CRC hopes to mark largest IPO Thursday

19-Feb-2020 Intellasia | BangkokPost | 6:02 AM Print This Post

One of Thailand’s largest family-owned conglomerates will have its first trading day, expected to be the country’s biggest initial public offering (IPO), this Thursday against the backdrop of a virus outbreak and sluggish economic growth.

Central Retail Corporation Plc (CRC), Thailand’s largest retailer and the retail arm of Central Group, is reportedly raising funds worth 78.1 billion baht after fully exercising its overallotment option. The company’s IPO price is set at 42 baht per share for no more than 1.69 billion IPO shares.

The massive market capitalisation will enthrone CRC as Thailand’s largest IPO.

The country’s biggest IPO to date was the BTS Rail Mass Transit Growth Infrastructure Fund, which raised more than 62.5 billion baht in 2013, according to Reuters.

CRC is a holding company investing in a multi-format and multi-category retail platform in Thailand and other countries such as Italy and Vietnam.

Central Group is a conglomerate owned by the Chirathivat family, which is involved in various ventures ranging from retail, restaurants and hospitality to real estate and merchandising.

But the equity debut’s timing comes amid the Covid-19 outbreak that has killed more than 1,700, with most fatalities in China, and reports of Thailand’s economy growing at its weakest pace in five years, expanding by 2.4 percent year-on-year in 2019.

In terms of stock fundamentals, CRC shares are a large-cap stock with a reasonable IPO price and several equity funds and foreign investors have accumulated CRC shares because of the equity’s fundamentals, said Mongkol Puangpetra, executive vice-president for strategy research at KTB Securities Thailand.

Despite being known as one of Thailand’s retail behemoths, CRC businesses have a weakness as its diversified business portfolio can have a pulling effect when some businesses do not perform well, according to Mongkol.

The retail business has also been experiencing digital disruption, akin to how media companies and banks have been reeling from disruptive technologies, he said.

“Central Retail’s presence is definitely large and strong in Thailand’s retail industry, but it is still uncertain whether offline retail still has an edge over online retail and e-commerce right now,” said Mongkol.

While some investors may compare CRC’s first-day trade debut with that of Asset World Corporation Plc, the property arm of Charoen Sirivadhanabhakdi’s TCC Group, these two companies’ business portfolios and price-to-earnings ratio are very different, said a source in the capital market speaking on condition of anonymity.

Suwat Wattanapornprom, assistant vice-president at Asia Plus Securities, said retail stocks continue to be buffeted since last year, with ebbing private consumption attributed to slow economic growth evidently affecting same store sales growth in the final quarter of the year.

Sluggish consumption is in line with falling consumer sentiment.

The University of the Thai Chamber of Commerce recently reported the consumer confidence index dropped to 67.3 in January from 68.3 in December, 69.1 in November and 70.7 in October.

“We still have a neutral view for this sector and could revise the sector’s combined net profit growth this year,” said Suwat.

“We believe the listing of CRC will enhance sentiment for the retail sector, but a follow-up has to be made on how the share price movement will turn out amid poor market sentiment.”


Category: Thailand

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