What makes a good float? Unfortunately, that is one of those things that is only apparent in hindsight. Companies don’t necessarily have to hit the ASX screens with a bang, but they do have to have some attributes, or potential, or “story” to impress the market. Here are snapshots of the five best floats of the year.
Appen Limited (APX)
Listed: 7 January
Issue price: 50 cents
Current price: $1.81
Gain to date: 264%
Language and search data services company Appen came on to the market in January at its 50 cent issue price, and briefly slipped to 48 cents before closing its first day up 5 per cent at 52.5 cents. About 40 per cent of the company was floated as private equity firm Anacacia Capital sold down its stake. Anacacia’s Wattle Fund remains a 4 per cent shareholder. But the market liked the fact that both Appen chairman Chris Vonwiller and non-executive director and former CEO Bill Pulver kept all of their shares, and did not sell into the float.
Appen then reported a 33 per cent jump in revenue to $35.8 million for the half year to June 30, with net profit up 28 per cent, to $2.68 million. On the back of the strong first half results and the weakened Australian dollar, Appen upgraded its full year 2015 guidance.
The company’s customers now include nine of the world’s ten largest technology companies. Large search engine providers, social media companies and e-commerce providers use its technology to improve the relevance of the search results to their users. It’s fair to say the market likes this stock.
REFFIND Limited (RFN)
Listed: 9 June
Issue price: 20 cents
Current price: 58 cents
Gain to date: 190%
Human resources (HR) technology company REFFIND burst on to the exchange, opening at 24.5 cents a share, a 22.5 per cent premium to its 20 cent issue price. And it did not stop there: REFFIND shares rocketed as high as to $1.93 by late October, before running out of steam a bit.
REFFIND has three product apps: REFFIND Employ, which is designed to manage, analyse and improve companies’ employee referral program; REFFIND Engage, which is aimed at the employee engagement market, replacing traditional in-depth written surveys of employee engagement, culture and workplace health; and an employer training tool, REFFIND Educate, which will handle workplace education and training and corporate communications. A fourth revenue stream, REFFIND Embrace, was added with the September purchase of global employee recognition platform WooBoard.
In its short life on the ASX REFFIND has consistently added new big-name customers. The job now is to turn that into revenue.
Superloop Limited (SLC)
Listed: 4 June
Issue price: $1.00
Current price: $1.97
Gain to date: 97%
The super-fast internet services provider surged on to the ASX screens in June, more than doubling from its $1 initial public offer price, and ending its first day at $1.84. Superloop is into “dark fibre,” which sounds exotic, but simply means optical fibre infrastructure that is not in use. Superloop has exclusive rights to use an approximately 130-kilometre fibre optic network within Sydney, Melbourne and Brisbane, while it also has rights to a 120-kilometre underground duct network in Singapore. The company also provides data centre services for the storage of information in the cloud on behalf of its business clients.
Superloop hit the sweet spot of exposure to the exponentially growing demand for data, which is largely driven by the shift to video and mobile by internet users. The company also had a tick of the approval from the market as being the fourth technology float run by Bevan Slattery, the former chief executive and founder of dark fibre operator PIPE Networks, data centre and IT services business NextDC and Asia Pacific Data Centres, the real estate investment trust (REIT) established to own some of NextDC’s data centres. Singapore and Hong Kong have been identified as the company’s big growth opportunities.
BWX Limited (BWX)
Listed: 11 November
Issue price: $1.50
Current price: $2.94
Gain to date: 96%
Skin care company BWX, which listed in November, soared 41 per cent on its first day, and has extended that gain close to double its $1.50 issue price. The company, which owns, produces and distributes Sukin, Derma Sukin, Uspa, Edward Beale and Renew Skincare products, closed its share issue after one week, being heavily oversubscribed. That is always a great sign for the after-market, indicating unsatisfied demand. BWX also floated at a good time, when demand and consumer interest in natural and organic consumer goods is booming.
BWX’s net profit was $9.6 million for the 2015 financial year: in October, BWX said it was forecasting a 15.6% increase in net profit, to $11.1million, in the 2016 financial year.
The growth is being driven by the popularity of its key brands, including Sukin, with pharmacy sales for that product growing by 40% in the 12 months to August 2015. The stock market can’t get enough, either.
QMS Media Limited (QMS)
Listed: 29 June
Issue price: 65 cents
Current price: $1.24
Gain to date: 90%
Outdoor advertising company arrived on the ASX relatively quietly in June, firming to a 9 per cent close on its first day – but that was an outstanding effort, given that the company chose for its debut one of the ASX’s worst days in recent years, at a time when the market was fixated on the Greek debt crisis.
QMS Media raised $90 million through its initial public offering, using the proceeds to fund acquisitions including QMS APAC Limited – one of Australia’s leading outdoor advertising assets –and the outdoor advertising assets of Paramount Outdoor, Octopus Media and Drive By Media amongst others. The company subsequently beat prospectus forecasts for revenue, and EBITDA (earnings before interest, tax, depreciation and amortisation) for FY15, but made a net loss – albeit a smaller one than forecast.
The market does not seem to mind that QMS is a loss-maker – the company’s growth strategy of developing its digital and static billboards in high-profile retail, transit and airport sites across Australia, Bali and New Zealand has clearly earned a vote of confidence.
But where there is success, there is also failure. It is doubtful that the subscribers to the five biggest flops have enjoyed their time so far on the ASX. Spare a thought for the following;
Story-I Limited (SRY)
Listed: 20 January
Issue price: 20 cents
Current price: 5 cents
Loss to date: 75%
1st Available Limited (1ST)
Listed: 9 June
Issue price: 35 cents
Current price: 9 cents
Loss to date: 74%
Premiere Eastern Energy Limited (PEZ)
Listed: 12 February
Issue price: 20 cents
Current price: 6 cents
Loss to date: 70%
Otherlevels Holdings Limited (OLV)
Listed: 31 March
Issue price: 20 cents
Current price: 10 cents
Loss to date: 50%
MyFiziq Limited (MYQ)
Listed: 17 August
Issue price: 20 cents
Current price: 11 cents
Loss to date: 45%
