average return of 44.04%. 8 biotech companies (-30.29%), 5 in healthcare equipment and services (23.68%); 6 IT companies (29.02%), 5 provides telecommunication/ ISP/ contents services (-24%). The industrial / capital good provides are often mining/resources industry related or focused. Most of these preformed very well in the IPO, 8/13 made an average return of 50.53%, the December listing has diluted average return for 13 companies to 28.86%, and I have included Metals Finance Corp (MFC) in the analysis.
An analysis on the timing of listing is very interesting. A whooping 51 companies were listed in the month of December to beat the Christmas/NY break. While 1st 3 months were quietest, only 11, 13 and 12 companies listed for Jan, Feb and March respectively. The August (21) market correction has reduced IPO activities for Sep and Oct to mere 15 and 16 respectively, compared to 30 and 25 companies listed in Jun and July. To analyse the monthly performance based on 1st day trading, of course August market crash which led September to be a miserable month for IPOs, with a mere average return of just 1.01% for 15 stocks, 7/15 made loss on debut. Whereas other months like January, February, April, October all delivered an attractive average return on 1st day of trading over 40%. December, August were flat months, delivered average return on 1st day of trading just 16.16% and 15.06% respectively.
The biggest float for 2007 is of course drilling contractor Boart Longyear (BLY), worth 2.335 billion, followed by RAMS (RHG) 695 million, Ellerston GEMS Fund (EGF) 600 million and Platinum Asset Management (PTM) 561 million. The smallest float was Metminco (MNC) 1.35 million. However, bigger does not necessarily mean better. 35 companies raised in excess of $50 million, delivered a dismal return of 4.41% on average. Whereas 108 companies raised $5 million or less, produced an impressive average return of 54.32%.
Finally, let’s have a look at IPO winners and losers in 2007.
Top 12 Star Floats in 2007 (All in the Mining & Minerals Industry except WHC in Energy (Coal) sector)
ASX Code|Issue Price|1st Day|31-Dec-07|Return (1st Day)|Return-Year End
WLF 0.20 0.84 2.15 320.00% 975.00%
CUR 0.25 0.62 2.03 148.00% 712.00%
RMT 0.25 0.85 1.8 240.00% 620.00%
YTC 0.25 0.77 1.25 208.00% 400.00%
DMM 0.20 0.3 0.93 50.00% 365.00%
PIM 0.20 0.58 0.9 190.00% 350.00%
CAV 0.20 0.26 0.9 30.00% 350.00%
NIP 0.20 0.22 0.85 10.00% 325.00%
TRJ 0.20 0.35 0.8 75.00% 300.00%
GXY 0.20 0.25 0.66 25.00% 230.00%
MAV 0.20 0.34 0.65 70.00% 225.00%
WHC 1.00 1.7 3.24 70.00% 224.00%
20 Dog Floats in 2007 (All have negative returns exceeding 50%)
ASX Code|Issue Price|1st Day|31-Dec-07|Return (1st Day)|Return-Year End
ENI 0.50 0.25 0.02 -50.00% -96.00%
RHG 2.50 2.49 0.295 -0.40% -88.20%
EOL 1.00 1.135 0.19 13.50% -81.00%
MRB 0.20 0.17 0.06 -15.00% -70.00%
AHI 3.81 3.96 1.35 3.94% -64.57%
HCG 0.20 0.135 0.071 -32.50% -64.50%
BVP 0.25 0.27 0.09 8.00% -64.00%
CCY 0.35 0.28 0.135 -20.00% -61.43%
LPM 0.20 0.22 0.086 10.00% -57.00%
IAW 0.50 0.38 0.22 -24.00% -56.00%
PUN 0.20 0.265 0.088 32.50% -56.00%
ROG 0.20 0.18 0.09 -10.00% -55.00%
LMP 0.20 0.21 0.09 5.00% -55.00%
EEE 0.35 0.3 0.16 -14.29% -54.29%
ACW 0.50 0.41 0.235 -18.00% -53.00%
AGU 0.20 0.16 0.095 -20.00% -52.50%
MNW 0.20 0.185 0.095 -7.50% -52.50%
CLD 0.20 0.16 0.099 -20.00% -50.50%
MSAS 1.00 1.02 0.5 2.00% -50.00%
AUQ 0.25 0.375 0.125 50.00% -50.00%
