Past IPO Performance Study on Bursa Malaysia
As an investor, it is important to understand IPO stock performance and conduct an IPO study on previous companies before making any investment decisions.
IPO or Initial Public Offering is the process where a company seeking to be listed on the stock exchange issues shares for sale to public investors for the first time. When a company launches an IPO, it gives investors the opportunity to own shares in the company and contribute to the growth of both the company and the financial market.
Why Study Past IPO Performance?
Here are several reasons why conducting an IPO study on past stock performance is crucial.
- Avoiding Poor Investment Risks
Studying past IPO stock performance can help investors avoid poor investment risks. If previous IPO stocks were unsuccessful, investors should consider the factors that led to the failure and decide whether the investment risk being considered is worthwhile.
- Understanding Market Trends
Studying past IPOs can also help investors understand market trends. If previous IPO stocks performed well, it may indicate that the market is growing or that a particular trend is gaining popularity in the industry. This can provide guidance to investors in making their investment decisions.
- Supporting Investment Decisions
Studying past IPO stock performance can help investors make better investment decisions. By examining previous IPO performance, investors can take into account the factors that influenced stock performance and make more informed decisions about whether to invest in new IPO stocks.
- Saving Time and Effort
Studying past IPOs can also save investors time and effort. By understanding previous IPO stock performance, investors can avoid conducting excessive research on new IPO stocks and focus on shares with better potential.
First Day Performance of 10 Most Recent IPO Companies (3 April 2023) [Ringgit Malaysia]
| No | IPO | Offer Price | Highest Price (%) | Lowest Price (%) | Opening Price (%) | Closing Price (%) |
| 1 | OPPSTAR BERHAD | 0.63 | 2.95 368.25% | 2.00 217.46% | 2.05 225.39% | 2.43 285.71% |
| 2 | CAPE EMS BERHAD | 0.90 | 1.50 66.66% | 1.32 46.66% | 1.42 57.77% | 1.50 66.66% |
| 3 | VESTLAND BERHAD | 0.33 | 0.46 540.90% | 0.34 12.12% | 0.38 15.15% | 0.39 18.18% |
| 4 | TT VISION HOLDINGS BERHAD | 0.34 | 1.70 400% | 1.03 202.94% | 1.49 338.23% | 1.28 276.47% |
| 5 | KUMPULAN KITACON BERHAD | 0.68 | 0.99 45.58% | 0.74 8.823% | 0.99 45.58% | 0.75 10.29% |
| 6 | WELLSPIRE HOLDINGS BERHAD | 0.23 | 0.56 156.52% | 0.325 41.30% | 0.33 43.47% | 0.43 86.95% |
| 7 | NATIONGATE HOLDINGS BERHAD | 0.38 | 1.00 163.15% | 0.805 111.84% | 0.81 113.15% | 1.00 163.15% |
| 8 | DS SIGMA HOLDINGS BERHAD | 0.55 | 0.83 50.90% | 0.605 10% | 0.81 47.27% | 0.62 12.72% |
| 9 | L&P GLOBAL BERHAD | 0.30 | 0.55 83.33% | 0.405 35% | 0.42 40% | 0.545 81.66% |
| 10 | ITMAX SYSTEM BERHAD | 1.07 | 1.55 44.85% | 1.35 26.16% | 1.52 42.05% | 1.38 28.97% |
Observations on Past Performance
Based on the first-day performance of 10 newly listed companies on Bursa Malaysia, there are several observations that can be made:
- No IPO recorded a loss on the first day of trading
- The highest return achieved on the first day was 400% by TT Vision Holdings Berhad, followed by 368.25% (Oppstar Berhad) and 163.15% (Nationgate Holdings Berhad)
- The lowest return achieved on the first day was 8.823% by Kumpulan Kitacon Berhad, followed by 10% (DS Sigma Holdings Berhad) and 12.12% (Vestland Berhad)
- The lowest return if sold at the opening price was 15.15% (Vestland Berhad), followed by 40% (L&P Global Berhad) and 42.05% (Itmax System Berhad)
- The lowest return if sold at the closing price was 10.29% (Kumpulan Kitacon Berhad), followed by 12.72% (DS Sigma Holdings Berhad) and 18.18% (Vestland Berhad)
IPO Trading Strategies
One popular approach among IPO applicants is to sell their shareholdings on the first day the company is traded.
Based on our brief observations of first-day IPO performance, there are several strategies that traders can consider using.
Among these strategies are:
- Selling 100% of shareholdings immediately at the opening price
- Waiting until the closing price to sell 100% of shareholdings
- Selling 50% of shareholdings at the opening price and selling the remainder at the closing price
- Selling 50% of shareholdings at the opening price and selling the remainder at what is deemed the best price of the day. If the price continues to rise, you will profit more compared to selling 100% at the opening price. If the price falls, at least you have successfully sold 50% of your shareholdings at a higher price.
Ultimately, it is up to the individual to decide which strategy they prefer.
However, these observations are based on the 10 most recent IPOs at the time of writing. There are many other factors not covered in this article, such as the date the IPO was launched, market conditions that affected IPO performance, the FBMKLCI trend, the IPO''s background, the IPO''s sector, and many more. Therefore, various factors need to be considered before applying for an IPO.
There are also investors among IPO applicants who do not sell their IPO holdings on the first day. They hold onto their shares until their investment goals are achieved.
Learn IPO From A to Z
This article is part of a series of articles written on Mahersaham about IPOs. For the full list of articles, refer to The Complete Guide to Learning IPO From A to Z.
Conclusion
As an investor, it is important to study past IPO performance before making investment decisions. By understanding previous IPO stock performance, investors can avoid poor investment risks, understand market trends, support better investment decisions, and save time and effort in making investment choices. Therefore, investors should pay serious attention to past IPO stock performance before making their investment decisions.
If you are interested in applying for an IPO but do not know how much capital is needed to purchase an IPO, read the article How Much Capital Do You Need to Apply for an IPO?.
If you are still looking for ways to apply for an IPO, check out Buy IPO on Maybank - Using Maybank2u or How to Apply for MITI IPO for Bumiputera.
FAQ - IPO Performance on Bursa Malaysia
1. Why is it important to study past IPO performance?
Studying past IPO performance helps investors understand trends and patterns of profits or losses from previous IPOs. This provides guidance for making wiser investment decisions and reducing risk.
2. Do all IPOs generate profit on the first day?
Not necessarily. Some IPOs surge on the first day, but others may fall below the offer price. Performance depends on factors such as market sentiment, investor demand, and the quality of the company.
3. How do you analyse an IPO prospectus before applying?
IPO prospectuses can be obtained from the Bursa Malaysia or Securities Commission websites. Focus on the business model, financial performance, key risks, and how the funds raised through the IPO will be utilised.
4. How long should you hold IPO shares before selling?
There is no mandatory holding period for IPO shares. Some investors sell on the first day for quick profits, whilst others hold for the long term depending on their individual strategy.
Ready to start investing in IPOs? Open a CDS account with Mahersaham today and receive exclusive investment guidance. Also download the free investment basics ebook to understand the ins and outs of the stock market.