Singapore IPO market 2016 mid year report - Deloitte
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Singapore IPO market 2016 mid year report
Singapore IPO market 2016 mid year report
Singapore IPO market
in 2016 H1
With 5 Catalist and 3 Mainboard listings in the first half of 2016, Singapore's IPO market showed positive improvements with
a total of 8 IPOs compared to only 3 in 2015 H1.
# Company Listing platform Date of listing Offer price Amount raised IPO Market Cap
S$('million) S$('million)
1 Eindec Corporation Limited Catalist 15-Jan-16 0.21 7.5 22.6
2 GS Holdings Limited Catalist 18-Jan-16 0.25 6.0 31.0
3 Secura Group Limited Catalist 28-Jan-16 0.25 28.0 100.0
4 Anchor Resources Limited Catalist 18-Mar-16 0.25 7.2 69.9
5 Acromec Limited Catalist 18-Apr-16 0.22 5.9 26.5
6 Manulife US REIT Mainboard (REIT) 20-May-16 USD0.83 650.0* 720.0*
* converted from * converted from
USD469.874 USD519.20
7 Frasers Logistics & Industrial Mainboard (REIT) 20-Jun-16 0.89 903.0 1,263.4
Trust
Mainboard
8 Top Glove Corporation Bhd 28-Jun-16 1.635 N.A. N.A.
(Secondary listing)
Total 1,607.6 2,210.78
The Singapore Exchange (SGX) is off to a promising start, raising over S$1.6bn proceeds and achieving a market
capitalisation of more than S$2.2bn. This is more than 29 times of total funds raised in 2015 H1, which was only S$56m.
Most of the funds raised in 2016 was attributable to the listings of Manulife US REIT and Frasers Logistics & Industrial
Trust, each raising S$650m and S$903m respectively, as compared to BHG REIT, the only Mainboard listing in 2015 that
raised S$276m.
2011 2012 2013 2014 2015 2016
H1 11 7 10 9 3 8
H2 10 15 17 20 10 ?
An interesting trend observed in the past four years is that the number of IPOs in the second half of the year far exceed
that of the first half, sometimes more than doubling.
Typically, the biggest contributor to total funds raised are the REITS and Property Trust listings, as illustrated in the
following two charts that depict the trends observed over the period of 2011 to 2016 H1.
02Singapore IPO market 2016 mid year report
Trends observed over the period of 2011 – 2016 H1
Out of S$7.99bn raised by Mainboard Capital Raised
9,000
listings, S$6.98bn was generated by the
listing of Hutchison Port Holdings Trust
8,000
7,990
7,000
Out of S$2.83bn raised by Mainboard
Amount Raised ($’000)
6,000 listings, S$2.64bn was generated by
the listing of IHH Healthcare Berhad
5,000
4,000
3,000
2,838
1,974 1,950 1,603
2,000
1,516 1,250
949 1,202 1,160
1,000
398 591 388
165 346 276 181
22 37 36 154 55
- 0 217 152 - 56
- 0 0
17 0 70
2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1
Period
Catalist REITs Other Mainboard List
• SPH REIT Number of Deals
• OUE Hospitality Trust
25
• Mapletree Greater China • Soilbuild Business • OUE Commercial Real Estate
Commercial Trust Space REIT • Frasers Hospitality Trust
• Croesus Retail Trust • Viva Industrial Trust • IREIT Global
20
• Far East Hospitality Trust
• Ascendas Hospitality Trust Keppel DC 5 BHG REIT
No. of deals
• Religare Health Trust REIT
15 4
Mapletree 3 • Manulife US REIT
Commercial Trust • Frasers Logistics &
6
4 Industrial REIT
10 1
3 2
7 3 5 1
1 12 2
5 5 9 9
1 7 2
6 6 5
3 2 3 3
-
2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1
Period
Catalist REITs Other Mainboard List
With this historical trend, we could expect more IPOs in
the second half of 2016, especially with some companies
planning listings as announced in various media reports,
including mm2 Asia’s subsidiary, UnUsUal1 and Q&M
Dental (China)1 for SGX Catalist board as well as Greenland
Group2 and Shanghai Based EC World REIT3 from Forchn
Holdings Group on SGX Mainboard.
1. The Business Times, June 10, 2016
2. The Straits Times, March 12, 2016
3. Reuters, July 1, 2016
03Singapore IPO market 2016 mid year report
STI performance vs. crude oil price vs. GDP growth (5 years) Market performance
The performance of the STI* index in 2015
GDP Growth (%) Crude oil price ended with 15.5 per cent lower than in the
beginning of the year. 2015 H1 showed a
general upward movement but that was
short-lived as its performance deteriorated
in H2, due to declining global commodity
prices and increased competition with
STI Index emerging countries. Expectations of
whether the Fed was going to increase
interest rates for the first time since 2006
also caused volatility towards the end of
2015.
We observe a strong correlation
between the STI and crude oil price
movements. The drop in oil prices since
2014 has weakened Singapore companies
in the manufacturing sector, as seen in two
of STI constituents – rig builders Keppel
Corp (SGX: BN4) and Sembcorp Marine
Source: Trading Economics (SGX: S51). By end of 2015, Keppel Corp’s
counter decreased by 27.68 per cent and
Sembcorp Marine’s share price fell by 48.16
per cent. In addition, we also observe
GDP Growth vs. STI performance (1 year) that REITs account for more than 60
per cent of total funds raised via IPO
STI Index 6.2
since 2013.
Generally STI index and GDP
growth are correlated, except GDP Growth (%)
for 2015 Q4 There seems to be a blurred
relationship between the STI and GDP
growth. STI’s largest industry (in terms of
number of stocks) is Real Estate with eight
stocks, but this industry only contributes a
2.3 trival amount in GDP growth. Weakening
GDP growth and sluggish crude oil
prices add to the uncertainty of the
0.2 Singapore market and this also affects
0.2 investing and listing decisions.
2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1
* STI Index represents the top 30 largest and most
liquid companies listed on SGX, therefore is most
-1.6 popular to be used as a benchmark for Singapore
Real GDP Growth, quarter-on-quarter seasonally-adjusted… equity market performance.
Source: Trading Economics, Yahoo Finance Singapore
and Monetary Authority of Singapore (MAS)
04Singapore IPO market 2016 mid year report
Focus on REITs listings REITs market cap & funds raised over 2011 – 2016 H1
The Singapore IPO market has seen a
5,000.0
dominance of REITs and Property Trusts
4,493
listings in the last five years. 4,500.0
4,000.0
We take a closer look at 3,500.0
the sizeable trust listings S$ (million) 3,000.0
2,709 2,871
2,367
over the years and found 2,500.0
1,974 1,949.7
2,240
2,000.0
that the actual yield for 1,600 1,603
1,500.0
REITs listed between 2011 1,000.0
950 1,202
1,250
and 2016 H1 generally 500.0
693 276
00 394
outperforms the forecasted -
0 0 0 0 346
2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1
yield at IPO. Period
Funds Raised IPO Market Cap
No of. IPOs 1 0 0 3 2 4 1 3 0 1 2
Dividend yield of REITs listed between 2011 - 2016 H1
Name GICS Sub-Industry IPO date Forecasted Yield as at Difference
Yield at IPO (%) Jan'16 (%) (%)
Mapletree Commercial Trust Retail REIT 27-Apr-11 5.7 6.3 10.5
Far East Hospitality Trust Hotel & Resort REIT 27-Aug-12 6.0 7.6 26.0
Ascendas Hospitality Trust Hotel & Resort REIT 27-Jul-12 7.9 7.4 -6.5
Religare Health Trust Health Care Facilities REIT 19-Oct-12 8.9 8.7 -2.6
Mapletree Greater China
Hotel & Resort REIT 07-Mar-13 5.6 8.1 44.6
Commercial Trust
Croesus Retail Trust Retail REIT 10-May-13 8.0 9.6 20
SPH REIT Specialized REIT 24-Jul-13 5.8 5.8 0
OUE Hospitality Trust Office REIT 25-Jul-13 7.4 9.3 25.7
Soilbuild Business Space REIT Industrial REIT 16-Aug-13 7.7 8.8 14.3
Viva Industrial Trust Office REIT 04-Nov-13 8.8 10.1 14.8
OUE Commercial REIT Office REIT 27-Jan-14 6.8 6.4 -5.9
Frasers Hospitality Trust Hotel & Resort REIT 14-Jul-14 7.0 11.7 67.1
IREIT Global Office REIT 13-Aug-14 8.0 7.3 -8.8
Keppel DC REIT Specialized REIT 12-Dec-14 6.8 6.5 -4.4
BHG Retail REIT Retail REIT 11-Dec-15 6.3 6.3* 0.0
Manulife US REIT Office REIT 20-May-16 7.1 7.1* 0.0
Frasers Logistics & Industrial
Industrial REIT 20-Jun-16 7.3 7.3* 0.0
REIT
Average 7.1 7.9 10.7
*As at Jan’16, only forecasted data available
05Singapore IPO market 2016 mid year report
Yield of 41 S-REITs listed as at June 30, 2016 by GICS sub-industry
10.0
8.7 8.4
9.0
8.1 8.3
8.0 7.3
6.9 6.5 6.7
7.0
6.1
6.0
S$ ('billion)
5.0
4.0
3.0
2.0
1.0
0.0
Retail Health Industrial Specialty Office Hotel & Diversified Real Residential
Care Resort Estate
Operating
The highest average yields are from Hotel & Resort REITs such as Frasers Hospitality Trust.
Breakdown of the 41 S-REITs listed as at June 30, 2016 by GICS sub-industry
Residential
Real Estate Operating
2
3 Retail
9
Diversified
4
3 Health care
Hotel & Resort 5
6 8
1 Industrial
Office
Specialty
REITs and Property Trusts on SGX
have experienced high growth, and
remain attractive today because of their
appealing distribution yields varying
between 6.1% to 8.7% and relatively
stable lease-based cash flows.
06Singapore IPO market 2016 mid year report
Outlook for 2016 H2
REITs and Business Trusts are one of the key strengths of SGX, along with consumer and
healthcare stocks. We expect to see a strong trend of REIT IPOs for the rest of 2016. Here
are some factors that may have an impact on the IPO outlook.
Singapore Budget 2016
In Budget 2016, the Government launched a new Industry Transformation Programme to
help enterprises and industries create new value and drive growth, as well as to transform
through innovation. A total of S$4.5 bn will be made available to support enterprises and
industries, on top of the existing resources via the R&D and the National Productivity Fund.
Fed interest rates
The Fed is expected to keep short term interest rates the same or lower in the wake
of Brexit.
Global GDP growth
Global GDP growth is projected to pull back to 3.7 per cent in 2016, from 3.9 per cent in
2015.
Brexit
Volatility is likely to remain in the market due to factors including the impact of Brexit on
the rest of Europe and on Britain, and slower global economic growth.
Regulatory requirements
SGX – Singapore-listed companies are to publish a sustainability report at least once a
year, to include board statements describing sustainability actions, identify environmental,
social and governance factors that affect business strategies, explain their practices and
performances, and set targets, done on a “comply or explain” basis. Requirements to take
effect for any financial year-end on or after December 31, 2017.
SGX – Minimum trading price (“MTP”) for six-month average share price of 20 cents for
mainboard-listed companies, with a final deadline of February 28, 2019, failing which
Mainboard companies could be delisted or have the option to transfer to the Catalist
board (no MTP).
Association of Banks in Singapore – Tightened standards of due diligence for member
banks on SGX listings, requiring banks to look into the reasons behind Board resignations
and questioning any unnecessary complex group structures.
Monetary Authority of Singapore – New guidelines issued for REITs Managers to
strengthen corporate governance, increase transparency of fee structure and operational
flexibility. Requirements to take effect from January 1, 2017.
Market developments
SGX continues to be in exclusive talks up untill August 31, 2016 to acquire The Baltic
Exchange, London, the world's source of maritime market information, which has been at
the heart of the global shipping industry for centuries. The acquisition, if successful, would
complement the exchange's iron ore swaps and futures business, lending weight to SGX's
commodities products business and opening up doors for future listings from this sector.
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