LV Technology’s shares (LVT) rocketed 83 percent above its initial public offering (IPO) price during its debut day in Thailand’s Market for Alternative Investment (MAI) on July 14, 2004. The stock closed the day 63 percent higher than its IPO price despite the overall struggling market.
LVT started trading at Bt2.7 when the market opened, and hit the peak of Bt3.66 before closing the trading day significantly above the Bt2-IPO price at Bt3.26, with a total turnover of Bt469.3 million from trading of 142.99 million shares. MAI on the day tumbled 2 percent to 249.6 points, while the Stock Exchange of Thailand (SET) index suffered a 1.5-per-cent dip to around 653 points.
Mr. Hans Jorgen Nielsen, president of LVT, attributed the impressive debut to the company’s strong fundamentals and handsome performance.
“The erratic stock market will not have any impact on the company’s stock given its solid fundamentals and a robust growth track record of 60 to 70 percent a year over the past few years,” said the Danish founder of the company.
LVT provides consulting services to cement plants, particularly on their grinding operations, for which it develops tailor-made services. The firm posted a net profit of Bt8.2 million for the first quarter this year. In 2003, its sales reached Bt260 million, turning into a Bt21.3 million profit.
The engineering consultancy firm has works in 40 countries, and its key customers are from the Middle East. It sold 30 million shares through the IPO and plans to use the Bt60-million proceeds to expand into Latin America.
“Proceeds from the share allocation have been used to finance plan to access Brazil and South American markets. Listing would help build up our customers’ confidence,” Hans Jorgen Nielsen said, adding that the firm would upgrade to list on the SET in the next two years if its registered capital qualifies, but this will also depends on the company’s spending plans.
LVT’s financial adviser meanwhile denied claims that the company had set the IPO price low in order to guarantee a skyrocketing price at trading.
“The selling price of LTV at Bt2 apiece was based on its book-building price, which was based on the overall stock market’s price-to-equity ratio of 9.5 (which has since increased to 10 to 11). There was strong demand at Bt2 and LVT was satisfied with that price,” Sasitorn Pongsathorn, director of United Securities, explained. “We are content with the share price today.”
She said she believed that LVT would be able to sustain its annual earnings growth of 60 to 70 percent as it has no direct competitors. Furthermore, there are about 500 cement plants worldwide that are LVT’s potential clients. Of these, only about 200 have already had LVT’s systems installed, and thus there is still a big room for the company to grow, she said.
LVT’s managing director Chanid-da Kongvibulsawad added that the company had about 20-30 small and large projects on hands this year, all of them outside Thailand. Of these, 10 projects have already been signed. The value of the large projects, according to Ms. Chanid-da, is approximately US$8.1 million. Revenues from these projects will however be realised only partly this year, and the remaining by next year.
The upward trend of LVT’s share price continued after its debut day, closing Friday, July 16 at Bt3.88. The stock opened weaker the following Monday at Bt3.84 and closed Bt0.06 down at Bt3.82, with a trading volume of 26.47 million shares worth Bt104.65 million. At the end of LVT’s second trading week on Friday, July 23, the stock rose to an intra-day high of Bt5.85 before closing at Bt5.70, with a dense volume of 49.61 million shares valued at Bt280.73 million baht for the day.
