Malaysian-listed China firms losing lustre? “Investors just do not trust China stocks and they are quite justified in doing so”
July 22, 2013 Leave a comment
Bursa-listed China firms losing lustre?
Published: 2013/07/22
KUALA LUMPUR: China-based companies that are listed on Bursa Malaysia are having a tough time attracting investors and retaining their stock prices after being listed.
Almost all of the nine China-based companies, namely XingQuan International Sport Holdings, China Automobile Parts Holdings, HB Global Ltd, China Stationery Ltd, XiDeLang Holdings, K-Star Sports Ltd, China Ouhua Winery Ltd, Maxwell International Holdings and Multi Sports Holdings, are trading below their initial public offering (IPO) price as at July 19’s market close. An analyst told Business Times that low investor confidence and possibly “justified stigma” are the reasons for the lacklustre performance. “Frankly speaking, investors just do not trust China stocks and they are quite justified in doing so,” said the analyst, on condition of anonymity.
“China stocks more often than not would open with really low premiums and then continue down south. There are also issues of what some would call ‘creative accounting’,” said the analyst, referring to a recent case involving HB Global.
In May this year, Bursa Malaysia directed HB Global to appoint a special auditor to probe into the company’s financials after its external auditors, Messrs Paul Wan & Co, reported wide discrepancies in the company’s unaudited results.
Now that another China-based company, bamboo flooring manufacturing Kanger International Bhd, will be listed as the 10th company with 80 million new shares in its IPO, would
things take a turn for the better?
“It is difficult to say, but I believe that as with most China companies, it will not be able to retain its price after the initial floating,” said the analyst.
The analyst also believes that China-based companies need to pay higher dividends to their stockholders and run a healthy balance sheet in order to retain investors’ confidence.
Meanwhile, XingQuan International, the first China company to be listed here in July 2009, closed at 95 sen last Friday, against its IPO price of RM1.71. The company has a net cash of RM358.62 million as of May this year.
China Stationery’s shares, which were listed in February last year, ended at 28 sen last Friday against its IPO price of 95 sen.
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