With the international and domestic share market experiencing uncertainty from the implications of coronavirus, it is hardly surprising that panic has not only scared off investors, but companies as well, with only two companies planned to list on the exchange this month. While thedocyard, Emerald Clinics, and Little Green Pharma completing their listings last month before the market turned, ARMnet did not manage to list, with their proposed date having been amended to ‘TBA’.
The docyard, Emerald Clinics, and Little Green Pharma are currently trading at approximately 10%, 16%, and 14% lower respectively from their issue prices. It’s fair to say that any companies thinking about making their public debut are probably going to hold off until investor confidence increases in the market.
Upcoming March IPOs:
AML3D Limited (Proposed ASX: AL3)
3D printing company, AML3D Limited, are proposed to list on the ASX on the 26th of March 2020, at an issue price of $0.20. The company had a deadline to raise $9m by next week, however, high investor interest in the company resulted in an oversubscription shortly after the offer opened. The company estimates that they will have approximately a $26m market cap following listing.
Founded in 2014 by welding specialist and Managing Director of the company, Andrew Sales, AML3D is a welding, metallurgy, robotics, and software business. The company uses wire arc additive manufacturing (WAM), an innovative form of 3D printing, which allows materials to be melted and fused together. The benefits of the technology over traditional manufacturing methods include both reduced production times and material waste.
The company makes their money from securing contracts for general manufacturing, as well as defence, aerospace, maritime sectors. However, they are currently not profitable having made a loss for FY2017, FY 2018, and FY2019, a fact not uncommon for pre-IPO companies.
The company identified some risks which include operational and competitor uncertainties, and noted that it is important the company retain their current customers. Due to the limited operating history, the company did not supply forecasted earnings. Additionally, while AML3D own their WAM software, they are yet to secure a patent over the intellectual property.
United Malt Group Limited (Proposed ASX: UMG)
Malt and yeast producer and distributor, United Malt Group Limited, may demerge as a subsidiary from GrainCorp (ASX: GNC) and appear independently on the ASX in late March. Shareholders in the company will receive one ordinary share in UMG for each share held in GNC.
United Malt is one of the largest commercial malters, with 13 processing locations across Australia, Canada, the United States, and the United Kingdom. Customers for the company include international craft brewers, food companies, and distillers. Graincorp will hold a 10% interest in the company if the demerger goes ahead following a shareholder meeting in a couple of weeks time.
In 2019, GrainCorp’s ‘grain’ segment reported a loss of $130.7m EBITDA, as drought conditions adversely impacted the production and exportation of the product. In contrast, the parent company’s ‘malt’ segment appears to be drought-resistant as it was relatively unaffected by the tough growing conditions in Eastern Australia, reporting $175.5m EBITDA.