Shares of Thai Agro Energy Plc (TAE), the country's third-largest ethanol maker, scored the biggest first-day gain of 2014 yesterday, nearly tripling their initial public offering price.
Stock Exchange of Thailand president Kesara Manchusree (third from left) and Thai Agro Energy chief executive Somchai Lovisuth (to her left) at TAE's first-day trade.
TAE's juicy return in its debut is a further sign that investor appetite in IPO shares remains healthy despite last month's military coup.
The stock began trading at 4.80 baht and further marched to the day's peak of 5.80 baht before profit-taking pared some gains and shares closed at 5.60 baht, marking a 180% rise from the two-baht IPO price.
TAE topped all others in trading value with 5.68 billion baht on the session.
Among the 10 IPOs this year, eight delivered gains to shareholders on the opening day and two fell below their IPO price.
Golden Lime (SUTHA) saw its shares soar 68% on the first day, followed by One to One Contacts (OTO) at 61% and Srisawad Power 1979 (SAWAD) at 54%.
Two brokers said in research notes that TAE's current trading price exceeds fair value.
Phillip Securities (Thailand) estimates the fair value of TAE at 2.82 baht, while KKTrade Securities puts it at 2.50 baht.
KKTrade expects TAE sales volume of 90 million litres or more this year. The ethanol maker's sales revenue is predicted to rise by 44% to 2.4 billion in 2014, with net profit leaping to 227 million baht from 118 million in 2013.
TAE is expected to reap the benefits of the Energy Ministry's plan to increase alternative energy consumption.
Ethanol demand is seen surging from 1.3 million litres a day in 2012 to 9 million litres by 2021.
TAE reported a net profit of 102 million baht in the first three months through March, up from 40.76 million baht in the year-earlier period.
It allocated 296.04 million IPO shares, of which 105.037 million were earmarked for shareholders of parent Lanna Resources. The remaining 191 million were sold to the public.
TAE has an annual production capacity of nearly 121 million litres, placing it just behind Mitr Phol Group and Ubon Bio Ethanol.
The company makes ethanol from molasses and cassava, and customers include PTT, Bangchak Petroleum, Esso Thailand and Thaioil.
Meanwhile, Stock Exchange of Thailand president Kesara Manchusree said the exchange is maintaining its target of 210 billion baht in market cap from newly listed securities this year.
Sentiment has improved, as witnessed by the main gauge's recent run-up to a seven-month high.
At least 10 companies are in line to seek IPO approval from the Securities and Exchange Commission, and Mrs Kesara said the SET is confident that their listing plans remain on track.
