IPO Play - quick profit?

Is subscribing to Initial Public Offering (IPO) shares (at IPO price) a “sure win” strategy? To me, as far as investment is concerned, nothing is sure. But my personal observation has been such that during good time, most IPO would open higher than IPO price on Day 1.

Well, what about buying the IPO share on its 1^st Day of listing, can we still make money in short term? Again, during bull market that has higher chance too. Let’s have a look at the more recent IPO listings on Bursa and compare its 1^st Day closing price vs IPO price and current price vs 1^st Day closing price:-

From the above list, there was only one that did not close above IPO price on 1^st Day of listing – KIP Real Estate.

If we compared the current price vs 1^st Day closing price:-

Losers = 5,  There are 5 out of 13 that trade below Day 1 closing price ( BCM Alliance -2% , HLT Global -19%, Matang -18%, KIP -7%, Ecoworld -19%).

Winners = 8, There are few with very impressive returns (Dancomech 56 % in 11 months, Rhone Ma 49% in 6 months, HSS Engineers 47% in 10 months, Perak Transit 40% in 8 months, Foundpac 38% in 6 months and Serba Dinamik 34% in 4 months).

Well, there is no guarantee we will make money from buying IPO shares on its 1^st Day of listing and trying to make quick money ( of course, this listing only compare current price vs Day 1 closing price, it is not conclusive as price changes every day). Though we know in most cases, there are stabilising managers that will try to support the share price if the share price falls below IPO price but again, that is no guarantee it will not fall below its IPO share (example – Malakoff relisting in 2015, IPO price at Rm1.80).Another one was Air Asia X.

There is one exciting IPO coming this week, but not Bursa – it’s SGX, that really attract my attention because I love its asset light business model, strong cash flow & highly scalable.. The only dilemma, it is priced too high - at PE 22 times based on FY16 results, which valued the company at S$900 million. Yes, it is HRnet Group Limited ( SEEK is valued at 16 times PE only). If you are interested , you can check it out too.

http://singapore-ipos.blogspot.com.au/2017/06/hrnetgroup-limited.html