STOCK FOCUS
Ticon Industrial Connection
Phatra Securities has placed a "buy" rating on shares of Ticon Industrial Connection, with a revised price objective of Bt21.50 apiece.
The brokerage feels positive about Ticon's recent private placement. The cash call will enlarge the company's equity base, lower the debt-to-equity ratio from 2.5 to 1 and provide greater leverage for funding its ready-built factory (RBF) construction.Under the private placement, the company issued 107 million shares at a subscription price of Bt19 apiece. Of those, 20 million shares were allocated to local investors and the rest to foreign investors. The Bt2 billion in proceeds will be used to finance factory-rental operations, which enjoys strong demand and a high growth potential. The broker expects the cash call to be made this quarter. The broker has raised its earnings projection for Ticon Industrial Connection 1 per cent to Bt828 million for this year and 11 per cent to Bt1 billion for next year, in order to reflect Ticon's ability to capture more rental demand after the cash call. More small and medium-sized entrepreneur investment in the automotive and electronics sectors is expected to boost demand for RBFs next year (manufacturers in these sectors are among Ticon's primary clients). With improved RBF-growth prospects, the broker expects Ticon Industrial Connection's economy of scale to improve, which would peg the company's average rent area for RBFs at 5 per cent, up from 3 per cent in previous estimates.
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