More S-Chips to re-list in light of low valuations: analysts
By Chris Howells | Posted: 10 March 2011 2027 hrs

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	<>   Video More S-Chips to re-list in light of low valuations: analysts

SINGAPORE : More Singapore-listed Chinese companies, or S-Chips, are packing up their bags here and re-listing in markets in North Asia, where they expect better valuations.

Allegations of accounting irregularities in some S-chips such as China Hongxing and Hongwei Technologies have dented investor interest in these companies.

And that's leading to low valuations for even the better-managed S-Chips.

Some of them are now leaving Singapore for Hong Kong where their businesses are more clearly understood and better valued.

And one S-Chip company is going private.

This week, the controlling shareholder of Singapore-listed Passion Holdings launched a conditional bid to acquire all shares of the handicraft and furnishing manufacturer.

This follows Sinomem Technology, which announced plans to de-list from the SGX over the weekend.

Analysts believe Sinomem is likely to get its shares re-listed in Hong Kong in the near future. This follows furniture manufacturer Man Wah, and Sihuan Pharmaceutical which re-listed in Hong Kong last year after de-listing in Singapore in 2009.

Currently, Man Wah's market capitalisation in Hong Kong is the equivalent of almost S$2 billion, compared to just about S$100 million when it was listed in Singapore.

Sihuan Pharmaceutical is currently worth some S$4 billion, versus S$458 million before its move.

Terence Wong, Executive Director and co-Head of Research at DMG & Partners Research said: " Confidence has been shaken in this field and I think a lot of investors have really shunned away.

" And even with the recovery coming through very strongly, the S-Chips still lag behind and many of them are trading in the single digits - low single digits PE - and if you look at the volume it has been crimped considerably."

Some S-Chips that are staying put in Singapore are seeking a dual listing, either in Hong Kong or Taiwan, to try to drum up more investor interest.

" If you dual list, you can benefit from both sides. So if it's a successful dual listing, and within Singapore, there is also the awareness that this company actually went and dual-listed in another stock market and in that market their reception was very good, and investors recognise the value of the company," said Wong Sui Jau, GM of Fundsupermart.com.

The Taiwan exchange for example is expecting 20 dual listings this year, an increase from 12 last year.

Going forward, analysts said more companies are likely to take either a re-listing or dual-listing route to other locations if investor confidence continues to wane in light of the new cases of financial irregularities among S-Chips.