PCS Machine major shareholders not likely to divest more stake

The owner “actually didn’t want to sell, but was urged by management”, Prasong Adulratananukul, chief executive officer of PCSGH, said yesterday.

The company’s stock took a tumble when Wanna sold her shares, prompting the firm to clarify the big-lot transactions to SET authorities.

It said the shares were sold to the management team and other family members of the major shareholders. 

Although it is not required to disclose the identities of the buyers, to quell fears of stock investors, PCSGH reported to the SET that Wanna sold 8 million shares, or 0.5 per cent of the company’s total outstanding shares, at Bt9.60 apiece. The sale was split among 2 million shares to Prasong, 1.5 million shares to each of four other top executives, and 5 million shares to unidentified buyers.

However, the company said in a press release that the balance was taken up by other family members.

After the trades, Siripong Rungrojkitiyos, founder and acting chairman, retains his 578 million shares or 37.4-per-cent stake, while his wife Wanna Raomanachai reduced her stake slightly to 578 million.

The divestitures reflected the “farsighted vision” of PCSGH’s owners, who want to transform the auto-parts company from a family business to a professionally run concern.

“The new management team was installed a year ago and we have confidence in the company,” Prasong said.

Before launching an initial public offering in March, Siripong, who started up the firm 12 years ago, brought in Prasong, a former executive at Siam Kubota, and other managers to succeed his family members in the company. The new executive team was not allocated shares in the IPO.

 

Less dependence 

PCSGH plans to reduce its dependence on products for 1-tonne pickup trucks from 96 per cent at present to 75 per cent in five years. It has already won some contracts to supply auto parts and components to non-pickup-truck customers including Volvo Truck for its large-truck assembly operation here, and Renault for its passenger-car plant in France.

PCSGH was able to keep its gross profit margin at above 20 per cent during the first six months of this year, and is striving to maintain the margin during the second half. 

Because of the faltering domestic new-auto market, the company’s capacity utilisation slipped from 94.7 per cent in the second quarter of 2013 to about 80-81 per cent in the first quarter of this year before picking up to about 84-85 per cent in the second quarter.

Prasong said It was hard to predict the outlook of the auto market, which had become more volatile during the past few years, but provided there is no new negative factor coming in, it should start picking up. However, it will be difficult for the industry to achieve the 2.2-million-unit production target set for this year. 

The planned increase in value-added tax from 7 per cent to 10 per cent in October next year and the planned imposition of a new excise-tax structure on autos might help stimulate demand, since consumers will rush to buy cars before the next tax rates become effective. 

On the negative front, rising aluminium prices have pushed up costs for PCS Die Casting, which contributes about 25 per cent of PCSGH’s sales.

PCSGH booked a second-quarter net profit of Bt206.55 million, shrinking 56.8 per cent from a year ago, while sales decreased 30.5 per cent to Bt1 billion. 

PCSGH mainly supplies powertrain systems including engine parts, transmission parts and final-drive parts such as camshafts, common rails, gears and shafts, to all pickup-truck makers in the country, including Toyota, Nissan, Ford, General Motors and Mitsubishi. Exports account for less than 10 per cent of its sales.