Foreign Listings on TWSE. Taiwan Stock Exchange Jun. 9, 2018

Transcription

1 Foreign Listings on TWSE Taiwan Stock Exchange Jun. 9,

2 Issuer Currency Scale AT&T USD 5,344 mil. Apple USD 2,377 mil. Pfizer USD 1,065 mil. Verizon USD 5,214 mil Source: WSJ Big U.S. companies like Apple Inc. and Pfizer Inc. have the world s largest corporate bond market in their backyard. So why have they been rushing to Taiwan lately to issue debt? The reason: a feature of the Taiwanese bond market that for now makes it easy and relatively cheap for companies to redeem any debt they issue there before its due date. For sure, the Formosa bond market so-called after the Portuguese name for the island is tiny compared with the U.S. s $8.6 trillion corporate bond market. Yet blue-chip companies including Apple, Pfizer, Verizon Communications Inc. and Comcast Corp. have each issued north of $1 billion of such debt this year. AT&T Inc. issued a $1.43 billion 30-year Formosa bond with a 5.5% coupon earlier this month. In the Formosa market, the call option adds only an extra 0.1 percentage point to 0.15 percentage point in yield, compared with 0.8 percentage point to a full percentage point in other markets, according to Deutsche Bank s Mr. Stephen. 2

3 Outline I. Why IPO? II. Why Taiwan? III. How to List on TWSE? IV. Foreign Listed Companies on TWSE V. Summary VI. Appendix 3

4 I. Why IPO? 4

5 Benefits of IPO What Boss Worries! The cost of regulatory compliance, business succession plan, dilution of shareholding etc. What s worth-ipo Creates New Values Fund-raising ability Capital can be used to fund capital expenditure, R&D or used to pay off existing debt. Compliance The listings retain professionals for services and comply with regulatory requirements Sustainable Growth Talents Easily recruit excellent employees by giving them stock compensation plan. Successor From private to public, it is easier to transfer ownership either to the successor or buyer 5

6 II. Why Taiwan? 6

7 Features of Major Capital Markets Taiwan capital market best fits for median-size floating considering the Average Market Cap, Turnover Rate and P/E Ratio. Market Name Mkt Cap Mkt Cap. (US$M) Rank Source: WFE and Bloomberg, as of Apr.30, No. of Listing Avg. Mkt Cap (US$M) Turnover Rate (Y17) P/E Ratio (Dec ) TWSE 1,077, , % 15.7 SGX 795, , % 11.7 HKX 4,443, ,186 2, % 16.3 NASDAQ 10,375, ,968 3, % 24.8 NYSE 23,138, ,294 10, % % 50% 0% TW 50 Mid-Cap 100 SMEs 17% 15% 36% 68% 29% 35% Mkt Cap Trading Vol. Group No. of Listing Mkt Cap (US$M) Avg. Mkt Cap(US$M) Turnover Rate TW ,545 14, % Mid-Cap ,821 1, % Other SMEs , % 7

8 Here are some facts about NASDAQ Average market cap of a NASDAQ listing company is about US$ 3.26bn. TOP 25% listings accounted for 94% of the total market cap, as well as 92% of trading value. LAST 25% (about 700 Co.) listings avg. mkt. cap is below US$ 33M. Compliance cost in the US is quite a burden for SMEs. ICT & SMEs are more than welcome by TWSE. NASDAQ equity markrt summary 5.82% 93.97% 0.22% Top 25% Mkt Cap medium Last 25% 7.65% Trading Value 91.91% Source: Bloomberg, period: 2016/12/6-2017/12/6 0.44% Top 25% medium Last 25% Top 10 listings of NASDAQ Name Mkt Cap. P/E 1 APPLE INC ALPHABET INC-CL A MICROSOFT CORP AMAZON.COM INC FACEBOOK INC-A INTEL CORP COMCAST CORP CISCO SYSTEMS INC AMGEN INC NVIDIA CORP Source: Bloomberg, Dec. 6, 2017, Unit:US$ bn

9 Multi-Layer Equity Market 757 Stocks 17 ETFs 1 TDRs More than 4,000 warrants Mkt. Cap. US$ 113 bn 2002 年 Emerging Board 256 stocks, Mkt. Cap. US$ 25.8bn Founded in 1994 Founded in 1962 MAIN BOARD Mkt. Cap. US$ 1 tn. T:17 TDRs W:upward of 10,000 warrants S:932 Stocks E:107 ETFs 2014 年 Go Incubation Board 2015 年 Equity-Based Crowd Funding As of April 年 Gofunding Zone 9

10 Significant Presence of Global Investors % 26% Apr-18 0 Trading value from foreign investors (%) Market value held by foreign investors (%) Source: TWSE. 10

11 Diversified Funding Strategies Ever-Lasting Fundraising sustains Listings Development Unit: NT$ 100Million IPO SPO GDR BOND As of May 2018, the amount of fund raised by foreign listings accounting for NTD 691 bn. (US$ 2.3 bn.) and NTD 659 bn. (US$ 2.2 bn.) through IPO and Increasing Capital respectively. We see the follow-on offering is popular in Taiwan s market; furthermore, upwards of 40% foreign listed companies, besides IPO, float subsequently. Source: TWSE

12 Foreign Listings Outperform the TWSE Index Increasing No. of Foreign Listings, especially from ASEAN Issuers based on China Issuers based on USA As of Apr. 2018, Unit:no. of IPOs Issuers based on ASEAN No. of Foreign Listings A Foreign Listings Outperform the TWSE Index As of Apr. 2018, Unit:%, US$ bn, times Foreign Listings TWSE Turnover 70.94% 30.63% Market Cap 32(A) 1,073(B) A/B is only 3.0% Trading 23(C) 329(D) Value C/D is up to 7.0% P/E Ratio

13 Diversified Foreign Listings No matter your location, nationality and industry, TWSE is the one! Upwards of 80% have operations in China and US is the 3rd Both ICT and non-ict, float shares and achieve fair value Technology 43% ASEAN 9% USA 7% China 83% China, 60 ASEAN, 6 USA, 5 Others, 1 Note: As of Apr. 30, ICT 33% 10% ICT, 23 Biotech, 7 Electric Machinery, 8 Trading and Consumers' Goods, 7 Others Biotech 13

14 III. How to List on TWSE? 14

15 Listing Requirement Criteria General Unicorn High Tech Agriculture Duration of Existence Company Size Profit. Others 3 years 3 years 3 years 1 year Paid-in capital or Networth: NT$600 mil. (appx. USD 19 mil.) Market Cap.: NT$1.6 bn (appx. USD 52 mil.) No accumulated deficit Cumulative net income before tax for the most recent 3 years is NT$250 mil. (appx. USD 8 mil.) Net income before tax for the most recent year is NT$120 mil. (appx. USD 4 mil.) Market Cap to be listed is NT$5 billion or more, and Paid-in capital or Networth: NT$600 mil. (appx. USD 19 mil.) The revenue for the recent fiscal years is NT$5 billion or higher and better than figure in preceding year The positive net cash flow from operating activities for the most recent fiscal years is positive Net worth shall not be lower than 2/3 of the capital Designate a litigious and non-litigious agent in Taiwan At least 1 of the independent directors shall be domiciled in Taiwan Market Cap to be listed is NT$6 billion or more, and Paid-in capital or Networth: NT$600 mil. (appx. USD 19 mil.) The revenue for the recent fiscal years is NT$3 billion or higher and better than figure in preceding year The positive net cash flow from operating activities for the most recent fiscal years is positive Net worth shall not be lower than 2/3 of the capital Paid-in capital or Networth: NT$300 mil. (appx. USD 9.7 mil.) Market Cap.: NT$0.8 bn (appx. USD 26 mil.) Net worth shall not be lower than 2/3 of the capital Working capital is sufficient for 12 months 15

16 Clear Review Points Assure Quality IPOs Information Disclosure Board of Director Corporate social responsibilities Shareholder protection Internal control system establishment Consistency of cash flow and order delivery Patent & certification R&D & talents Corporate Governance Internal Control R&D Compliance Financial Competitive Niches Sound regulatory framework par with international standards Financial reports present fairly in all material respects Opinion of CPAs Peer comparison Sales validity 16

17 Efficient Application & Review Process Foreign listings take only 3-5 months to finish listing application. Pre-Listing Prep. Counseling Period 6 months Review Process 1-2 months Preparation to list 2-3 months Intermediaries -Underwriter -CPA -Attorney Issuer s Preparation Internal / Financial Audit Taxation Legal Discrepancies Prospectus Documents Review Listing Review Committee Approved by TWSE s Board of Directors Effective Registration Offering, Issuing and Underwriting Shares Share Dispersion Centralized Custody of Shares Application of Trading Note:TWSE s review fee takes NT 500k (appx. USD 16k), Annual maintenance fee depends on amount of issuing shares and ranges from NT 100k to 450K (appx. USD 3.2k-14.5k) Reasonable cost for Listing Review and Post-Listing Maintenance 17

18 IV. Foreign Listed Companies on TWSE 18

19 (i) BizLink Industry Sector: Other Electronic Operation Location: Fremont, California Date of Listing : Paid-in Capital: NT$ 1.2 bn (appx. US$ 38.5M) Product: Wire Harness and Connector Pre-listing Book Value Identify Fair Value IPO Mkt Cap Mkt. Cap M M 873.7M +186% +716% Unit:USD Marks UP- Sustaining its Continuous Operation Growth leading global interconnect solution provider Unit:NT$ Billion, NT$ dollar for EPS Sales EPS HQ manufacturing sites Listing on TWSE sales and engineering support 19

20 Industry Sector: Semiconductor Operation Location: US, China, India Date of Listing: Paid-in Capital: NT$ 880M (appx. US$ 29M) (ii) Silergy Corp. Pre-listing Book Value IPO Seeding IPO Mkt Cap Mkt. Cap M M 1,819 M Product: Analog IC +618% +608% Unit:USD Unit:NT$ Million 1,371 2,087 3,273 4,701 7,139 8, ,201 1,470 1, Sales Net Income Sales went up significantly Silergy on Forbes Lists Asia's 200 Best Under A Billion Future Focus Smartness/Green Power/ IOT

21 (iii) Gourmet Master Co. Ltd. Industry Sector: Tourism Operation Location: Taiwan, China, US Date of Listing : Paid-in Capital: NT$ 1.63 bn (appx. US$ 54.3M) Product: chain stores of fresh bread, cakes and beverages From 1 to 1,037 stores TW Top 20 Branding Market Value up to USD 1.82 bn Sales Breakdown by Region IPO Mkt CAP 0.72 bn Sales 6yr CAGR up to 20% 21

22 Real Successful U.S. Listings on TWSE Company Location Snapshot Spotlight IML Silicon Valley Exar(NYSE Listing) acquired IML corp. for US$ 223M Acquisition Premium > 34% CoAdna- KY Silicon Valley II-VI(Nasdaq Listing) acquired CoAdna corp. for US$ 85M Acquisition Premium > 59% Tanvex- KY San Diego First Pharmaceutical company based in U.S. floats on TWSE Share price soared 68% above IPO 22

23 V. Summary 23

24 Realize your potential by listing on TWSE Utilize Capital Raised Consolidate Strategic Alliance Enable R&D Capability Strengthen Information Disclosure Enhance Corporate Governance Commit to Social Responsibility Expansion Phase Start-up Phase Underwriters Legal Counsel CPA Growth Phase Listing Application Phase Funding supports business development Duration of Existence Company Size Profitability Dispersed Shareholding Incorporation 24

25 VI. Appendix 25

26 Listing Requirements in Main Capital Mkt Market General Condition Profitability Application Fee TWSE SGX The foreign issuer or any of its controlled companies shall have an operational track record of 3 years or longer. Paid-in Capital or Net worth:nt$ 600,000,000 Market Capitalization:NT$1,600,000,000 The cumulative net income before tax for the most recent three fiscal years of the foreign issuer is NT$250 million or higher, and the net income before tax for the most recent fiscal year is NT$120 million or higher and the foreign issuer has no accumulated deficits. Three years audited accounts. Required to meet one of the following financial standards i) Earnings Test: Aggregate for last three fiscal years >= US$ 10M; Each of the two most recent fiscal years >=US$ 2M; Each of the prior three fiscal years >$0 ii) Global Market Capitalisation Test Issuer must have at least: US$ 200Min global market cap. Companies must meet all of the criteria under at least one of the four financial standards below: Standard 1:Earnings-Aggregate Pre-Tax Earnings in prior three fiscal years > $11 million and Each of the prior three fiscal years > $0 and Each of the two most recent fiscal years > $2.2 million. Standard 2:Capitalization with Cash Flow-Aggregated Pre-Tax Earnings in prior three fiscal years > $27.5 million and Each of the prior three fiscal years > $0. Average Market cap.> $550 million over prior 12 months Market cap. Revenue of previous fiscal year > $110 million. Standard 3:Capitalization with Revenue-Average Market cap.> $850 million over prior 12 months Market cap. Revenue of previous fiscal year > $90 million. Standard 4:Assets with Equity-stockholder's equity is up to 55 million. Minimum consolidated pre-tax profit of at least S$30 million for the latest financial year with operating track record of at least 3 years; Profitable in the latest financial year, and has a market capitalization of not less than S$150 million based on the issue price and post-invitation issued share capital with operating track record of 3 at least years; Operating revenue in the latest completed financial year and a market capitalization of not less than S$300 million based on the issue price and post-invitation issued share capital. Real Estate Investment Trusts and Business Trusts who have met the S$300 million market capitalization test but do not have historical financial information may apply under this rule if they are able to demonstrate that they will generate operating revenue immediately upon listing. Operating track record required is at least 1 year. USD$16k The entry fee is up to US$ 500K. The entry fee is up to US$ 50K ~ 75K. USD$71k~143k 26

27 THANKS FOR YOUR LISTENING Foreign Listing Department Chien-chung TIEN TEL: Chang-i CHUANG TEL: Nai-yu KUO TEL: