CEO Angkakarn Tantiviroon said yesterday that the stock is expected to trade all day above its initial public offering price of Bt2.25, as it was sold in the primary market at a conservative price compared to the IPOs of other steel firms.

"Our IPO is lower than our competitors' while our profitability is on par with them," she said.

The company's retained earnings of Bt100 million would also make the stock attractive, she said.

The firm floated 100 million shares at Bt1 par value to the public last week, becoming the third steelmaker to go public this year after G Steel Plc and City Steel Plc. The two earlier stocks had disappointing performances on their first day of trade in the secondary market. Only two of the seven stocks that have debuted this year were successful in staying above their IPO prices, namely Rayong Refinery Plc and Ekarat Engineering Plc.

A source from Seamico Securities Plc, Rich Asia Steel's financial adviser, said the steel manufacturer would use Bt80 million from the Bt214.39 million in proceeds to buy a machine for processed steel production.

The rest would be used to pay off short-term loans, which will help cut the company's debt-to-equity ratio to 0.87.

The company allocated 40 per cent of the offered shares to retail investors and the rest to supporters of its business.

"Besides the 20-per-cent discount, Rich Asia Steel had about Bt100 million accumulated profit at the end of the second quarter. The company also plans to pay a dividend, so it's recommended to invest in this stock," the source said.

Angkakarn said the company believes revenues this year will beat last year's Bt4.92 billion. In the first half, the company posted Bt2.29 billion in revenues with Bt71.75 million in net profit.

Its profit margin has improved to 6.04 per cent for the first half, from 2.91 per cent late last year. The margin for the whole year should be 6 per cent or higher, she said.

"The third and fourth quarters are the high season for the construction industry, which is the company's core business. Besides, in the fourth quarter of this year, we are about to add processed steel production to our business," she said.

Steel prices are not likely to fluctuate any more because China's steel industry has started to settle down after aggressive volatility last year, she said, adding that in the next three to six months, the steel price should stabilise at Bt20 per kilogram.