Choice of HK listing paying off for 2 Singapore startups

Hong Kong

LISTING in Hong Kong is helping two Singapore startups to grow.

Games company CMON and property and energy management systems provider Anacle have increased their revenues and headcounts, as well as broadened their reach into new markets since listing on the Stock Exchange of Hong Kong (HKEX) last year.

"We've benefited from a higher profile in our industry, and that has opened doors for us. I think it's far exceeded our expectations, and a very positive development for CMON," chairman and chief executive Ng Chern Ann told The Business Times.

"We've grown our headcount, and are actively setting up our sales office in Canada and beefing up our Singapore team.

"Some of the brightest luminaries in our industry have entered the CMON fold, either as employees or working exclusively with us, including award-winning designer Eric Lang, acclaimed artists Adrian Smith and Kopinski, and Mike McVey who is responsible for art directing many of our excellent miniature designs."

Mr Ng added that his company is also consolidating "procurement operations in China that should see improvements in efficiency".

CMON came onboard the HKEX's Growth Enterprise Market (GEM) board - an alternative stock market for growth companies - at the beginning of December, raising some HK$53.8 million (S$9.7 million) in net proceeds which the company is putting towards game development, sales and marketing and acquisitions.

Last month, CMON moved into a new 85,800-square foot facility in Georgia, United States, to better support its North American operations.

The company reported US$21 million in revenue for 2016, a 22 per cent increase from the US$17.2 million for the year before, primarily driven by the increase in revenue from board games.

CMON's latest product on online crowdfunding platform Kickstarter, Rising Sun, broke all CMON records, raising over US$4.2 million from 31,000 backers.

"There's definitely a lot of positive buzz surrounding CMON today," said Mr Ng. "Longer term, we're dipping our toes into digital and comics, and hope to move into other media too."

Anacle is similarly riding on its bigger profile since joining the GEM board in December and raising HK$74 million from the listing.

"Our team has grown about 5 per cent especially on the sales front, and we are still on the lookout to grow the team as we embark on our regional expansion plans," Anacle founder and chief executive Alex Lau told BT.

His company plans to complete an acquisition in Hong Kong by the second quarter of next year as a further step into the Hong Kong and mainland China markets, with the acquired company acting as a regional marketing office.

Anacle is also expanding its solution and product offering, including an Internet of things (IoT) meter to be launched in the second half of this year and Web-based billing portal.

According to its third quarter report released recently, Anacle's total revenue increased by just over 22 per cent to around S$9.93 million in the nine months ending Feb 28, 2017, up from some S$8.12 million for the same period the year before.

The company recorded a net loss before tax of about S$1.53 million during the same nine months, down from a net profit of S$1.76 million the previous year mainly due to one-off listing expenses.

CMON also saw its profit and total comprehensive income for the year attributable to equity holders of the company fall by about 44.4 per cent from some US$1.8 million in 2015 to around US$1.0 million in 2016, mainly due to listing-related expenses.

But both Mr Lau and Mr Ng said the benefits of being on the HKEX are worth the extra costs of listing in Hong Kong.

"If you're considering listing in Hong Kong, just be aware that it's likely going to be more expensive than Singapore, due to the market rates for listing professionals in Hong Kong being higher. It's early days yet, but it's been great for us thus far," said Mr Ng.

"It was the right choice for us and our shareholders - given the choice to make again today I'd make the same one."

For Anacle, which eyes Hong Kong and mainland China as target markets, HKEX also offered a quicker upgrade path, said Mr Lau.

He added: "In consideration of our plans to expand beyond the SEA (South-east Asian) region and the funding needed for R&D (research and development), listing was the route to go and HKEX was the natural choice since it is the gateway to the PRC (mainland China) market."