Large SE Asian listings have mixed debuts on outlook concerns

Kuala Lumpur

SHARES in the Philippines' second-largest IPO and Malaysia's largest offering in more than three years had a mixed debut on Monday, as analysts pointed to expansion concerns in pandemic-hit markets.

Converge ICT Solutions, a Philippine fibre broadband provider, fell as much as 11.2 per cent and ended 9.4 per cent lower, while shares in MR DIY Group, the Malaysian home improvement retailer, recovered to end the day 9.4 per cent higher after briefly dropping as much as 6.25 per cent.

The South-east Asian IPO market has been hit by underperforming stocks and currencies, but companies in the region have raised US$7.1 billion so far this year, led by Thailand, up 21 per cent from the same period a year ago, according to data from Refinitiv.

April Lee Tan, head of research at COL Financial in Manila, flagged Converge's offer price as expensive.

"I like the growth story of the company, except the IPO price. They are vulnerable to missteps, like if the execution is not as good as expected," she said.

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TA Securities' consumer sector analyst Jeff Lye said MR DIY shares performed quite well amid domestic concerns about a rise in coronavirus cases and tighter movement restrictions.

If Covid-19 were to get of control, they may be forced to close down - or retail traffic in malls could decline substantially - and that would hit their revenue, he said.

Converge, which raised US$600 million, counts Canadian pension fund OMERS and Macquarie among its cornerstone investors.

MR DIY raised US$362 million, attracting funds under BlackRock Inc, JPMorgan Asset Management and AIA.

Saurabh Agarwal, a partner at Warburg Pincus, the largest institutional shareholder of Converge, noted "a multi-year runway for growth based on how underserved and under-penetrated the market is".

Converge will use the proceeds to roll out its network to tens of thousands of local communities, while MR DIY aims to repay bank loans.

"Our funds are secured until 2025. We don't need to come back to the exercise anymore," Dennis Anthony Uy, chief executive of Converge, told ANC news channel.

MR DIY CEO Adrian Ong told a virtual news conference that the company was on track to add 307 new stores in the next two years to its existing 674 stores in Malaysia and Brunei. REUTERS