Srisawad Power 1979 Plc has set its initial public offering (IPO) price at Bt6.90 per share, with it open for bookings next week and it set to trade on the Thai Stock Exchange on May 8.
The company’s executives highlighted Srisawad Power 1979’s low bad debt ratio of 3.7 per cent and adequate reserves to back potential non-performing loans risk.
It has targeted Bt8 billion for this year’s loan portfolio, which should reach Bt10 billion in the next five years.
According to Srisawad Power 1979 lead underwriter, Asia Plus Securities chief executive Kongkiat Opaswongkarn, the company plans to offer 250 million IPO shares with a Bt1 par value, of which 100 million will be allocated to institutional investors, 60 million will be reserved for contributors and Bt90 million will go to general investors.
The share price is equivalent to a price to earnings ratio of 11.9 times and offers investors a 23.7 per cent discount. They will be available for booking from Monday to Wednesday.
High net profit, growth
According to Asia Plus Securities, Srisawad Power 1979’s shares are attractive due to the company’s high (31 per cent) net profit and business growth potential.
The company provides consumer financial services such as personal secured loans. Collateral includes the ownership documents for an array of vehicles.
It also provides home loans and loans for foreign workers.
The objective of Srisawad Power 1979’s IPO is to raise capital to support the extension of loans as working capital and to repay part of the company’s loan obligations, according the company’s director Thida Kaewbutta.
Thida said it would strengthen the firm’s financial structure to support continuing business growth for the long term amid effective financial risk management.
Commenting on the company’s business plan this year, Thida said Srisawad Power 1979 hoped to expand its loan portfolio to Bt8 billion, or an increase of 30 per cent over last year’s Bt5.7 billion.
The company’s bid to expand its loan portfolio to Bt10 billion in the next five years was based on the expansion of its client base and the expansion of branch offices from the current 602 to 1,000 locations within three years. It will invest Bt30 million to have 702 branches by the end of this year, Thida said.
The director said the current economic slowdown did not have a significant adverse impact on the company’s lending growth or bad debts management as the firm had allocated adequate non-performing loans (NPLs) reserves to match the potential risk exposure. Its current NPLs were 3.7 per cent.
The company expects its profit to grow 20 per cent this year in line with its client loan portfolio and the opening of 100 branches.
On the assumption average revenue growth of 20 per cent the past three years, securities analysts expect the company to generate Bt1.7 billion in interest income this year.