Plastic-packaging firm TPBI sees huge response to IPO
PLASTIC-BAG maker TPBI’s initial public offering, the first to be traded on the main board of the Stock Exchange of Thailand this year, has received an overwhelming response from local institutional investors and is 32 times oversubscribed.
Tanachai Bunditvorapoom, first senior vice president and head of investment banking at Tisco Securities – the financial adviser, lead arranger and underwriter of TPBI – said results from the book-building process conducted to gauge institutional investors’ demand for the IPO on Wednesday led to the finalisation of the IPO price at the highest of its indicative price range of Bt10.50-Bt10.80.
Based on the IPO price of Bt10.80, the valuation is 10.8 times TPBI’s 2015 earnings, 10.4 times its projected earnings for this year, and a 22.3-per-cent discount to the Bt22.3-per-share average targeted price appraised by stock research houses.
TPBI will float 100 million shares, equivalent to 25 per cent of the total outstanding stocks after the IPO. Of the total IPO proceeds of Bt1.08 billion, Bt800 million is reserved for acquiring another plastic-packaging company that manufactures high-value-added products, and the rest is for expansion of its existing operations.
Paiboon Nalinthrangkurn, chief executive of Tisco Securities, said the 32-times oversubscription of TPBI’s IPO was very high and had not been seen on the SET for a long time.
“The reason is the current trend that every government around the world is focusing on stimulating domestic demand. TPBI is selling goods that are related to consumption in the international markets.
“The company also has a long way to go, since it has a concrete plan on board,” he said. The IPO subscription period is set for March 16-18.
Other co-arrangers, co-underwriters and underwriters of the TPBI stock are KGI Securities (Thailand), CIMB Securities (Thailand), KT Zmico Securities, Capital Nomura Securities, and Asia Plus Securities.
Trading of the stock is scheduled to begin on March 24.
According to its official filing, TPBI plans to allocate 42 per cent of its IPO stocks to retail investors, 16 per cent each to local and foreign institutional investors, 22 per cent to the company’s patrons, and the remaining 4 per cent to the firm’s board of directors and staff.
Because of the high demand from local institutional investors, Tanachai said some of the allotments reserved for the patronage tranche would be allocated to local institutional investors, but would not exceed 1 million shares.
TPBI CEO Somsak Borrisuttanakul said he was confident the company could achieve double-digit earnings growth again this year.
TPBI is negotiating with a foreign company that manufactures high-value-added plastic packaging products with its own technology, and expects some concrete results from the negotiations by the end of this year.
Somsak said TPBI aimed to adjust its product portfolio to increase the portion of flexible packaging and other value-added products from 20 per cent to 30-40 per cent within five years, while reducing the proportion from general packaging from more than 70 per cent to 40-50 per cent during the same period.
“We will follow the trend of the food industry, where there is a high barrier to new entrants. We will also not limit ourselves to plastic, but will expand to paper and other packaging materials,” he said.
