Number of China companies listed on SGX falls to 146 By Linette Lim | Posted: 06 November 2012 2234 hrs
SINGAPORE : The number of China companies currently listed in Singapore has dwindled to 146 as of October this year from almost 160 two years ago.
Over the same period, the market capitalisation of primary-listed China companies on the mainboard of the Singapore Exchange (SGX) fell by a third to just over S$35 billion.
Analysts say this is a sign of how the once-popular S-chips asset class has fallen out of favour.
Terence Wong, Executive Director, DMG & Partners Research, said: "There is a fall in the number of S-chips being covered. Definitely if you were to compare against the heady days in 2006, 2007, where every research house would have a very good coverage, it's very different today. Many houses do not have a specific analyst to look at the S-chip sector."
Frozen food maker Synear Food is the latest S-chip preparing to exit the SGX.
The former market favourite is proposing to delist the stock at a third of its IPO price of 54 cents in 2006.
The stock hit a high of S$2.48 in 2007, but plunged 80 percent after net profit fell by more than half in the following year.
Terence Wong, Executive Director, DMG & Partners Research, said: "Many of these investors were really excited about the growth prospects of these small Chinese companies - many of them are seen to be able to grow in excess of 20 to 30 percent per annum. But once there was a break to that growth, or once they realise that there was really no growth, that really took the wind out of many of these investors."
Although Synear's exit price is 18.6 cents, which is its highest trading price in over a year, a recent report by independent research house NRA Capital puts the stock's fair value at 37 cents per share.
Channel NewsAsia understands that the company's minority investors, which include some hedge funds, are trying to accumulate a 10 percent stake to vote against the delisting.
David Gerald, President & CEO, SIAS, said: "Singapore is the only country that has got this exit offer requirement in the listing rules. No other jurisdiction has this. In Singapore there is no legal recourse if you're not happy, you can't challenge the decision of the board on the exit offer. But if minority shareholders get together, they can put some pressure on the board, discuss with the company on the reasonableness and fairness of the offer, they can make some progress."
S-chips were virtually non-existent about a decade ago.
After a meteoric rise between 2005 and 2007, S-chips crashed in the couple of years that followed, undone by a number of accounting fraud cases.
Mr Gerald said this does not mean all S-chips are bad, adding that out of all the listed S-chips, only 13 have had problems.
But confidence in S-chips never quite recovered, perhaps a point underscored by the fact that investors did not even bat an eyelid when Synear announced its intention to delist last month. <contradicting the previous highlighted para >
Synear's board has appointed Ernst & Young Corporate Finance as its independent financial advisor to give its opinion on the exit offer, and shareholders will be asked to vote on the delisting in due time.
UBS reports: After 10 weeks of rally, China spot steel price rolled over in Nov as expected. We expect spot prices to fall until spring.
2013 likely to be another one of those years
We expect China spot prices to recover in early spring but peak again in 2Q13 as supply response and
weak sentiment outweigh better demand from investment and liquidity. We believe it difficult for regional mills to meaningfully raise prices as 79%
global utilization rate in 2013E is not enough to support steel market. Still, we expect 2013E margin to improve modestly YoY given low base and
falling cost.
