Published on June 24, 2005

Thai Steel Cable shares closed 45 per cent up yesterday – on their first day of trading – over the stock’s modest initial public offering price, thanks bright business prospects.

The stock was quoted at Bt11.10 at the opening bell, up from its IPO price of Bt9.20, and peaked at Bt14 in afternoon trading session before closing at Bt13.30. The SET index rose almost 1 per cent to 693.13 yesterday.

Its strong debut bodes well for two other steel-related companies planning IPOs – MCS Steel Plc, a steel fabricator, and Permsin Steel Works, a cold-rolled steel trader.

Thai Steel Cable’s impressive trading initiation could be attributed to a discounted offering price, a euphoric market and the company’s prosperous outlook, said Warut Siwasariyanon, senior director of Globlex Securities. The securities firm estimates the company’s fair value at Bt12.

The company’s net profit in the second quarter ending June 30 would come close to matching the Bt64 million net profit it posted in the first quarter, predicted Sarit Patanamarueng, managing director of Thai Steel Cable.

The company is under the umbrella of companies owned by Transport Minister Suriya Jungrungreangkit’s family.

Meanwhile, MCS plans to sell 125 million shares to the public next month to raise at least Bt155 million, said Somjin Sornpaisarn, senior vice president of Kim Eng Securities (Thailand).

The broker is the financial adviser for the steel maker’s IPO.

MCS will offer an additional 15 million shares if its stock is oversubscribed, he said. A price has not yet been released.

The company’s listing plan is aimed at raising production capacity, expanding its customer base and strengthening its competitiveness.

About Bt70 million from the sale of stock will be used to build its seventh plant, which will increase annual production capacity to 50,000 next year from 40,000 tonnes.

The steel maker plans to spend Bt10 million-Bt20 million from the sale to open a service centre in Japan, Bt40 million to establish a joint venture in China and another Bt15 million to build its own wharf.

MCS chief executive Naiyuan Chi predicted the company’s sales would this year jump by more than 30 per cent from 2004.

Last year MCS’s revenues exceeded Bt1.5 billion, of which 90 per cent was derived from exports. Japan is the company’s major export destination.

“The trend of demand for structural steel in Japan in the next few years is stable at a level of six to seven million tonnes per year. There are only a few players outside Japan who can meet Japanese standards and match our cost advantage,” Chi said.

MCS’s net profit shot up to Bt130 million last year from Bt58 million in 2003 and Bt12 million in 2002.

Permsin Steel Works has set an IPO price of Bt3.50 apiece for the 100 million shares it plans to sell, said Chukiat Yongvongpaibul, president.

Subscription begins next Wednesday and will be open until July 4. Seamico is the financial adviser.

Siriporn Chanjindamanee

The Nation

Post your comment to this story here