|• XMH Holdings' business has had a great recovery over the past 3 years after being put on the SGX Watchlist. If you are not familiar with XMH -- with a history of over 60 years, XMH is an established diesel engine, propulsion and power generating solutions provider. It has a diverse customer base in the marine and industrial sectors across Asia, particularly Indonesia.
• But it is facing a looming headache: How to meet a SGX criterion for staying listed? The criterion is -- an average daily market capitalisation of $40 million or more for a period of 6 months prior to the end of the extension application.
• With the market cap hovering around $30 million or lower this year, shareholders and the SIAS have made queries on this matter ahead of XMH's AGM. The company's response, just published on the SGX website, is below.
• Interestingly, XMH's CEO-cum-Chairman has been buying shares, raising his stake to 44%. Shows that he is not fazed by the matter?
|Q: The SGX-ST had on 1 December 2022 approved the Group’s application for the extension of the watch-list cure period by 12 months to 4 December 2023. The Company had turned profitable in FY2021 and had achieved encouraging growth in earnings in the last 2 financial years.
However, the Company still has not met the other requirement of Rule 1314 of the Listing Manual, that of the Company having an average daily market capitalisation of S$40 million or more for a period of 6 months prior to the end of the extension period.
With less than 4 months left to the extended cure period, what is the Company’s plan with regards to its extended Watch-list status? Apply for a further extension of the cure period?
The Group was placed into the SGX-ST watchlist in December 2019 after incurring 3 prior years of consecutive losses.
During the past few years, the Group has not only navigated the challenges brought about by the unprecedented Covid-19 pandemic, the global supply chains disruptions, ongoing conflicts and tensions as well as interest rate hikes around the world, it has also turned around its business to record profitability in the last 3 consecutive years.
Having fulfilled the first criteria through the Group’s continuous hard work and efforts, it has also been considering and evaluating its options to fulfil the market capitalisation criterion to exit the watch-list.
On many accounts, market capitalisation is very much dependent on the prevailing market forces so much so that even corporate actions, if taken, do not guarantee success in achieving this.
As such, the Group will adopt a holistic approach and will take into account all relevant factors and market conditions before making a decision for the benefit of shareholders.
In the meantime, what the Group can do is to continue to focus and strive for profitability which it has managed to achieve in the last 3 financial years.
For more Q&A, see the company's response to shareholders here and SIAS here.