S.Kijchai Enterprise Plc (SKN), Thailand's leading manufacturer and exporter of medium-density fibreboard (MDF) products, yesterday set its initial public offering (IPO) price at 7.35 baht per share to raise funds worth 1.47 billion baht for debt repayment and capacity expansion.
The company's IPO shares of 200 million, at one baht par value per share, recorded book building by 15 times from institutional investors. Book building is the process by which an underwriter attempts to determine an IPO price offering based on demand from institutional investors.
The company will offer 160 million shares to institutional and retail investors, with 80 million shares allocated to each group, with the remaining 40 million shares offered to sponsors.
SKN is scheduled to commence its first trading day on the Stock Exchange of Thailand on Sept 26. IPO share subscription will be available this Friday and Sept 18-20.
Managing director Vichai Sangwongkit said its debt-to-equity ratio will drop to 0.5 times from over 1 times after the IPO.
A portion of the raised funds will be used as long-term loan repayment of 650-700 million baht, he said.
The company will spend 500 million baht for capacity expansion, which is scheduled to be completed in the third quarter of 2018, said Mr Vichai.
Production capacity will rise to 500,000 cubic metres per year from 260,000.
The rest of the funds will be used as working capital, he said.
Taweechai Tangthanasup, first senior vice-president at Tisco Securities, SKN's financial adviser, said MDF wood has good growth prospects because of high global demand, growing 11% annually.
"The company exports more than 90% of production to global markets. The price of MDF increased in the first half, rebounding from last year, and we expect the positive trend to continue this year," said SKN director Hansiri Sangwongkit.
Tisco Securities is the lead underwriter, with AEC Securities, Asia Plus Securities, KGI Securities (Thailand), Krungsri Securities, Trinity Securities, and UOB Kay Hian (Thailand) as co-underwriters.
SKN's total revenue for the first six months was 742.5 million baht, with net profit worth 103.71 million baht. Last year's revenue tallied 1.5 billion baht, with 262.58 million baht in net profit.
