Sri Trang Offers Singapore Stock Below Maximum Price

Sri Trang Agro-Industry Pcl, Thailand’s biggest listed rubber producer, set the offer price for a Singapore initial share sale 25 percent below the maximum price indicated last week. Its shares plunged.
The Bangkok-based company said today (January 26) it fixed the price at S$1.20 apiece, after saying on Jan. 20 it planned to sell 280 million shares for as much as S$1.60 to raise S$448 million ($350 million). The reduction came after Thailand’s benchmark stock index tumbled 7.3 percent in the past four days amid protests by nationalist demonstrators. Sri Trang’s shares fell as much as 16 percent in Bangkok today (January 26) on resuming trading.
“It’s inevitable for Sri Trang to set the offering price very low given the Thai market’s recent drop,” Jitra Amornthum, the head of research at Finansia Syrus Securities Pcl, said by phone today (January 26). “The company’s outlook remains robust as high rubber prices will boost its earnings.”
Thailand’s SET Index dropped to a four-month low yesterday (January 25) as global funds trimmed holdings of shares and nationalists vowed to rally indefinitely over a border dispute with Cambodia. Sri Trang was the best performer last year among the 479 members of the SET gauge, soaring 696 percent as rubber futures rallied.
Sri Trang traded 10 percent lower at 33 baht at the 12:30 p.m. break, set for the steepest decline since May 2009. Its shares resumed trading after being suspended on Jan. 21, pending the price fixing. Today’s (January 26) statement didn’t specify how many shares the company plans to sell.
Proceeds from the Singapore share sale will be used to expand processing plants and acquire additional land for plantations, according to the prospectus. The company said it plans to boost capacity for natural-rubber products to about 1.5 million metric tons a year by the end of 2012 from about 860,000 tons at present.
Rubber futures in Tokyo have gained 9.9 percent this month, extending last year’s 50 percent rally, as rising car sales led by China and India boost the demand outlook. Rubber slumped as much as 4.9 percent today (January 26), the most in more than two months on speculation that record prices are spurring producers to increase output.
J.P. Morgan (S.E.A.) Ltd., CIMB Bank Bhd. and Standard Chartered Securities (Singapore) Pte are managing and underwriting the sale, according to the prospectus.
(Bloomberg, January 26, 2011)