Sri Trang Agro Industry PCL [STA], Thailand’s largest natural rubber producer, is planning to raise at least half a billion dollars in an initial public offering (IPO) of its rubber-glove subsidiary Sri Trang Gloves Thailand [STGT] which will run between Tuesday and Thursday.
STA is already the best performing stock on the SET so far this year and reached a decade high of 29.75 baht on Monday afternoon before settling down to 29 baht at the end of the day.
The stock began the year at 10.1 baht before the demand for gloves skyrocketed following the outbreak of the coronavirus. The increase in demand resulted in STA’s decision to list its rubber gloves unit which sent its share price up by almost 200 per cent.
STA said that the funds raised will be for expanding its production capacity and to settle existing debt.
STGT has a production capacity of 32.6 billion gloves per year. It plans to expand its capacity following the IPO to 50 billion gloves per year by 2024, 70 billion by 2028 and 100 billion by 2032.
The subsidiary made 3.79 billion baht in the first three months of 2020, up 25 per cent from 2.98 billion baht in the same period last year.
Analysts expect STA’s profit to be around 2.9 billion baht in 2020 with 10.9 per cent gross profit margin, up from 8.1 per cent in 2019.
The IPO period will be from June 23 and June 25 when the company is planning to raise 14.9 billion baht (US$480.34 million) from the selling of 438.78 million shares.
STGT’s financial advisor, Finansa Securities, said on Monday the 34 baht IPO price is based on the high demand for the shares.
They expect STGT to enter the trading floor on July 2.
The company has three manufacturing plants in Songkhla, Surat Thani and Trang.
