Sri Trang Argo-Industry Public Company Limited is offering 280m shares at a maximum offering price of $1.60. The offer will close on 24 Jan at 6pm (interesting timing?). The company is already listed Stock Exchange of Thailand and is one of the largest processors of natural rubber. It is encouraging to see such dual listings finally as we have been seeing a lot of SGX-listed companies going for dual listing elsewhere in the region.
Thailand was the world's largest natural rubber producer in 2009 (hmm...frankly i always thought it was Malaysia, i guess that is because we associated Thailand with Jasmine rice instead). The company is involved in the entire natural rubber supply chain.
Revenue for FY2009 was 46m Baht but for the first 9 months of 2010, the revenue has reached 61.3m Baht. This is 104% higher than the same period in 2009. Profit for 9 months ending 30 Sep 2010 is 3,183m Baht. In Singapore dollars terms, the audited revenue for 9M is $2.6 billion and net profit after tax is $136m. The company's capacity will also increased from 755k tonnes in 2009 to 1.5m tonnes in FY2012.
Extracting the results and translating into SGD, the 'historical' results is presented on the left. The Singapore issue of 280m shares will represent 21.9% of the issued and outstanding share capital post listing. 14m shares will be for public and the rest via placement.
The final offer price will depend on the demand for its shares during the book-building period but retail investors will have to subscribe at the maximum offering price of $1.60 The company also have a generous dividend policy of paying out 30% of net profit for each financial year.
Based on the enlarged share capital, the projected 2010 EPS is $0.14 and based on the IPO price of $1.60, that translate into a "dual-listing" PER of 11.4x. Assuming EPS grow by 25% in FY2011 due to increased rubber price, capacity and demand, the PER will drop to 9x. Assuming a fair value range of 12-15x, the fair value will range from $2.10 to $2.60. I quite like this company, sector and prospects. I will give it a 3 Chilli ratings.
24 Jan 2011 update: I have given it a 3 Chillis rating based on a longer term perspective. For short term trading, a lot depends on its performance on the Thai market as well. I am not sure if Singapore markets will typically give it a higher valuation than the Thai market as there are not many similar 'dual listing' cases here. For investors who want to stag, I believe it should still be possible but the final pricing would be a key determinant and hopefully the underwriters and company will leave so food on the table.