Premier expects Bt455m from its IPO

Trading firm Premier Marketing has set its initial public offering (IPO) price at Bt3.10 a share for its 215 million shares.

PM managing director Somchai Choonharas said the firm would launch the IPO from tomorrow until May 16. Trading of the stock should start on May 27 under the beverage and food sector.

According to its financial advisor, Advisory Plus, PM is expected to raise Bt455 million from the IPO. The par value of the share is Bt1.

PM distributes products such as snacks, beverages, confectioneries and nutritional food. Its subsidiaries manufacture packaged food items like Taro and fish snacks.

Somchai said the PE ratio based on the share value this year was 8.1 times.

He was confident the float would be well received by investors, given the company has strong brands. Its Taro snack reportedly holds 68.5 per cent of market share in its particular segment.

The firm plans to use its IPO proceeds to pay off loans, inject cash into its subsidiaries and as working capital.

PM is upbeat that it could clear an accumulated loss of Bt500 million this year, which would enable it to pay a dividend to shareholders, based on 50 per cent of its net profit.

The dividend will come from net profit earned this year and paid next year.

According to its business plan, PM is expecting revenues and its net profit to grow by 10 per cent a year in the next three to five years.

The fish snack market value was expected to rise 10 per cent this year to Bt1.434 billion from Bt1.304 billion last year.

PM also plans to gradually divest its shares in its subsidiary Premier Enterprise (PE) this year.

PM holds 18.22 per cent of PE, totalling 145.76 million shares.

It also plans to change the business of another subsidiary, Premier Frozen, to run frozen food warehouses which have better prospects.

Premier Frozen makes frozen food, which is currently facing stiff competition in the market.

It is holding talks with some firms that could be potential customers in this venture.

According to Bualuang Securities, the lead underwriter of PM, the IPO price of Bt3.10 offers a discount of between 25-30 per cent.

Of the total 215 million shares offered in the IPO, 1 per cent will be allotted to preferred clients of the company.

Four institutional investors have reportedly contacted Bualuang to subscribe to the shares.

Among them is Japan Asia Investment Co (JAIC), which is seeking 5 per cent of the float.

JAIC's purchase was expected to boost demand for the share offering.