Thai IPOs ready post-coup rally

Thailand's stock market has experienced a wave of initial public offerings since the military took over the country three months ago, with companies relieved that the political deadlock has ended.

The environment has become far more conducive for firms to raise funds as prospects for the economy are brightening, with growth tipped at 5.5% next year, and the benchmark stock index is trading at 14-month highs having jumped 10% since the coup.

"The more stable political situation is generally good news for companies and investors," said Prasert Patradhilok, president of Advisory Plus, an investment advisor. "The IPO window is opening and the momentum should continue, until the election risk late next year."

The Thai army has promised a general election by late 2015.

Bangkok Airways and Bangkok Land are among the approved IPOs waiting for listing dates in the coming months. As of June, there were 13 companies and four property funds that had obtained approvals and were negotiating with the Thai stock exchange over listing dates.

A further 28 companies, four property funds, one infrastructure fund and three real estate investment trusts are in the bulging IPO pipeline awaiting filing approvals.

Thai investors will buy most of the small deals. But the bigger ones such as Bangkok Airways and Impact Growth Real Estate Investment Trust, each seen valued at 20-30 billion baht, will be marketed internationally, providing a test of how foreigners view post-coup Thailand as a place to invest.

Many of these deals will come this year and while it might be a stretch, the Stock Exchange of Thailand thinks it may even break its 210 billion baht IPO target for 2014.

Last year was the busiest in a decade, according to the exchange, with 38 IPOs worth 192 billion baht booked, but this year could turn out better, which would be a remarkable feat given the political turbulence.

The Thai stock market was Southeast Asia's worst performer in 2013, suffering a 6.7% drop as former prime minister Yingluck Shinawatra's grip on power began slipping away.

There were just 11 IPOs worth 23 billion baht in the five months before the May 22 coup, but since the army takeover 12 deals worth 34.3 billion baht have been booked, exchange data shows.

Investment bankers said valuations were fairly high versus historical levels, making it attractive for firms to list.

The benchmark SET index is trading at 13.86 times 12-month forward price earnings ratio, versus an average of 15.13 times from 1997-2013, Thomson Reuters Datastream shows.

Infrastructure Funds

Recent IPOs performed strongly. Shares in beverage maker Sappe, for example, doubled on its June 25 debut and has risen a further 7.2% from there. Next off the block will be Exotic Food, which will list on Thailand's Market for Alternative Investment bourse on Aug. 25.

The ruling military council's commitment approval of 2.4-trillion-baht of infrastructure investment over the next eight years, has also excited investors.

Construction stocks have surged with shares in builders such as Ch Karnchang Pcl and Italian Thai Development up almost 50%.

Investors are preparing for infrastructure funds to start listing. Among large offerings expected, telecoms group Jasmine International's planned infrastructure fund for its broadband internet business could list with a valuation around 60-70 billion baht.

That deal is unlikely to come this year, however, due to a legal dispute of an underlying asset.

In addition to infrastructure funds, new Thai Securities and Exchange Commission regulations could pave the way for foreign companies to list on the main exchange as part of plans to make Bangkok an investment hub for the Greater Mekong Subregion.

Proposed regulations would allow foreign companies to make their first sale of stock to the public on the main Thai stock exchange and simultaneous dual listings locally, according to Vorapol Socatiyanurak, Secretary General of the SEC.

"Many foreign companies have an intent of listing here. We are working on foreign primary listing regulations and hoping to finish them in August or September," he said.

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