Friday, December 04, 2020

SCPG rises 5% on opening day of trading before falling to issue price

Oct 23. 2020
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By The Nation

The price of SCG Packaging (SCGP) closed at Bt35 per share on the first day of trading on Wednesday, on par with its initial public offering (IPO) price.

Shares worth Bt11 billion were traded.

The company's share price had risen to Bt37 per share in the morning session, up Bt2 or 5.17 per cent, before facing volatility. The share price hit the highest at Bt37.25 per share.

Pichet Sithi-Amnuai, the president of Bualuang Securities who are underwriters to the issue, said he was satisfied with the first day of trading even though the share price did not rise to the expected level.

He said some investors sold SCGP shares to hold cash, but he expected institutional investors to buy more shares, as it was considered a large-cap share with growth potential in line with the growing Asean packaging market.

"SCGP shares are large-cap shares focusing on sustainable growth, so we would like investors to be confident and keep an eye on its growth in the long term," he said.

Veena Lertnimitr, executive vice president at Siam Commercial Bank, who are also the underwiters, said the company would be listed on the SET50 Index in line with the Stock Exchange of Thailand (SET)'s fast track regulations.

She added that SCGP had a high chance to be listed on the MSCI Index on November 10 this year from its market capitalisation and stock liquidity.

SCGP chief financial officer Kulachet Dharachandra said that of the approximately Bt45 billion raised from this issue, Bt10 billion would be used for repaying debt to financial institutions, which would help reduce the company's interest-bearing debt ratio to 0.5 times from the current 0.9 times, while another Bt27 billion would be used for business expansion in the Asean region.

"The company is currently studying acquisition of a corrugated packaging company in Vietnam, which is expected to close the deal by the end of this year," he said.

"Meanwhile, the company is studying investment opportunities in glass bottle, film and polyethylene terephthalate packaging businesses."

He added that cash flow from the fundraising was sufficient for investment in the next 2-3 years.

SCGP chief executive officer Wichan Jitpukdee expected the company's sales this year to be higher than the past of 6-7 per cent yearly, as the company has adjusted its business model to be strong.

“This is an important step for SCGP to become a public company, which will help boost the company's potential and financial status," he said.

He added that in 2020-21, the company intends to invest Bt8.2 billion to increase flexible packaging production capacity in Vietnam and Thailand, as well as paper packaging production capacity in Indonesia and Philippines.

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