Procurri’s IPO debut ended in a disaster yesterday, Wednesday 20 July 2016. It never traded above its IPO price. After holding steady for the whole of yesterday at between 53 to 55 cents, it collapsed in the last hour of trading to close at 45 cents. That is a 20% loss for anyone who subscribed for the IPO and did not cut loss yesterday after its opening price was below water. That’s a hefty loss for one day for IPO investors and staggers. Ouch!
I did not subscribe for the IPO and neither did my family. We were put off by the high absolute pricing as well as the high PE Ratio. We can only breathe a sigh of relief and nothing more. My thoughts go out there for those who decided to take the plunge and are still holding on the shares. Analysts and experts have been giving very positive reviews about the stock and IPO, painting its future prospects rosily. So, it pays to trust your own analysis and instincts rather than to trust what the “experts” tell you.
Procurri’s IPO pricing was priced to perfection and full ripeness, at about close to 15 times price-earnings. This meant that there was very little meat left for IPO staggers to feast on. For staggers (now turned long-term investors?), the chance of making money was much lower than the risk of losing money.
It now seems like the mother company, Declout, is also being “punished” for its pricing strategy for Procurri. Following her “daughter’s” debut, Declout’s share price has also dropped to as low as 19 cents today (currently at 20 cents), which translates to a 15 – 20% loss from its earlier share price of 23.5 cents which news of Procurri’s IPO was announced. It looks like investors are upset with Declout too for being so aggressive and not leaving anything on the table for them.
Yet again, the market seems to be irrational. Procurri’s IPO debut would mean that Declout has monetized one of its key investments and freed up a lot of cash for the mother company. So, Declout’s shares should be trading up rather than down. Is this a case of sentiments ruling over logic?
Procurri’s retail IPO interest was partly sparked by the remarkable debut of an earlier IPO – Advancer Global Limited, which doubled in price on its opening debut. Spurred by this positive development, it would not be surprising that investors and staggers would have wanted to try their luck with Procurri, which with hindsight, has been disastrous.
Following the bad outcome from Procurri’s IPO debut, sentiment in the IPO market, especially for retail investors, is likely to be dampened for now until they see one or two more IPOs trading above water at least.
Anyway, the two forthcoming IPOs, Katrina Group and Wong Fong Industries have both “CHICKENED OUT” by listing through placement shares only. No retail/public tranche - folks! They probably see us retail investors as “kacang putih” and not worth their efforts. : (
And following that, it will be EC World REIT to list with the offering of 188.13 million units comprises an international placement of 180.63 million units and 7.5 million units to the Singapore general public. Each unit is priced at 81 cents. Annualised distribution yield for FY16 and FY17 is expected to be 7.1% and 7.3%.
Offhand, I am again not keen on this one, it being entirely China-focused.
So, looking forward to more IPOs to come. Good ones please……. !
Don't treat us as carrot-heads (菜头).
