Sri Trang has been talking about a dual listing for more than six months. Although the company put no price on the offer in the prospectus filed with the Monetary Authority of Singapore, analysts say the 280m shares being offered are likely to raise between S$280m and S$360m. The issue is being managed by JP Morgan, CIMB and Standard Chartered.
Sri Trang trades some 800,000 tonnes of rubber each year – 8 per cent of the global trade. It also makes rubber gloves, hydraulic hoses and escalator handrails, and Lee says the company is looking to move into plantations.
The company has benefited from the strong recovery in rubber prices, which hit a new record of over $5.30 a kilo in Tokyo on Thursday, almost five times the price of two years ago.
Some 75 per cent of rubber production goes to producing tyres, and the economic recovery has boosted demand for cars, trucks are doing greater mileages and aircraft are taking off and landing more often.
But supplies are inelastic: it takes seven years for a rubber tree to start producing latex. Paul Lee, Sri Trang’s Singapore-based executive director, estimates that global rubber stocks stand at just 200,000 tonnes – a little over a week’s consumption – after floods last year in Thailand, the world’s largest producer, knocked out two to three weeks worth of output.
Lee believes that there will be a rubber deficit for the next three to five years, and that has been good news for Sri Trang’s share price.
In the first quarter of 2009, when the global economy was in the doldrums and no one was buying cars, shares in Sri Trang traded at a low of Bt1.61 a share: on Thursday they were at Bt39.75, a return of nearly 2,400 per cent for those prescient enough, or tough enough, to buy them at the bottom.
(Source: http://blogs.ft.com/beyond-brics/2011/01/13/thailand-rubber-on-a-roll/)
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