Sluggish Stock Exchange Lists 2nd Company

Cambodia’s ailing stock exchange, which has remained stagnant since it opened in 2012, finally added a second company to its board Monday with the listing of the Taiwanese-owned Grand Twins International garment factory.

After twice delaying the date because of “technical problems,” Grand Twins—a Phnom Penh-based manufacturer of apparel for U.S. athletic brands Adidas and Salomon—became the first private company to publicly sell its shares on the Cambodia Securities Exchange (CSX) since the bourse opened for trading.

Hean Sahib, left, chairman of the Cambodia Securities Exchange, and Eddie Liao, CEO and director of the Grand Twins garment factory, ring the bourse's opening bell Monday at 9 a.m. (Siv Channa/The Cambodia Daily)
Hean Sahib, left, chairman of the Cambodia Securities Exchange, and Eddie Liao, CEO and director of the Grand Twins garment factory, ring the bourse’s opening bell Monday at 9 a.m. (Siv Channa/The Cambodia Daily)

“This reflects a new development of the exchange,” Hean Sahib, the chairman of the CSX and a secretary of state at the Finance Ministry, told a crowd of mostly officials and journalists at Monday’s listing ceremony at the CSX in Canadia Tower.

“We see the potential of the CSX…and this will become a catalyst for Cambodia’s economic growth,” Mr. Sahib said.

At 9 a.m., Mr. Sahib and Eddie Liao, CEO and director of Grand Twins, as well as a number of Grand Twins officials dressed in Adidas tracksuits, rang the opening bell.

“I am 100 percent confident we will do well,” Mr. Liao said after opening the exchange. “We have good workers, good skills and good customers. And the government supports us in Cambodia.”

However, the initial performance of the new firm’s stock was not particularly encouraging. Grand Twins’ opening share price was 9,700 riel, or about $2.40, with an initial 2,700 shares trading at a total value of 26.19 million riel, or about $6,469.

At closing, the price fell to 9,220 riel, or about $2.20. Trade volume increased to 3,101 shares for a total value of 29.88 million riel, or about $7,383.

“There’s not much enthusiasm about [the initial public offering]. Even today we had some trade but still low volume,” said Hong Sok Hour, CEO of the CSX.

“Some people say it’s not the right time [to list], but [Grand Twins] cannot wait any longer,” he added.

Industry analysts said Monday that while the listing is a step forward, the bourse is still struggling since it first listed the state-owned Phnom Penh Water Supply Authority (PPWSA) two years ago.

“The stock exchange is too stringent on the listing requirements,” said Thomas Hugger, CEO and manager of Asia Frontier Capital, a Hong Kong-based fund management firm.

“The whole process to get listed is very bureaucratic,” he said. “It’s just that the capital market in Cambodia may be too young or not that developed and there’s not enough support or interest from companies.”

Mr. Hugger noted that Laos, where the population is one-third of Cambodia, has had three companies list on its bourse since opening in 2011.

“So Cambodia should have six or seven,” he said. “It’s definitely disappointing that only two companies have listed.”

Rohan George, head of global markets in Cambodia for ANZ Royal Bank, said the listed companies currently offer little value, resulting in low investor confidence.

“Value depends on earnings and earnings are shaped by the economic cycle, forecasts [and] business improvements…. Both stocks are not in attractive sectors of the market currently offering value,” he said.

For example, when the PPWSA listed, its share price soared by almost 50 percent on the first day of trading and continued to an all-time high three days later of 10,000 riel, or about $2.57, which Mr. George credits to “first day excitement.” It then slumped back toward the initial public offering of 6,300 riel, or about $1.57, and continued to drop. On Monday, the stock price was 4,800 riel, or about $1.18.

As for Grand Twins, Mr. George said current unrest in Cambodia’s garment sector—including strikes and protests that were lethally suppressed by government forces—make the company a tough sell to investors.

“The garment sector seems to have some issues,” he said.

Exchange officials on Monday admitted that more must be done before the CSX would have any impact on the Cambodian economy as a whole.

“I think the future of the CSX is bright,” said Ihnsoo Lee, chief operating officer of Korea Exchange, which owns a 45 percent stake in the CSX. “But we have to wait. If we have around 10 companies listed, it’s going to work automatically. But before then, we have to be patient.”

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