Australian IPOs are showing resilience to turbulence in global markets from the impact of Brexit and the US elections.
IPO performance to September re-bounded in Australia, following the federal election, a reporting season rally and a record low interest rate environment.
In the September quarter, there were 25 listings, compared to 30 the year before, with combined market capitalisation of $3.974 billion, compared to $4.43 billion.
Analysis by Deloitte shows the new listings had average gains of 5.2% in the quarter. For 2016 so far, listings gained 20.6%.
Here are the best, and worst, performers so far in 2016:
“Australian IPOs remain resilient and quality assets are still in firmly in favour,” says Ian Turner, Deloitte’s national leader corporate finance Ian Turner.
“While foreign listings decreased in number, there were still six foreign businesses, or businesses with operations primarily overseas, that listed on the ASX.”
Turner says the December quarter is expected to be a bumper three months for IPOs as companies dash for a pre-new year finish line.
“This doesn’t mean we’re out of the water in terms of prospective volatility, but in a record low interest rate environment, investors are looking to the market,” he says.
IPOs expected in the final quarter include Alinta Energy, Inghams and car dealership Autosports Group.
Tapan Verma, Deloitte corporate finance IPO director, says there’s clear evidence that companies which don’t meet their prospectus expectations will be scrutinised by investors.
“Full-year results were reported through August and, in the continuing low interest rate environment, we saw investors paying close attention to the ability of companies to meet earnings forecasts, as the search for yield and return continues,” Verma says.
Of the positive performers in 2016, the two largest listings, plumbing supplier Reliance Worldwide and logistics software maker Wisetech Global, both exceeded prospectus forecast net profit after tax earnings. Reliance by 2% and Wisetech by 1.2%.
Investors noticed, pushing share prices higher. Reliance is up 24% since listing and Wisetech 70.1%.
Of the 2015 listings, skin and hair care products company BWX exceeded prospectus profit by 8% and saw gains since listing increase to 226%. Baby Bunting Group exceeded expectations by 16% and has been rewarded with share price gains of 118% since listing.
On the other side of ledger, furniture and homewares company Temple and Webster downgraded forecasts, with revenue 20% down on the original prospectus expectations. The loss on the share price was 86.4%.