Singapore IPO market 2018 mid-year report

Singapore IPO market 2018 mid-year report

Key observations 03 Overview of Singapore IPOs in H1 2018 04 IPOs on the SGX in H1 2018 05 Upcoming IPOs on the SGX 06 Overview of Singapore IPOs: geographical analysis 07 Overview of Singapore IPOs: industry analysis 08 Singapore companies: SGX or HKEx? 10 SGX developments in H1 2018 11 Macro factors 11 Report as of June 30, 2018 02

Key observations S$422 million S$55 million Real estate listings Singapore Stock 87% Exchange (SGX) Total IPO Proceeds Sasseur REIT SLB Development 01. Real estate listings continue to be the main driver for IPOs on the Singapore Stock Exchange (SGX), with Sasseur REIT and SLB Development Ltd. raising S$422 million and S$55 million respectively in the first half of 2018, accounting for 87% of total IPO proceeds on the SGX. 02. Foreign based assets have a dominant presence on the SGX, which is evidently a preferred international market for listing. In the past five years, foreign companies listed on the SGX from developed countries such as Australia, Europe, United States of America, Japan and in recent years, China, typically raised between three to seven times more funds when compared to Singapore counterparts. 03. The healthcare industry has been on a bullish trend. In the recent five years, healthcare IPOs have shown an increasing price earnings ratio on listing, and have delivered strong growth, of an average 24.5% share price returns since their IPO. 04. In the first half of 2018, Singapore companies that sought listing on the Hong Kong Stock Exchange (HKEx) increased more than two-fold, from three (2017 H1) to seven (2018 H1). Singaporebased construction companies continue to show a preference for a listing on the HKEx, with 10 out of the 12 local domiciled construction companies choosing the HKEx in the past 5 years. 03

Overview of Singapore IPOs in H1 2018 Singapore saw 7 IPOs in the first half of 2018, with S$548 million in proceeds raised with total market capitalisation of S$1.98 billion. This compares to the 9 IPOs in the first half of 2017, which raised S$464 million with market capitalisation of S$2.14 billion. Number of IPOs: H1 vs. H2 trend 2011 2012 2013 2014 2015 2016 2017 2018 H1 11 7 10 9 3 7* 9 7 H2 10 15 17 20 10 9 11? * Excludes secondary listing of Top Glove Corporation Bhd SGX s domestic IPO activity and performance remains stable and strong in comparison to previous half-years performance. Looking at the key exchanges in the region, there have been a general year-on-year decrease in 2018 H1: The Shanghai Stock Exchange had 37 IPOs in 2018 H1 which raised RMB 64.8 billion, resulting in a 70% decline from the 120 IPOs which raised RMB 76.7 billion in 2017 H1, due to a fall in listing approvals. The Stock Exchange of Hong Kong saw a 8.6% fall in funds raised, despite seeing a 44.1% increase in the number of IPOs from 68 to 98. IPO amount raised from 2014 to 2018 H1 S$'mil 6,000 4,195 4,000 2,564 1,608 2,000 886 456 655 464 548 56 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 IPO Market Capitalisation from 2014 to 2018 H1 S$'mil 10,000 8,081 7,221 6,339 5,000 2,238 2,157 2,144 1,476 1,982 412-2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 Average IPO market capitalisation and funds raised (2014 2018 H1) S$'mil 600 500 527.68 424.15 400 300 274.74 211 200 145 100-2014 2015 2016 2017 2018 Average Market Cap Average Fund Raised 04

IPOs on the SGX in H1 2018 With a Mainboard REIT and six Catalist listings in the first half of 2018, the Singapore IPO market raised 18% more in IPO proceeds periodon-period. # Company Listing platform Date of listing IPO amount raised (S$'m) Price Earning ratio IPO Market Cap (S$'m) IPO Offer Price (S$) Share price as at 30-Jun- 2018 (S$) Share Price % change Industry Country of operations 1 LY Corporation Limited Catalist 31-Jan-18 19.72 8.76 127.18 0.26 0.25-6% Consumer Business Malaysia 2 Ayondo Ltd Catalist 26-Mar-18 21.00 N/A 130.69 0.26 0.093-64% Financial Services Europe 3 Sasseur REIT Mainboard 28-Mar-18 421.6 N/A 1,340.22 0.8 0.73-9% Real Estate China 4 SLB Development Ltd. Catalist 20-Apr-18 54.74 9.79 209.99 0.23 0.195-15% Real Estate Singapore 5 Asian Healthcare Specialists Limited Catalist 20-Apr-18 10.79 127.80 66.70 0.23 0.265 15% Life Sciences and Health Care Singapore 6 Hyphens Pharma International Limited Catalist 18-May-18 15.60 10.40 78.00 0.26 0.22-15% Life Sciences and Health Care Singapore 7 Jawala Inc. Catalist 1-Jun-18 4.50 42.60 29.62 0.25 0.26 4% Total 547.95 1,982.40-12.8% Energy and Resources Malaysia The largest IPO in 2018 H1 Top Performer Notwithstanding the decrease in general Singapore Trade Index (STI) amidst global trade tensions, Asian Healthcare Specialists Limited, a Company comprising of four clinics under The Orthopaedic Centre, specialising in a range of general and sub-specialised orthopaedic, trauma and sports services, have managed a commendable price returns of 15% since its listing in April 2018. Worst Performer Ayondo is the Singapore's 1st listed fintech firm on the Singapore Stock Exchage (SGX). Ayondo offers social trading services and brokerage services to both business to consumer (B2C) and B2B (business to business) clients through two proprietary platforms: WeTrade and Tradehub. Traders can view one another's portfolios, trading performance, as well as share and follow one another's investment strategies on a real-time basis. 05

Upcoming IPOs on the SGX The following details the IPO lodgements/registrations up to 30 June 2018 details below: Mainboard/ Catalist Lodgement/ Registration Date Estimated Amount Raised (S$ mil) PropNex Limited Mainboard 28-Jun-18 (Registration) 60 DLF Holdings Limited Catalist 22-Jun-18 4 Synagie Corporation Ltd Catalist 29-Jun-18 21 1 Koufu Group Limited Mainboard 28-Jun-18 74 1 Estimated using average amount raised for the six Catalist IPOs in 2018 H1. Following the successful listing of APAC Realty Limited in the prior year, with share price returns of 33% since IPO, PropNex was successfully listed on 2 July 2018, raised $60 million from the IPO, at a market capitalisation of S$251 million. Amount raised in 2016 H1, 2017 H1 and 2018 H1 (including lodgements/registrations) S$'mil 3,500 3,000 2,500 2,000 Mainly due to the listing of Netlink NBN Trust which raised S$2.45 billion in July 2017. 1,500 1,000 500 0 2016 H1 2017 H1 2018 H1 Actual Lodgements/Registrations as at 30 June 2018 06

Overview of Singapore IPOs: geographical analysis The SGX continues to be an attractive listing destination of choice for both Singapore companies and foreign companies. As a wellestablished capital market in Asia Pacific, SGX remains a preferred international exchange for listing. In the last five years, there were 45 Singapore companies and 40 foreign companies that listed on the SGX. Between 2014 to 2018 H1, near 47% listing in SG are from overseas issuers: Country of operations of Singapore IPOs (2014-2018 H1) Percentage of foreign issuers listing on SGX (2014-2018 H1) Singapore 53% Overseas 47% Asia 28% Southeast Asia 34% China 13% Europe 7% United States 8% Australia 8% Japan 2% For the period from 2014 to 2018 H1, a total of S$11.4 billion was raised on the SGX, of which 56% were from foreign domiciled companies: S$ mil 800 700 600 500 400 300 200 100 - Average amount raised by country of operations Asia Australia China Europe Southeast Asia Average Amount Raised Singapore Japan United States Number of IPOs No. of IPOs 50 45 40 35 30 25 20 15 10 5 0 Overseas issuers from developed countries such as Australia, Europe, Japan and USA raised between 3-7 times more funds per IPO listing than Singapore and Southeast Asia countries. This shows keen interest in investors of the SGX market to the increasing exposure to overseas companies, in particular, Deloitte noted that the bulk of the cross border offering on the SGX were from the real estate based industries. 07

Overview of Singapore IPOs: industry analysis IPO amount raised - by industry (2014 2018 H1) No. of IPOs (S$ mil) 25 $7,000 $6,145 22 $6,000 20 19 $5,000 15 $4,000 10 $2,506 12 11 11 $3,000 5 6 $1,552 3 $2,000 $774 $213 1 $16 $133 $94 $1,000 0 Real Estate Technology, Media & Telecommunications Consumer Business Energy & Resources Life Sciences & Health Care Public Sector Financial Services Industrial Products $0 2014 2015 2016 2017 2018 H1 Amt raised The Real Estate sector has been dominating Singapore's capital markets, having raised S$6.1 billion which accounted 54% of the total IPO amount raised in the past five years. Technology, Media and Telecommunications and Consumer Business accounted for 22% and 14% of the total amount raised respectively. In 2018 H1, this trend has been relatively consistent, with Real Estate accounting for 87% of the IPO amount raised. 08

IPO appetite is up among Healthcare firms, with at least 1 healthcare IPO every year since 2014, with all indicators out-performing the market. The Life Sciences and Healthcare sector appears to be the industry most highly valued by investors, with the highest average PE ratio at IPO at an average of 20.8 times. Price Earnings (on IPO): 2014-2018 Since listing, the Healthcare sector has shown strength, outperforming most other sectors in share price returns, including traditional ones such as Financial Services, Energy & Resources and Industrial Products. Share price returns (since IPO): 2014-2018 80 60 Real Estate TMT Consumer Energy & Business Resources Life Sciences & Health Care Public Sector Financial Services Industrial Products 120% Real Estate TMT Consumer Business Energy Resources & Life Sciences & Health Care Public Sector Financial Services Industrial Products 40 20 70% - (20) 20% (40) (60) -30% (80) 2014 2015 2016 2017 2018-80% 2014 2015 2016 2017 2018 A further look into the healthcare industry: Price Earnings 80 60 40 20 0 2014-2018 Healthcare Sector - P/E ratio vs Price Return (annual) 69.1 33.7 3.8 4.0 12.5 2014 2015 2016 2017 2018 P/E ratio (on IPO) % gain / loss 200% 150% 100% 50% 0% -50% (Source: Bloomberg) Generally, price earnings of healthcare companies on the SGX are traditionally listed at between 20 to 30 times earnings. The healthcare companies have performed well, averaging 24.5% return on share price return since their IPO. This compares with the real estate sector which performed slight below average at -2.3% return in the same period. Healthcare companies such as HC Surgical Specialist Limited, Singapore O&G Ltd, and TalkMed Group Limited, listed in 2016, 2015, 2014, have share price return of 150%, 38% and 200% respectively. More recently, Asian Healthcare Specialists Limited, listed on 20 April 2018, had a high PE ratio as at IPO of 127x, which is an indication that investors are bullish on the Healthcare sector. Average Share Price Returns (%) since IPO 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% 24.52% -2.29% Average Share returns for Healthcare Average Share returns for Real Estate (Source: Bloomberg) 09

Singapore companies: SGX or HKEx? Since 2015, a total of 30 Singapore companies have been successfully listed on the Hong Kong Exchange (HKEx). The recent years have seen a rise in Singapore domiciled companies seeking a listing on the HKEx. SG companies listed on the SGX vs HKEx (2014-2018 H1) No. of IPOs 14 In the first half of 2018, the number 13 12 of Singapore companies that sought 10 a listing on HKEx increased from 3 (2017 H1) to 7 (2018 H1). 8 8 7 7 7 7 6 5 4 4 4 3 3 3 2 2 1 1 0 0 0 0 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 Source: SGX, HKEx and Bloomberg SGX HKEx It is interesting to note that the construction industry played a key role in fueling this trend. Of the 30 Hong Kong listings from Singapore companies, one-third were construction-related companies. Of the 12 Singapore construction companies that went for an IPO in the last five years, 10 chose HKEx and two chose SGX. The average funds raised and market capitalisation for each IPO were similar in both exchanges. Singapore company IPOs on SGX vs HKEx (2014-2018 H1) S$'mil 18 16 14 12 10 8 6 4 2 0 2014 2015 2016 2017 2018 H1 HK Total SGX Total HK Construction SGX Construction Singapore construction-related listings on SGX and HKEx (2014-2018 H1) S$'mil 25 20 15 10-5 SGX HKEX Average market cap (S$ mil) Average fund raised (S$ mil) (Source: SGX and Bloomberg) (Source: SGX and Bloomberg) Some reasons for Singapore construction companies to list in Hong Kong: 01. the price-earnings ( PE ) of construction-related companies listed on the HKEx were usually double digit, while construction-related firms listed on the SGX managed only single-digit PE; 02. to facilitate plans to expand operations into the Greater China Market; and 03. to tap on the multi-trillion-dollar institutional investor market in China. 10

SGX developments in H1 2018 SGX consults on proposed changes to quarterly reporting requirements -11 January 2018 SGX collaborates with fintech firm Smartkarma to roll out C-Suite Pilot Program - 12 March 2018 SGX RegCo launches SGX Fast Track programme for companies with good corporate governance standing - 4 April 18 Macro factors Fed Rate hikes (two hikes in March and June 2018, with two more hikes expected in 2018) Competition from regional and global bourses Trade Tariffs between USA and China, EU and Canada Iran sanctions by the U.S. affecting oil prices Macro factors that may have an impact on the Singapore capital market SGX consults on Listing Rule changes consequential to Code of Corporate Governance Review - 16 January 2018 After two rounds of public consultation on proposed safeguards for dual class share listings, SGX rolled out the implementation on 26 June 2018. Singapore Exchange (SGX) and Tel-Aviv Stock Exchange (TASE) Establish Partnership to Grow Cross-Border Capital Raising Opportunities for Technology Companies 14 May 2018 Singapore GDP is expected growth of 3% for full year 2018 Uncertain policies and directives from U.S. administration At Deloitte, we expect to see a continuing healthy pipeline of domestic and cross border IPOs in spite of global uncertainties in relation to the escalating trade tensions between US with China, Europe and Canada. With the introduction of dual-class shares structures, SGX is now in a position to support high-growth companies and attract blockbuster listings from around the world, while broadening investment options for investors and adding to the vibrancy of Singapore s capital market. We are cautiously optimistic that Singapore s IPO market will continue to do well in 2018 H2. Ms Tay Hwee Ling, Global IFRS and Offerings Services Leader, Deloitte Singapore, 5 July 2018 11

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