PR frenzy, poor fundamentals: Disappointing IPO darlings

New Straits Times

7 hours ago

KUALA LUMPUR: Over the past 18 months, Bursa Malaysia witnessed a surge in new listings, many accompanied by high expectations and polished narratives.
Behind the scenes, public relations consultants and investment advisors played pivotal roles organising media briefings, analyst meetings and investor briefings to generate interest and drive early demand.
However, as the dust settles, some of these companies have fallen short of their promises, with share prices slipping below IPO levels despite the initial fanfare.
Here are three companies that illustrate the disconnect between pre-listing optimism and post-listing realities:
Alpha IVF Group Bhd
•Recent Price: 28 sen (as of June 6)
Alpha IVF, a fertility services provider, made its debut on Bursa Malaysia with a compelling narrative centred around expanding fertility awareness and clinical capabilities.
The company positioned itself as a beacon of hope for couples struggling to conceive, backed by cutting-edge technologies and a regional footprint.
Public relations consultants heavily promoted the IPO, emphasising emotional branding - stories of successful IVF journeys, warm imagery of smiling babies - and reassuring interviews with founders and doctors.
Investor briefings were held, reinforcing the company's regional growth story.
The IPO was oversubscribed, and the stock saw a slight uptick upon listing.
However, the honeymoon phase was short-lived. Analysts began to question the valuation multiples, especially given the thin margins and rising operational costs of running fertility centres.
The company's expansion plans, initially perceived as bold, began to look like expensive bets in a niche and price-sensitive market.
Despite the promotional efforts, Alpha IVF's share price gradually declined, slipping below its IPO price and staying there.
Notably, the IPO price of RM0.32 corresponded to a price-to-earnings (P/E) ratio of 21.92x, based on a net profit of RM54.79 million and earnings per share (EPS) of 1.46 sen for the financial year ended May 31, 2023.
This valuation was higher than the industry's average P/E ratio, raising concerns about the company's valuation amidst the optimism.
CPE Technology Bhd
•IPO Price: RM1.07
•Recent Price: 71 sen (as of June 6)
CPE's entry into Bursa was anything but quiet.
As a precision engineering company with clients in the semiconductor, life sciences, and industrial automation sectors, it was touted as a proxy for Malaysia's high-tech ambitions.
The IPO narrative leaned heavily on its global supply chain connections, particularly its exports to the US, Europe and China.
In the weeks leading up to its listing, CPE's name was everywhere.
PR consultants rolled out a carefully staged campaign: glossy investor kits were circulated, media interviews were arranged with top executives, and photos of high-tech assembly lines flooded financial pages.
There were even organised tours for analysts and key fund managers to CPE's Johor-based facilities, complete with safety helmets, walkthroughs, and sales pitch presentations over coffee.
The message was clear: CPE was not just another component maker - it was a growth story in a fast-evolving tech ecosystem.
Investors initially responded with enthusiasm. The IPO was oversubscribed, and there was buzz about CPE being well-positioned to ride the next wave of industrial demand.
But reality, as it often does, proved more complicated.
Just a few quarters in, cracks began to appear. Order flows from major clients slowed as the global tech sector cooled. Margins came under pressure, not least due to rising raw material costs and a strong US dollar.
Earnings missed early projections, and suddenly, the glow around CPE started to fade. The same analysts who had attended the factory tours began to revise their outlooks.
Despite the polished communications campaign and well-managed listing strategy, CPE's share price drifted below its IPO level.
The company had a credible story - but not enough momentum to keep the market convinced.
DXN Holdings Bhd
•IPO Price: 70 sen
•Recent Price: 50 sen (as of June 6)
DXN's return to the stock market after years in private hands was framed as a rebirth.
PR consultants spoke of a "new chapter" for the direct-selling giant, with aggressive outreach to media and investor groups. Yet, cracks began to appear when earnings underwhelmed and overseas sales growth slowed.
Despite the well-orchestrated relisting campaign, investors began to question whether DXN's golden era was behind it.
Conclusion: Hype Fades, Fundamentals Remain
Industry observers said new IPOs often arrive on a wave of excitement, backed by slick presentations, aggressive PR campaigns, and promises of untapped potential.
But investors must learn to separate story from substance. Just because a stock is trending or being heavily marketed doesn't mean it's a good buy.
PR blitzes can create temporary buzz, but they can't sustain valuations if earnings disappoint and growth stalls.
The observers said the message is clear: don't get carried away by headlines or hype, and stick to fundamentals, scrutinise the financials and invest with discipline.