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The class of 2024 ASX IPOs is getting ready to graduate to the Big Time next calendar year. Many of them could’ve made it in 2023 but held back as the dour equity market conditions continued. But next year could well see a rebound in the market. And if it does rebound, there are plenty of companies waiting in the wings to list.
We thought we would pinpoint the Top 6 for investors to watch. For the record, we don’t mean ‘buy’ these companies. We don’t even know if for sure that they are going to list and even when we knew, we would at least like to glance through the prospectuses. After all, you can spot plenty of red flags there. Still, here are 6 companies eyeing off a listing next year.
6 2024 ASX IPOs to look out for
Spare a thought for investors who got wiped out when the company went into administration and sold to private equity, only for it to be relisted. We feel sorry for them, but it was inevitable this was going to happen – and indeed, the company has been trying to IPO for months now. It hasn’t just been about equity market conditions for this company. It has been about getting to profitability (a step achieved for the first time in over a decade) and also seeing if the heavy travel demand holds up, drops off or if demand gets diverted from domestic travel to international travel (a trend we are seeing in the USA).
Virgin hired bankers several months ago who have been selling the company to would-be fund managers. The AFR reported earlier this month that fundies were giving feedback as to what they wanted to see at the IPO and raising concerns. After all, airlines are a risky business to begin with. And so are IPOs where private equity exits.
Most importantly, the performance of Qantas in the last 2 months doesn’t inspire confidence.
We accept this one probably shouldn’t be on the list. We are keeping it on because an IPO is an option its owners and bankers are considering, but it is not the only option being considered. Another option being considered is a reverse listing via Sigma Healthcare (ASX:SIG). Alternatively it might just undergo a trade sale.
It would be an appetising company with a strong market position and in a defensive sector. But as companies like Redox (ASX:RDX) show, it is no guarantee of success post-listing.
Cuscal offers payments infrastructure to its clients. The company is owned by Mastercard, Bendigo and Adelaide Bank along with credit unions. It hired Bank of America for the listing, has spoken to investors about its plans and noted Bank of America Research which has valued it at up to $736m.
In FY23, it recorded revenues of $182m and made a net profit of $26.1m in FY23, up 12% year on year and an 8.8% return on equity. It boasts a 12% CAGR in net profit over the last decade.
Mining and utlities services entities’ record on the ASX is…average at best. But this hasn’t stopped this company, from looking at an ASX IPO. It has 1,300 employees, is still founder-led 15 years from its establishment and counts BHP and Rio Tinto as flagship clients in its mining segment. It also offers non-mining engineering services.
Bell Potter & Shaw and Partners have been hired to conduct the IPO which could value the business at $400-500m. In FY23, it recorded $320m in revenue and $39.5m in EBITDA and anticipates $400m in revenue in FY24.
Guzman & Gomez
19 years since the burrito chain was founded in the Sydney suburb of Newtown, it is looking at listing. It is also looking at expanding even though the economy is soft and margins for fast food providers are being squeezed. The company told the AFR it expects to surpass $1bn in sales in FY24 after reaching $759m in FY23, with demand holding up as consumers seek ‘value’.
Expansion into the US is the key item on the company’s agenda, with the first few outlets opened in Chicago. But it will remain loyal to its roots, expecting to open 30-35 outlets in Australia this financial year.
One concern might be if its 40% shareholder TDM Growth Partners tries to sell out at IPO or after the escrow period. Another is competition in the US market, which is more comprehensive so far as fast Mexican food is concerned.
Mason Stevens is a wealth management technology and services provider, offering exposure to several investing asset classes. In our view, this could well be one of the best IPOs of 2024 so far as prospects are concerned. Stocks in the wealth management technology sector have a good track record, including Netwealth (ASX:NWL) and Hub24 (ASX:HUB).
It has raised money from pre-IPO investors and made record revenues of $43.1m in FY23, up 16% from the year before. But as it the case with all of them, it is waiting for the conditions to be right for it to list.
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