Thai Exchange Head Sees IPOs Spurring Further Stock Rally

Thai equities, Asia’s second-best performers in 2012, may extend a rally this year as new listings and cheaper valuations than most Southeast Asian markets lure investors, the head of the nation’s bourse said.

Southeast Asia’s fourth-largest bourse by market value is expecting at least 30 companies with a combined market value of $4 billion to join its main and second-tier boards this year, according to Stock Exchange of Thailand President Charamporn Jotikasthira. Companies that sold shares in 2012 had a market value of $3.6 billion, he said in a Jan. 10 interview with Bloomberg Television from Singapore.

Initial public offerings raised about $1.83 billion last year, the most since 2004, data compiled by Bloomberg show. Newly listed shares on the Stock Exchange of Thailand and Market for Alternative Investment returned an average 64 percent from their initial public offering prices last year, according to data on 23 stocks tracked by Bloomberg.

“Almost all of the IPOs on the SET turned out very well” in 2012, Charamporn said. “There are more runways to go up” for Thai stocks, he said.

The benchmark SET Index has gained 1.7 percent this year, extending last year’s 36 percent advance. The surge in 2012 was the biggest in Asia after a 49 percent jump by Pakistan’s KSE 100 Index, according to data compiled by Bloomberg.

The Thai measure dropped 0.5 percent to close at 1,416.14 today. It trades at 13 times estimated earnings, 7.9 percent lower than the MSCI Asia Pacific Index’s valuation.

Fund Raising

The exchange is trying to attract companies with operations in neighboring countries such as Laos, Cambodia and Myanmar, according to Charamporn. CK Power Ltd., a holding company with hydropower projects in Laos, and a BTS Group Holdings Pcl infrastructure fund will be among the biggest share sales this year, he said.

“The booming IPO market has attracted many executives,” Arthid Nanthawithaya, senior executive vice president at Siam Commercial Bank Pcl, said in an interview on Jan. 10. “Several companies are accelerating plans to raise funds via IPOs as overwhelming demand for new listings cuts equity funding costs.”

CK Power, a unit of Ch. Karnchang Pcl, the nation’s second-largest contractor by market value, is the biggest shareholder in a $3.6 billion Xayaburi power project in Laos.

BTS Group, which operates an elevated train system in Bangkok, plans to set up an infrastructure fund of as much as 60 billion baht ($2 billion) to invest in assets including railways and toll roads, it said in a presentation on Nov. 12.

Attractive Valuations

Even after last year’s rally, Thai equities remain attractive as valuations are still “on par” with other Southeast Asian markets, Charamporn said. The SET is as much as 25 percent cheaper than the largest markets in the region. The benchmark Philippine index is valued at 17.3 times estimated earnings, Malaysia at 15 times, Singapore at 14.5 times and Indonesia at 14.1 times, according to data compiled by Bloomberg.

Overseas investors bought a net $237 million of Thai equities this year after $2.5 billion of purchases in 2012, which was the biggest inflows since 2010, according to data compiled by Bloomberg.

The Thai stock market is valued at $397 billion. Singapore is the biggest in Southeast Asia at $615 billion.

-- With assistance from Anand Menon in Singapore. Editor: Matthew Oakley, Darren Boey.

(Updates Thai stock-index levels in sixth paragraph.)
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