Chow Steel sets IPO price at Bt3

  The IPO shares are open for subscription from next Tuesday-Thursday through KGI Securities, the lead underwriter, and Country Group Securities, Thanachart Securities, Capital Nomura Securities, Seamico Securities, Finansia Syrus Securities and Globlex Securities.
Anavin Jiratomsiri, CEO of the country’s major producer and provider of international-standard billet, said yesterday that his firm would raise capital by making a IPO of 200 million shares.
At Bt3 each, the shares offer a 28-per-cent discount based on the average price-to-earnings (P/E) ratio of common stocks listed on the Market for Alternative Investment (Mai), he said.
The shares are expected to be traded on the Mai in the third week of this month under the ticker symbol “CHOW”.
After the IPO, the company will record paid-up capital at Bt800 million, represented by 800 million shares at par value of Bt1 each.
To give way for investors to make direct investments in Chow, the Jiratomsiri family’s shareholding ratio will have been reduced from 84.5 per cent to 63.4 per cent. All IPO proceeds will be used to invest in current projects.
In the first three quarters of this year, Chow recorded a net profit of Bt168.70 million, up year-on-year by Bt185.83 million or 1,089.99 per cent. In the period, it had already generated Bt4.25 billion in revenue, or 86 per cent of its Bt5 billion sales target for this year, and believes that the high growth rate will persist this quarter. The company has set a growth goal of 20 per cent this year, as its production rate is expected to jump from 300,000 to 360,000 tonnes following the increase in steel demand and the strong growth in the steel industry, driven by government-initiated mega projects and by the need to repair steel structures in the aftermath of the flooding.
Its customer base is also expanding as a result of its success in replacing the imported steel in the market by its products, which offer advantages in terms of shipping costs and time. Its customers receive products on time and in lower per-shipment quantities, which allows them to manage their inventory more efficiently.
Pinmanee Makmontana, managing director of Triple A Plus Advisory Co, its financial adviser, is confident that the IPO will receive a good response, due to Chow’s strong fundamentals. Considering the growth achieved by the company for the first three quarters as well as the steel industry’s bright outlook as a result of skyrocketing demand driven by large-scale construction projects and the ongoing need to repair flood-damaged buildings, she predicts the company’s robust growth to last into next year.
Patchaporn Sankaburanuruk, head of investment banking at KGI Securities (Thailand), said the Bt3 price is very reasonable and provides a satisfactory discount of about 28 per cent.