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Two SMEs may list on CSX this year

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Two SMEs from the construction and leasing sectors may list on the stock exchange by the end of this year. Heng Chivoan

Two SMEs may list on CSX this year

Two small and medium-sized enterprises (SMEs) will list on the Cambodia Securities Exchange’s (CSX’s) Growth Board by the end of this year, Securities and Exchange Commission of Cambodia (SECC) vice-president Sok Dara told The Post.

He said that since the first edition of the SECC’s Excellent Programme (EP1) in 2018, some SMEs have expressed their desire to list on the board.

The capacity-building programme assists SMEs in ensuring quality and competitiveness and creating a clear business plan.

It also helps them prepared proficient financial statements and provides access to experts free of charge.

Dara said the programme lasts for four months and is divided into three phases. EP1 had 73 companies participating in the first and second phases, with the SECC limiting the third phase to 38 companies. Only 18 completed the programme.

He added that 10 of the 18 companies received awards from the SECC. Of those, eight submitted a letter of interest in listing on the CSX.

“Three of the companies have firmly engaged in the process, and among the three, two are on track to go public via initial public offering [IPO]. We expect the two companies to complete their proceedings by the end of this year.

“They may come from the construction and leasing sectors [a first for the bourse], but we proceed with a realistic approach to their evaluation. The companies have expressed their expectations for a listing by year’s end,” Dara said.

The CSX has struggled to attract a single SME since the launch of its Growth Board in late 2015. According to SECC regulations, companies are required to have a minimum of $500,000 in operating capital to list, compared to $7.5 million on the main board.

Companies that list on the platform are also required to release one year of audited financial results, compared to the two years required for bigger companies.

Additionally, the results must show a positive net profit or positive operating cash flow with gross profit margin of at least 10 per cent.

CSX vice-chairman and chief operating officer Ha Jong-weon recently told The Post that he expects the board to have its first listing soon.

He said: “We expect a few companies to list this year. They are now working with the initial public offering team.

“The board was created to encourage more companies to list publicly, especially SMEs and start-ups with good business models and growth potential,” Ha said, adding that the idea is for companies listed on the Growth Board to eventually join the Main Board.

A sub-decree issued last year gave substantial tax breaks to companies listed on the bourse. According to the regulation, companies that list in the next three years will enjoy a 50 per cent reduction on income tax and the cancellation of any tax debt.

The Cambodia Inter-censal Economic Survey 2014 shows there were 513,759 enterprises in the Kingdom that year, of which 97.6 per cent were micro-enterprises and 2.2 per cent SMEs.

Women-owned 26 per cent of SMEs and 62 per cent of micro-enterprises. About 150,000 are registered as manufacturing entities.

There are 12 listed firms in the Kingdom – six stock-listed and six corporate bond-listed. The 12 companies have raised a combined $240 million and the stock index increased more than 57 per cent last year over 2018, CSX data show.

To date, more than 25,000 individuals and companies have opened trading accounts at CSX.

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