9M2022 and 9M2023 Industry Market Multiples and Market Outlook within Southeast Asia
With the recent events happening around the globe, uncertainty is ever present as an element in the finance world. As we step into the fourth quarter of 2023, we are presented with a good learning opportunity to reflect on the market’s course thus far. Market multiples have always been a useful tool for evaluating stock valuations and business valuations. Let us take a step back and review the market multiple performances of the different industries within Southeast Asia for 9M2022 and 9M2023.
Industries’ Multiples Performance
Amidst the recovery from COVID-19 pandemic, the market has seen taken a hit again from several main events such as the collapse of two mid-size banks being Silicon Valley and Credit Suisse and the Russia-Ukraine on-going conflict that started in February 2022. These hits have continued to impact the Southeast Asia markets throughout to 9M2023.
Across all the industry sectors in the Southeast Asia region, EV/EBITDA (“Enterprise Value/Earnings before interest, taxes, depreciation, and amortization) and P/E (“Price/Earnings”) multiples have generally declined comparing its performance in 9M2022 and in 9M2023.
However, with respect to the EV/EBITDA multiples performance, Energy, Health Care and Materials sector have remained fairly unchanged compared to the other sectors as the demand of the consumption of total energy, materials and health care are rising. For P/E multiples performance, Energy, Financials, Health Care, Information Technology and Materials have also seen a rise compared to the other sectors.
By further analysing the multiples across the Southeast Asia region, we note that Philippines’ Financials and Energy sectors have contributed to the rise of P/E multiples with high median of 54.3x and 35.1x respectively.
Thailand’s median P/E multiples of the Communication Services, Consumer Discretionary, Health Care, and Utilities sectors are also seen to be the better performer comparing to the other Southeast Asia countries.
High P/E multiples from the Information Technology, Materials and Real Estate sector of 38.7x, 16.3x and 20.8x were contributed by Indonesia and Vietnam respectively.
No. of IPOs achieved within Southeast Asia Region for 9M2022 and 9M2023
An IPO (Initial Public Offering) is the process by which a privately-owned company transition into a publicly traded one. During an IPO, the company offers its shares to the general public for the first time, typically with the assistance of investment banks and underwriters. This allows the company to raise capital from public investors and become listed on a stock exchange, facilitating the buying, and selling of its shares by the general public.
In 9M2023, the Southeast Asia IPO capital market achieved a total of 132 IPOs as compared to 114 IPOs achieved for 9M2022. Indonesia led the pack with a significant contribution of 66 companies out of the total 132 IPOs achieved in the Southeast Asia region within the 9M2023.
Amongst the other countries, Singapore and Vietnam capital markets experienced a substantial decline in number of IPOs in 9M2023. 9M2022 saw the listing of three Special Purpose Acquisition Companies (“SPACs”) on the Singapore Exchange and total IPO market capitalisation of S$699.53 million and amount of fund raised of S$571.79 million compared to IPO market capitalisation of S$136.63 million and amount of fund raised of S$27.88 million for 9M2023.
As the Southeast Asian countries began to move out of the shadow cast by the COVID-19 pandemic, they are still confronted with the global economic challenges such as rising inflation costs, disruptions in the supply chain, geopolitical instability, and the ongoing Russia-Ukraine conflict, all of which have collectively contributed to a slower economic growth trajectory. The outlook for the Southeast Asian IPO market in 2024 remains uncertain, subject to the government’s pro-growth policies, political stability and continuous influx of foreign direct investment.
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Valuation Advisory Specialists