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Serrano's fate mirrors that of the whole market

As I write this at 2pm on Tuesday 24 May, the Straits Times Index is -20 points. This no doubt will be duly reported by the news media, the weakness attributed to any one or a dozen of factors - China slowing, rising US interest rates, Brexit etc. To me though, the significant news of the day is an announcement this morning by interior design firm Serrano that it has applied for a stay of proceedings under the Companies Act that basically stops anyone from legal action against the company for 12 weeks until it can restructure its debts. Why is this significant? Because the company listed less than two years ago in Oct 2014 at 23 cents per share, an IPO that was 1.3 times subscribed, but its shares now sell for just above one cent. By any measure this is an awful loss that its shareholders have had to suffer.

Not having tracked this company over the past 18 months, I don't know how and why Serrano's fortunes deteriorated as they did. By most accounts, the IPO held much promise - Vietnam it appears, was touted as offering huge potential. The company was profitable if not wildly so, and its financials looked OK. At least OK enough for UOB to underwrite the IPO. Clearly, that potential was either not tapped or failed to be fulfilled. In many ways, Serrano's fate encapsulates that of the whole market - this was a small IPO just like the local market is small in global terms, its shares suffered from low liquidity just as the whole market has, and performance has been weak for the past 18 months - just as it has been for the entire market.

In Serrano's case, after closing at 23.5 cents on its debut, I believe its shares never performed, and headed steadily downward since then. They hardly trade now - not a good advertisement for Catalist, I'd have to say. Was Serrano a victim of bad timing?  Maybe I should try and figure out what went wrong with this stock in a future blog post.