Thailand: TPIPP logs first IPO flop since 2015

Thailand: TPIPP logs first IPO flop since 2015

TPI Polene Power Plc (TPIPP), which is 70.2% owned by Thailand's
third-largest cement maker TPI Polene Plc (TPIPL), dipped 4% below its
initial public offering (IPO) price of seven baht per share on the first day
of trading yesterday, marking the first IPO flop since December 2015.

Tisco Securities, TPIPP's lead underwriter for the IPO, blamed the setback
on the large number of shares.

TPIPP started on a sour note at the opening bell, at 6.85 baht, before
closing at 6.70 baht in brisk trade worth 4.82 billion baht.

The power producer set its IPO price at the top end of its indicative price
range of six to seven baht.

TPIPL recently issued a statement that it will not divest any single shares
in TPIPP for one year after the first day of trade to build up confidence in
IPO subscribers.

TPIPP mobilised 17.5 billion baht from the share sale through the primary
market by issuing 2.5 billion shares.

It was the first stock that failed to close above the offering price on the
first day of trade since December 2015 when Star Petroleum Refining Plc
(SPRC) was 11% below its IPO price.

Paiboon Nalinthrangkurn, chief executive at Tisco Securities, believes TPIPP
is suitable for long-term investment because it should not be affected by
the country's economic doldrums as it is engaged in the energy sector and
has stable cash flow. The company's production capacity expansion plan
should also give the stock a boost, he said.

TPIPP operates waste-to-energy power plants with a combined capacity of 150
megawatts and plans to expand its capacity by 290MW through developing three
power plants worth around 10 billion baht, comprising a 150MW coal-fired
power plant, a 70MW refuse-derived fuel (RDF) power plant and a 70MW
coal-fired plant blended with RDF.

All three plants are expected to receive environment impact assessment
approvals within this year.

"Investors shouldn't be worried about the performance on the first day as
the company has a clear business expansion plan. Stock market sentiment is
not expected to take a toll on the stock's debut," said Mr Paiboon.

TPIPP chief executive Prachai Leophairatana said he was not worried about
the lower debut price because it is normal for an IPO with a large offering
amount to trade at lower prices.

"I'm still confident in the strong fundamentals of the company, which is a
worthwhile investment in the long term," said Mr Prachai.

The dip on the first day of trading could be attributed to several products
being available on the Stock Exchange of Thailand, he said. For example,
real estate investment trusts could draw investors because of their
impressive return in the short term.

Mr Prachai said proceeds arising from the IPO sale will be used to expand
its power-generating capacity as well as to repay debt.

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Link to Original Article:
http://www.bangkokpost.com/business/finance/1227916/tpipp-logs-first-ipo-flo
p-since-2015

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com