Executive Chairman of the KLSE Dato' Mohd Azlan Hashim said MESDAQ companies not only have gained a listing at an earlier stage, but also the value of companies on the MESDAQ market has improved significantly since the consolidation of the MESDAQ market into KLSE Group in March 2002.
"From only five listings in the first three years of operations to March last year, there are now sixteen companies listed on the MESDAQ Market. From a market capitalisation of about RM260 million before consolidation, the market capitalisation is now over RM 1billion. A total of RM244 million of capital was raised in the last twelve months to February 2003.
"Additionally, the average price earning ratio of profitable companies listed on the KLSE Main Board is 12 to 13 times, whilst on the Second Board the price earning ratio is 11 to 12 times. On the MESDAQ market, the price earning ratio is over 20 times.
"Thus, the MESDAQ Market expands opportunities not only for the issuers, but also for the investor and venture capitalist," Mohd Azlan said.
For the investor, companies listed on the MESDAQ market allows the investor entry into the company at an early and more exciting stage of their development whilst providing a highly viable option for investors who seek to diversify their investment portfolio with technology and high growth stocks.
For venture capitalists, the MESDAQ market provides a strategic exit mechanism to make their investments more liquid and even realise some investment value which is important to enable venture capitalists to continue the investment cycle of re-investment of capital.
"The MESDAQ market therefore also serves as an important component of the venture capital industry and institutional investing," Mohd Azlan added.
Mohd Azlan was speaking at the Going Public on the MESDAQ Market in Penang today. The seminar, officiated by Chief Minister of Penang, YAB Tan Sri Dr. Koh Tsu Koon, was attended by over 200 representatives of high growth and technology companies based in Penang and the Northern Region as well as representatives from the Penang Development Corporation.
Mohd Azlan said the seminar will update participants on matters of raising capital, in particular via the MESDAQ Market.
"With practitioners and regulators discussing a range of relevant topics on raising capital, this seminar is indeed an excellent opportunity to clarify issues and address concerns for businesses to raise capital for further growth and expansion," he said.
Mohd Azlan added the seminar is held in Penang to capitalise on the culture of business innovation and entrepreneurial activity that has been driving Penang's economic growth. To date, out of 873 companies listed on the KLSE, 37 companies on the Main Board, 42 companies on the Second Board and 2 MESDAQ Market companies are based in Penang.
On companies going public, Mohd Azlan said this will require timely and accurate disclosure of information to regulators, shareholders and investors.
"However, one must not forget, this effort comes with the benefit of greater awareness of the company, positive profiling and positioning of the company. "With adequate and proper disclosure, there will be greater awareness of the public company -in Penang, in the northern region, in Malaysia, in Asia, even the world.
"The KLSE today serves over 3 million investors from over 100 countries. A public listed company will therefore continue to have the attention of not only the broad investor base but also financiers, fund managers, business partners - in fact, the target audience needed for public listed companies to grow and progress further," Mohd Azlan said.
Mohd Azlan said some common misconceptions about the MESDAQ Market is that it is only for small companies, it is only for technology companies and it is a short cut to the Second and the Main Board of the KLSE.
The MESDAQ Market is not only for small companies. Although the minimum issued and paid-up capital required for listing on MESDAQ market is RM 2 million, there is no ceiling to the issued and paid-up capital requirement. The MESDAQ Market is able to cater for large companies, in terms of size of capital - even those which qualify for a Main or Second Board listing, but prefer instead to be listed on MESDAQ Market.
The MESDAQ market has also been established to cater to the fund raising needs of technology and high-growth companies.
Mohd Azlan said technology companies are not mere users of technology but developers of technology with the technical capabilities to research and develop new technology, processes or equipment. This includes a broad spectrum of companies that commit substantially to research and development, companies with intellectual property, companies that own new technology, companies that build brands, companies with niche markets, companies with substantial exports in non-traditional areas, companies with substantial foreign earnings, companies that contribute significantly to national development in technology.
With respect to high growth, Mohd Azlan said for the MESDAQ market, high growth companies can either be in technology or non-technology areas . High growth companies are companies that have an outstanding business model, a unique product, a diversified market and client base for the product, perhaps in an industry that has high barriers of entry - in short a company that has a high degree of potential to grow and expand.
On another common misconception, Mohd Azlan said the MESDAQ Market is not a third board or a short cut to the Second or the Main Board of the KLSE. The Listing Requirements of the MESDAQ Market are separate and different from the Main Board and the Second Board. The MESDAQ market caters to the niche segment of technology and high growth companies seeking the unique and strategic profiling that the MESDAQ Market can accord them.
"In fact, MESDAQ can list companies which even qualify for a Main or Second Board Listing at the KLSE," Mohd Azlan added.
Mohd Azlan said moving forward, the outlook is very encouraging for the MESDAQ market.
"The number of companies are certainly growing, and we invite you to grow with us on the MESDAQ Market.
"Together we can chart new progress for national development, in the technology and high growth sector whilst contributing to the continued growth of the capital market," Mohd Azlan added.
