DMX Technologies stock had been undervalued for long enough for the company’s CEO to decide to get its shares quoted as ADRs in the United States where, she hoped, investors would appreciate it better.
It was not just DMX. Other stocks in the tech sector in Singapore seemed to be grossly under-valued - and DMX had an unusual business to boot.
DMX is a leading Internet network infrastructure and digital media solutions & services provider. Its revenue is mainly derived from China.
“This had been in my heart for 3 years since I became CEO. I felt there’s an invisible wall I could not break through. DMX had been trading below its Net Asset Value for a long time,” Ms Jismyl Teo told an audience of senior management of a dozen specially-invited Singapore-listed companies this morning.
The event at St. Regis Hotel was organized by Maddison Williams, which had sponsored DMX’s listing on the OTCQX, and Financial PR, Singapore’s largest investor relations company.
The OTCQX is a trading platform that has attracted more than 130 companies since its inception in early 2007. Trading volumes during 2008 and 2009 were more than US$10 billion. (For more on the OTCQX and DMX's press release on its OTCQX intention, click here.)
Some of the companies that have listed on the OTCQX include adidas, BASF, BNP Paribas, Deutsche Telekom, Marks & Spencer, Peugeot S.A, Roche Holding Ltd and Zurich Financial Services
Since DMX’s announcement of its intention to quote its ADRs on the OTCQX on Sept 17, the stock had indeed attracted greater appreciation. In Singapore, it has since jumped 36%, as Singapore investors anticipated buying interest in the ADRs from American fund managers.
Ms Teo and her marketing director have just returned from a non-deal roadshow in the US, meeting with fund managers, including Fidelity. This is part of her commitment to travel to the US twice a year to meet investors.
She said the preparation for the Sept 23 quotation on OTCQX was relatively simple, compared to a dual listing in a regional exchange.
Unlike Singapore companies with plans for a dual-listing or a TRD listing in Taiwan, DMX was not seeking to raise fresh funds. On the OTCQX, the issue of new shares is not allowed.
The preparation cost was about US$50,000 while the recurring maintenance cost is US$200,000 a year.
Madison Williams’ MD, Stephen Nash, highlighted a number of benefits of the OTCQX:
* The OTCQX relies solely on disclosure that listed companies currently make on their home exchange without alteration.
* They do not have to restate their financial accounts to US GAAP.
* There is no necessity for SEC registration nor Sarbanes Oxley compliance.
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