Steel Lohakit sets IPO price at Bt2.76

Managing director Prasarn Akarapongpisak said the company had appointed eight underwriters and co-underwriters.

The subscription period is today through Thursday, and the stock will be listed under the industrial sector of the Stock Exchange of Thailand.

Semico Securities is its lead underwriter.

The company is offering 80 million shares at Bt1 par value and expects to boost its registered capital from 240 million shares to Bt320 million shares.

The Akarapongpisak family, owner of the special-grade stainless-steel producer, will see its stake drop from 90 per cent to 67.5 per cent as a result of the IPO.

Panu Kongtan, vice president for investment banking at Seamico Securities, said after conferring with financial adviser, the IPO price was set at Bt2.76 per share.

This price places its price earnings ratio at 7.67, significantly lower than the industry average of 9.

He said proceeds from the IPO would be used to fund building construction, machinery purchases and debt repayment.Lohakit has long-term debts amounting to Bt160 million and short-term debts of Bt2 million to  Bt3 million.

Panu said despite volatile conditions in the stock market today, Lohakit's stock was expected to trade above the IPO price, because it possessed strong fundamentals.

In its fiscal 2006, which ended last March, the stainless-steel producer generated revenue of Bt2.14 billion.

In the first quarter of fiscal 2007, it generated Bt641 million in revenues, of which Bt23 million was net profit.

Ratchanok Dandamron-grak, senior vice president and head of research at Finansa Securities, said her company did not recommend buying stocks in the steel industry right now, because the industry outlook was still not very positive.

Siriporn Chanjindamanee

The Nation