Impressive year for MessDaq IPOS.

Given the issues mentioned and highlighted in the following two posts:

1. Oh MessDaq
2. Comments on IPO

My fingers were itching when i found out that Star Business today had an article: Impressive year for Mesdaq IPOs


From a business-perspective, it would definately make sense for Bursa Malaysia to highlight these issues. As a business-entity, Bursa is now focused on the Moola itself. This is its responsibility to its shareholders. To make Moola.

However, making moola at all costs?

Is it wise and feasible?

Shouldn't due consideration be made on improving the quality of the newly listed stocks rather than the issue of churning out more business for the exchange?

Anyway, as mentioned in the article, there were simply more new listings in the Messdaq than in the main board or the second board. And the article does shed some light on why is it so.

“For many companies, a listing via Mesdaq was less cumbersome because there were fewer requirements to fulfil,” an analyst with a research house said.. ( EASIER!)

In the case of Mesdaq, companies do not need to show a profit track record. (Lousy company can also list wor!)

“The listing on Mesdaq allows young companies and less-established ones to focus on growth and improving earnings in the early years of listing without having to worry too much about meeting the exchange's stringent rules and regulations, especially on earnings,” he said.

“The cost of entry into Mesdaq is lower (including listing exercise) while allowing companies flexibility to grow globally,” he said.

Those were some of the reasons why the Messdaq seduced more listing...

Now consider some of the following issues mentioned in this blog.

Isn't there one too many companies which lost money after being listed on the Messdaq? (see Oh MessDaq ). For example, Litespeed announced it lost money a few days after being listed!! Or companies like EB Capital and DVM.

Now, why is it such a big deal?

Yeah, yeah, yeah... the Messdaq is a good hunting ground for speculators and punters. A lot of fortune has been made.

What about the losers?

Yeah, they deserve to pay the price for their foolishness... but take the following issue mentioned in Karensoft "Move over who: Part Vii"

When Kenanga first wrote on Karensoft, Kenanga stated that Karensoft some 69.2 million shares then.

Get this... at 0.96 sen, Karensoft then had a market capital of rm65.8 million

Today?

Karensoft (which had a 1-for-2 bonus issue in June 2005) now has some 115.015 million shares.

Now at 0.065 sen, Karensoft market value (market cap) is only some 7.475 million.

Soooooooooooo ...... from 2nd Dec 2004 to 20th Dec 2005, some 58.35 million in market value has simply vanished!

This for me is the huge issue. Huge Issue. Cos most of the messdaq stocks have been trading at a rather high price before crashing. Look at Karensoft, one of them Messdaq stocks had a market value was much as 65.8 million on Dec 2nd 2004. Now, almost a year later some 58.35 million has vanished!!

Think about it.

For a stock like Karensoft, this stock had the means to erase some 58.35 million in market capital from our stock exchange. And this is only one of them troubled Messdaq stock. Aren't the numbers mind boggling?

Do such listings create or ultimately destroy value?

How?

If an investor bought and hold such a share, what would happen to their value of their shareholding?

See the importance of creating value in the market and not quantity?

Yes, yes, yes in this incident, the investor was probably wrong and silly to buy and hold a poor quality stock but let's think in regard to the market itself. Yes, Mr.Market.

Can the market survive without these 'investors'?

Can the market exist without any minority shareholders?

Can the market survive if all there exists is rather poor quality stocks?

Who would want to invest in a poor business?

Shouldn't due consideration be made on improving the quality of the newly listed stocks rather than the issue of churning out more business for the exchange?

Is bigger neccessary better?

Think about it.

Oh MessDaq

Oh yeah.

M'sia to unveil tougher rules for Mesdaq listing

Finally something is being done over the clear lack of quality of the newly listed stocks, especially those being listed on the MessDaq.

Here is a snippet from the article which clearly highlights the appalling lack of quality control on stocks being listed on the MessDaq.

Litespeed's showing so far typifies that of many a Mesdaq company. Listed only last Thursday on Malaysia's tech index, the counter is trading at 31.5 sen - 15.5 sen lower than its offer price of 47 sen.

On its debut it opened one sen higher but closed the day at 39 sen, the second most-actively traded counter. A total of 11.4 million shares were traded, more than double the public IPO portion of five million shares.

Litespeed raised RM16 million (S$7.2 million) from its public issue of 32.5 million 10-sen shares, and its public portion was subscribed almost six times.

Unfortunately for those subscribers, only a few days into its listing, Lite-speed announced a net loss of RM1.9 million for its quarter ended July 31.

Aiyoh! Only a few days into its listing, Lites-speed announced a net loss of rm1.9 million for its quarter ended July 31!!!!!

This is simply NOT ACCEPTABLE.

Truly appalling!

A waste of market capital.

Only this Lite-speed like this? or is there more?

Ok... how about EB Capital ??

Listed 2nd Aug 2005.

Yesterday I saw this bugger's quarterly earnings.

Sales Revenue: 1.802 million
Net loss: 1.064 million!!!

First quarterly earnings after listing and it reports a net loss!

Imagine a horsie horse in a cup race. The bell rings and the horse stumbles, throwing the jockey off the horsie. How? Out off the gates and already no hope liao!!

Disgusting or not?

You tell me lah.

And worse still, this EB Capital losses is at operating level and the company is net debt.

And lagi worse still for EB Capital, based on yesterday's closing price, EB Capital market capital is worth some 21.4 million.

And lagi, lagi worse still.. just imagine if the bossie owns 13% of this stock. This means the bossie is worth some 2.78 million based on his shares value in the market.

You tell me lah.... how come sky NO eyes one?

So, so easy to be a million hair ar?
So, so easy to be kaya raya!!

Sigh!

And lagi, lagi, lagi worse... just how did such company got listed?

Mana tu QC?

Well, i dunno but u guys and gals but muah is certainly pleased to read that SC is aware of this issue and is enforcing stricter rules.

Comeon... SC let's kick some butt!!!!!!

But there are some who are sceptical.

Will it really help?

I dunno... but... at least the very first small step is being made to rectify this issue.

I shall keep my faith... for now.