AIM vs Hong Kong Stock
Exchange:
How do they compare?
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PRECISE. PROVEN. PERFORMANCE.
Foreword
Notes on the report
Moore Stephens has decided to carry out an
analysis to compare the HKSE to AIM instead of
the London Main Market.
It is our view that the perceived size requirement
for companies listing on the London Main Market
is significantly higher than that of the AIM as
market capitalisation of Main Market companies
are typically in excess of $500m, whereas AIM
companies are expected to be much smaller,
circa $100m.
There appears to be a gap for companies in the
UK with a market capitalisation of between
$100m to $500m, hence we have considered
whether it may be more efficient to seek an
alternative listing elsewhere.
We highlight that local stock markets would expect
that their issuers are suitable to list in their
respective market; one prominent test is where
the company is operating and its geographical
growth plans.
AIM vs Hong Kong Stock Exchange
Sector analysis
Introduction
As at 31 December 2016, 982 companies were listed on AIM. There has been a recent downward trend of
the number of companies listed on AIM, with more delistings and exits than new entrants over recent months.
As at 31 December 2016, 1,964 companies were listed on the HKSE; 1,701 were listed on the
Mainboard. The remaining 263 were listed on the Growth Enterprise Market (GEM), the HKSE’s junior
market for growing businesses.
Key sectors: The number of companies by market and key sectors are shown in the charts below.
Comparatively speaking, AIM has a significant number of companies operating in banks and financial
services (70), mining (111), oil and gas production (73) and software and computer services (92).
In contrast, the most populated sectors for HKSE are
construction (124), banks and financial services (155), personal
goods (155), real estate (191) and technology hardware (101).
HKSE
AIM
982
1,964 companies
companies
The chart below highlights that both AIM and HKSE have a
diverse range of companies and are generally considered
sector agnostic.
1,701
mainboard
263
99
101
15
Technology hardware
and equipment
Real estate
investment services
48
61
22
73
17
6
Personal goods
Oil and gas
producers
46
Mining
Leisure goods
Industrial
transportation
Industrial
engineering
31
Travel and leisure
111
144
14
55
18
64
4
56
9
56
39
Pharmaceuticals
and Biotechnology
Key
AIMHKSE
Food and
General retailers
Banks and
Financial services
Automotive
0
11
50
Construction
and materials
70
100
Household goods and
home construction
124
155
150
155
191
200
3
39
Number of companies
GEM
Analysis based on ICB sector per BBBHKSE and AXX index.
Excluding HKSE business with market capitalistion in excess of US$5bn
1
AIM vs Hong Kong Stock Market
Size of companies
We have already seen that the HKSE has double the number of companies listed on it compared to AIM,
but are they larger companies? Predominately yes.
We note that for the purposes of analysing the smaller and mid-cap companies, we excluded companies
with a market capitalisation in excess of US$5bn from the HKSE population in order to make the data-set
more compatible with AIM.
Revenue: The mean revenue for HKSE
companies within our sample was US$268m,
significantly higher than the median of US$55m.
There are a significant number of large
companies which distort the mean and pull up
the average revenue. Similarly, this is also true for
AIM (shown below).
Key
HKSE
AIM
300
250
Total assets: Much like revenue, average
total assets shows a similar story (below). The
average assets owned by a HKSE business is
much more substantial than AIM on both a
revenue and total assets basis. The median
book value of total assets of our HKSE sample is
US$323m compared with US$33m for AIM.
2000
Key
HKSE
AIM
1550
US$’m
US$’m
200
1000
150
100
500
50
0
0
Mean
Median
Average company revenue by market
Mean
Median
Average company total assets by market
2
AIM vs Hong Kong Stock Market
Company valuation
Valuation by market: The chart below shows a
key valuation metric, EV / EBITDA, of HKSE
companies compared with AIM. Both markets
achieve a healthy median EV / EBITDA with a
multiple of 16.0 for AIM and 18.1 for HKSE.
This highlights that when companies generate a
positive EBITDA investors attribute a high value,
whether on HKSE or AIM.
EV / EBITDA
0
5
10
15
HKSE
AIM
20
18.1
16.0
NB: For the purpose of our analysis, companies with a negative EBITDA were excluded from the calculations.
Valuation by sector: Having considered the
valuation of companies by exchange, one questions
whether certain sectors outperform others?
The chart overleaf shows sectors with ten or more
companies on each exchange and their respective
median EV / EBITDA multiple.
Our findings show that certain sectors outperform
others depending on the stock exchange and
sector.
HKSE markedly outperforms AIM in mining,
financial services, media, support services and real
estate and investment services.
3
AIM vs Hong Kong Stock Market
Company valuation
Other sectors such as general retailers and
healthcare equipment and services are similar and
generate consistent strong multiples.
biotechnology. The huge mining sector differential
is perhaps somewhat misleading given the relatively
large number of small mining companies on AIM.
Whereas in some sectors, AIM outperforms HKSE
such as food production, pharmaceuticals and
17.8
Software and
Computer services
23.0
18.7
20.6
Pharmaceuticals
and Biotechnology
Health care
equipment
and services
General retailers
Industrial
engineering
Travel and leisure
Food producers
11.6
12.8
20.0
20.5
16.3
16.6
14.3
14.0
19.7
16.4
22.5
17.2
Electronic and
electrical equipment
Support services
Real estate and
investment services
Key
HKSEAIM
Media
0
Financial services
5
HKSE and AIM
AIM outperforms HKSE
show similar valuation
8.2
10
17.0
17.0
15
17.5
20
14.1
25.0
29.4
28.6
25
30.9
30
26.7
HKSE outperforms AIM
35
Mining
EV/EBITDA valuation multiples by sector
EV / EBITDA
Conclusion
This analysis indicates that it may be beneficial
for appropriate AIM companies based on their
sector to dual list their equity on HKSE.
By doing this the company may be able to
achieve a higher valuation multiple, particularly
if they have an overseas presence or
international ambitions.
4
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