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Tuesday, November 29, 2011

Good Corporate Governance Practices Ensure Premium Pricing For Bursa Companies

4 Muharram 1433 Hijrah

KUALA LUMPUR, Nov 29 , 2011- Good corporate governance practices are what ensure a premium pricing for companies listed on Bursa Malaysia.

The Chief Executive Officer and Executive Director of HwangDBS Investment Management, Teng Chee Wai said unlike in the 1990s, where the local stock market was able to attract much liquidity, companies listed on Bursa today need to work harder to attract investors.

"The challenge for fund managers in Malaysia, is the difficulty in looking for good companies to invest," he said, during the Bursa Malaysia IPO Seminar here Tuesday.

He said there were not many companies on the local bourse, such as SP Setia, which had market valuation above the regional average.

On average, he added, the Compound Annual Growth Rate (CAGR) for Bursa Malaysia listed Companies share prices from 2001-2011 was at 0.02 per cent per annum.

According to Teng, the top outperformers among Malaysia listed companies had a share price (based on 2011 market capitalisation) of CAGR between 25-33 per cent.

"The outperformers tend to come from those sectors which Malaysia has a clear competitive edge," he said.

In the furniture sector for example, he said, there is a lack of initiatives to move up the value chain.

"What fund managers look for are Malaysian companies which are ambitious and have growth beyond Malaysia, as the domestic market is limited. They must also be good business models," Teng added.

The Managing Director Malaysia division of Aberdeen Asset Management, Gerald Ambrose said among the questions fund managers ask are, if the business plan can grow for eight to 10 years and if the cash flow or cash flow forecast can fund that growth.

"Other related questions are of the balance sheet finance dividend payments and whether the management appears transparent," he added, at the seminar.

Source:BERNAMA

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