Last year’s flurry of low-cap technology listings -- a redux of the late 1990s dotcom craze -- shows no signs of abating in the early weeks of 2015.
The latter half of 2014 saw dozens of new tech players on the ASX, embracing activities such as bitcoin generation, crowdfunding, mobile e-commerce and cloud computing.
Overwhelmingly, the listings were via dormant shell resource stocks, accompanied by raisings of $5 million or less and focused on 'disruptive' online plays ignored by the old-world incumbents.
But will these wide-eyed entrants suffer the same fate as dotcom-era supernovas such Pineapplehead, Bigshop and the aptly-named Chaos Group?
In the small-cap circle of life, unlucky explorers morph into tech and biotech stocks and then revert just as quickly to resource plays -- anything from uranium to rare earths to graphite -- when investor fashion dictates.
One shell, RKS Consolidated, is in its eighth rebirth -- a regeneration record that puts Dr Who to shame.
Arguably, it’s different this time around because, unlike at the turn of the millennium, online delivery — especially mobile-based commerce — is not only entrenched, but still growing fast.
In a new report, Foster Stockbroking identifies more than 80 ASX-listed tech stocks in sectors including e-tailing, mobile payments, cloud computing and security.
“While Australia is generally viewed as a resource nation, the surprising successes it has had in healthcare and biotech (Resmed, Cochlear and CSL) illustrates that similar successful companies in the global technology space is not only possible, but probable,’’ the firm says. “Already Seek, Realestate and Carsales have achieved considerable earnings growth in their categories.’’
It’s not surprising that many of the minnows proclaim to be 'mini-me' versions of these billion-dollar early movers.
The well-backed Latam, which listed last month, seeks to be the leading Latino classified cars site, following the success of both Carsales and iCarAsia.
While anecdotal evidence suggests investors have become more discerning because of the sheer volume of IPOs, most tech plays have done okay on listing.
A standout is the Silicon Valley-based 1-Page, which promotes a cheaper recruitment method based on a one-page resume.
Ironically, 1-Page is a tech solution to a tech problem: the blight of generic online resumes that flood a recruiting employer’s inbox.
1-Page shares have soared more than fivefold since listing in October via the mortal remains of Intermet Resources.
Asian-centric plays have also appealed, if only because the populace is, well, populous and internet and mobile savvy.
Take the Singapore-based Migme, which offers social media platforms including LoveByte, a channel for love-struck couples. Migme shares have quadrupled since relisting in August and raising $8m via the shell of Latin Gold.
Shares in YPB, which tackles the immense problem of Chinese counterfeiting of consumer goods, have climbed more than 50 per cent since listing in August.
Some new listings started strongly but lost steam, including bitcoin trader and “miner” Digital DCC, Chinese m-commerce play 99 Wuxian and online work intermediary Freelancer.
A recent disappointment was well-backed Skyfii, which gathers and sells data on consumer behaviour gleaned from free Wi-Fi in venues such as shopping centres.
As with the 1990s, the IPOs tend to push the big-picture stuff such as projected growth rates for mobile commerce and advertising. Just as the heady valuations of the old dotcoms were based on projected revenue multiples, most of the new crop lack a sales record or the prospect of short-term earnings.
Still, the tech caravan rolls on, even if investors are becoming more discerning simply because of the surfeit of offerings. A cynical take is that there’s more than an opportunistic whiff to the phenomenon, in that the listing and compliance process is expedited by the easy availability of “zombie” resource shells.
If you’re a director of cash-strapped Acme Exploration NL (as in No Luck), do you opt for irrelevance or a corporate rebirth?
Idle brokers and advisers exposed to the moribund small-cap resource sector are another catalyst in the tech-tonic shift.
Market lore goes that if it smells like a boom it is a boom and the spate of rebirthings has that aroma.
There will be casualties. But unlike dotcom era, at least this time everyone has the benefit of a more mature online market.
YPB chief John Houston says that even in a conducive market, proponents can’t assume an IPO will be successful.
“You have to make it work,’’ he says. “The shareholders and the investment community are now important stakeholders and you will need to invest time in working with them to understand and follow the business.’’
Charles Thomas, director of the Perth-based GTT Ventures, expects continued investor interest in 'quality' tech offerings.
“As always with any sector that is receiving increased investor interest there will always be opportunists trying to make a quick buck,’’ he says. “We are focusing on quality technology plays that represent good value and are niche players in the markets that they operate in.’’
Thomas is also a director of the listed “incubator” AppLabs, which is finalising the listing of IT solutions group, via the shell of Liberty Resources. Also in the AppLabs camp, multimedia provider xTV easily raised $6m and will list through Intercept Minerals.
Last month, one-time Tanzanian uranium hopeful Select Exploration said it would acquire the shares in Rent.com.au, the rental property website, and raise an unquantified amount of capital.
There’s also action in the non-internet tech space, with jetpack maker Martin and medical cannabis delivery device outfit Phytotech due to list early this year.
If this duo can fly high -- and both raisings were oversubscribed -- we’ll know this gold rush won’t become a tulip boom just yet.
This article was first published in The Australian. Reproduced with permission.