This article first appeared in The Edge Malaysia Weekly on June 5, 2023 - June 11, 2023

The month of May showed a clear trend on the performance of new listings on Bursa Malaysia.

Companies that operate in the old economy have not performed up to expectations on their debut. In contrast, companies in the technology sector seem to be doing well after their initial public offering (IPO) even at their lofty valuations.

Last week, furniture manufacturer Synergy House Bhd and property developer Radium Development Bhd made unimpressive debuts on Bursa Malaysia. Both stocks are trading below their IPO price — a fate similar to that of DXN Holdings Bhd, which was listed on the Main Board on May 9.

DXN, a multilevel marketing company involved in health supplements, was listed on the Main Board at an offer price of 70 sen earlier last month. But since its listing, its share price has fallen under water as it is hovering at 65.5 sen, having made a tepid debut at 69 sen.

Cloudpoint Technology Bhd, however, has enjoyed good response from investors. The IT service provider for data centres and networking systems, which was listed at 38 sen on May 15, soared almost threefold before settling at a more reasonable valuation of 53 sen.

Cloudpoint was listed at a price-earnings (PE) multiple of 15.4 times, which is not too far off from the valuations of Radium, DXN and Synergy. Radium and Synergy House were listed at PE valuations of 17 and 12 times respectively while DXN’s was at 16 times.

Only investors in Cloudpoint have enjoyed returns upon its listing while those who subscribed for shares in the other three companies would be sitting on paper losses.

Did Cloudpoint do better during its listing because it is in the IT segment of the economy, compared with the other three companies that are in the old economy? Or is the appetite for new listings among investors waning?

Since December last year, there have been 17 new listings on Bursa Malaysia. Only five companies are trading below their IPO prices. And, coincidentally, all five are operating in the old economy in industries such as property development, packaging and construction.

The trend seems to suggest that investors prefer tech companies to those in the old economy.

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