KCE calls off plan for share repurchase

Shares of KCE Electronics, a major manufacturer and exporter of electronic circuit boards, have been selected as the only new securities in both the SET100 and SETHD (High Dividend) Index constituents of the Stock Exchange of Thailand for the second half of 2013. This follows the company’s announcement that it will invest Bt4.67 billion in the construction of a new factory to double output capacity in anticipation of a constant growth in orders.

Commenting on the offering of repurchased shares, managing director Bancha Ongkosit said the company’s board of directors had mandated that the company repurchase 14 million shares or 2.98 per cent of all sold shares. These shares were scheduled to be offered once again between June 11 and 19. However, during that period, stock-market conditions were unfavourable and there was the possibility of an abnormal drop in the share price, which was not in the best interest of shareholders. 

“Therefore, it was impossible for us to offer those 14 million repurchased shares during the said time. The board of directors passed another resolution on May 9 to lower the paid-up registered capital of the company by cancelling all repurchased and unoffered shares from the system.

“The board of directors at its meeting on June 18 passed a resolution approving investment in the new factory worth approximately Bt4.67 billion to increase production capacity by 2 million square feet per month in anticipation of increased purchase orders from existing and new customers. It will be located on a  … plot of land in the Ladkrabang Industrial Estate. We have ownership of this plot, which is near the current factory,” Bancha said.

The construction of the new factory will be carried out in three consecutive phases. Construction of Phase 1 (approximately Bt2.86 billion) will take approximately one year. The output of this phase is 700,000 square feet per month. Completion and production commencement are expected by late 2014. Construction of Phase 2 (approximately Bt484 million) will increase output by 600,000 square feet per month. Commencement is expected by late 2015. Construction of Phase 3 (approximately Bt1.33 billion) will increase output by 700,000 square feet per month. Commencement is expected by late 2016.

Bancha said the new factory would more than double production capacity from the current output of 1.8 million square feet per month. This will accommodate the constantly growing demand of the customers and the industry itself. This factory will bring about improved production efficiency as money will be invested in modern and automated machinery that increases output and lowers dependence on labour. It will also have efficient production-cost management.