Shares in Phnom Penh Autonomous Port (PPAP) debuted on Cambodia’s sleepy stock exchange yesterday morning, ending the day at 5,140 riel ($1.28), down 1.15 per cent from the 5,200 riel opening price, after a lukewarm session of sideways trading that dashed some investors’ hopes for quick returns.
The port operator became the third company to list on the Cambodian Securities Exchange (CSX) after successfully raising $5.2 million in an initial public offering.
Speaking before the start of yesterday’s trading session, CSX chairman Hean Sahib said PPAP’s listing would improve the company’s corporate governance while infusing liquidity into the pint-sized exchange.
“PPAP will become stronger and more progressive after listing today, and at the same time this will increase the volume of shares traded on the CSX,” he said. “This is a step forward for the CSX and we hope there will be other firms listed in 2016.”
At 9am sharp, Finance Minister Aun Pornmonirith rang the opening bell to signal the start of trading.
However, the initial performance of the new stock was not particularly encouraging, and it soon dipped below its 5,200-riel opening price, though managed to end the day 20 riel above the 5,120 riel issue price. Some 13,050 shares worth $17,000 changed hands by the close of the session at 11:30am, which amounted to a modest day on the CSX, but relatively low volume for the exchange’s first new listing in over a year.
By comparison, Phnom Penh Water Supply Authority (PPWSA) saw nearly 500,000 shares traded worth $1.13 million when it debuted on the CSX in April 2012.
Grand Twins International (GTI), however, fizzled with only 3,101 shares traded worth $7,250 on its first day of trading in June 2014, ending with its share price down nearly 5 per cent. It did, however, rally in its second day of trading, which saw moderate volume.
PPAP’s “more rational” valuation and the strong interest by investors, which resulted in the combined bookbuild and retail subscription of the IPO being 1.4 times oversubscribed, led some to expect retail investors would rush to purchase the stock when trading commenced.
Thomas Hugger, CEO of Hong Kong-based investment firm Asia Frontier Capital, said he was surprised by the unexpectedly low volume of traded shares yesterday, which could be seen in one of two ways.
“One can argue that the low volume indicates that the shares are in ‘firm hands’. On the other hand, it means also that there are not too many investors out there interested to buy slightly above the IPO price,” he said.
Svay Hay, president and CEO of Acleda Securities, said PPAP’s first-day performance was in line with his securities firm’s expectations, and suggested that investors were in it for the long haul.
“This movement may reflect that many investors consider an income approach for high dividend yield rather than jumping for a short-term [gain],” he said.
Phnom Penh Autonomous Port operates Cambodia’s second-largest port and generates revenues from handling container and cargo shipments, services such as dredging, and leasing its assets.
The company’s revenue has doubled in the last four years, increasing from $6.2 million in 2010 to $13.3 million in 2014, and is projected to grow 15-20 per cent a year on increasing container traffic.
The port operator issued 4.1 million new shares in its IPO, representing a 20 per cent stake in the company, and has offered private investors a guaranteed 5 per cent dividend yield on the initial share price for the next five years.
Han Kyung Tae, managing director of Yuanta Securities (Cambodia), the IPO’s underwriter, said while some investors cashed out on the stock’s opening day, PPAP’s potential for capital gain and dividend income would encourage longer investment timelines.
“PPAP’s sustainable growth prospect together with its five per cent guaranteed dividend will better serve medium- and long-term investors,” he said.
Although market regulator Securities and Exchange Commission of Cambodia gave PPAP a short leash on its opening day – sanctioning a 10 per cent drop or 50 per cent increase in share price – it will cap daily price movements at 5 per cent starting on Friday.
Han said the newly listed stock had no greenshoe option, which allows underwriters to issue additional shares within the first 30 days of a stock’s trading to stabilise its pricing, but Yuanta was ready to support its share price.
“Although this IPO has no greenshoe arrangement, we are now seriously looking to participate in the secondary market as a buyer,” he said.