Stock news 2:50 pm 2024-03-28
Somsak Sirichainaruemit CEO, Asset Pro Management Company Limited (APM), financial advisor Asia Palm Oil Public Company Limited (APO) revealed that APO will be traded on the Market for Alternative Investment (MAI) on the first day, April 2, in the Agricultural and Food Industry Business category (AGRO) after selling 100 million IPO shares. Shares with a par value (par) of 0.50 baht per share, offering a price of 0.99 baht per share during March 25-27, completed.
APO shares have received a good response from investors who have confidence in the potential of the business. Because the company studies business development to be modern. Willingness to procure high quality raw materials on a regular basis. It is also poised for growth, along with factors in the palm oil industry which tend to grow according to demand at home and abroad. Although there is promotion by the government, such as using crude palm oil to develop higher value products.
Mr. Woranan Thawornan, Executive Director and Managing Director Kingsford Securities (KFS), as the underwriter for APO’s IPO shares, said that APO will receive interest from investors in trading on the May market as the offer price is appropriate given the operational potential of the Company Strong financial position and good financial liquidity The share price is 0.99 baht per share, taking into account the ratio of share price to book value (P / BV) equal to 1.00 times, and if you consider only direct competitors , only UVAN VPO and UPOIC operate similar businesses to the company, which average P/BV at 1.55 times
Mr. said Sittipas Udomphonkul, CEO of APO, that this funding round will enable the company to expand its operational potential. Create growth in accordance with the operational plan that has been set out. The company has a plan to improve the production process. Change the autoclave machine from horizontal to vertical. Increase the efficiency of the palm oil production system To obtain good quality oil Help to protect the environment Reduce greenhouse gas emissions and reduce costs in the palm oil production system The rest of the money raised will be used as working capital for business expansion. Support the demand for crude palm oil Increase your chances of competing and making a profit. to create sustainable growth in the future,” said Mr. Sittipas.
Although there are 4 brokers including KFS, Beyond Securities (BYD), Krungthai Xspring Securities (KTX) and Krungsri Patanasin Securities (KCS), which jointly issue APO IPO shares at an appropriate price frame, APO shares are in the 1.10 range -1.64 baht.
The view of the analysis of 4 brokers looking at APO’s overall growth in the same direction is that The crude palm oil extraction business is quite volatile according to environmental factors, but APO intends to market the business aggressively in order to expand its customer base to a variety of customers. Willing to plan to increase efficiency while making long-term profits. Including increasing the capacity to produce electricity from biogas. To help support future implementation outcomes
BYD said APO’s profit in 2023 fell 53% to 13 million baht due to the impact of El Niño. Before returning to good growth in 2024, about 321% to 56 million baht Factors supported by 1. Income from the main business returned to grow well in line with the trend of world oil prices 2. Income from the business produces electricity from biogas It has a high gross margin It will increase as generation capacity increases from 400 KW to 1 MW 3. Selling and administrative costs to sales (SG&A to sales) are likely to decrease from 3.9% in 2022 to 2.9-3.0% in 2024- 25. and 4) reduced tax payments from receiving an investment promotion certificate. Put an appropriate price of 1.64 baht per share based on a PER in 2024 of 10 times, close to the average of palm oil stocks in the market.
KTX said the plan to improve production efficiency will help increase APO’s profitability It expects earnings per share (EPS) to grow at an average rate of 21.5% per year in 2023-2026. It is planned to use IPO proceeds to invest in improving the efficiency of production machinery Expected to be completed in 2025, it will help reduce the rate of loss of raw materials and production costs. Including increasing profitability APO’s net profit is expected to expand at an average rate of 32.6% per annum due to the acceleration of crude palm oil sales volume. Estimate the appropriate value of APO at 1.50 baht using the Earnings Earnings method, based on 2024 estimated earnings per share, expected rate of return of 8% This price level corresponds to 2024 PER at 12.5 times.
KFS analyzed that APO will use the IPO proceeds to invest in the development of Automation Phase 1 and 2 steaming systems in the amount of 68 million baht to increase the efficiency of crude palm oil production, reduce losses, and reduce production costs. Operations are expected to start in the second half of 2024 and be completed in the first half of 2025. The remaining money will be used as working capital for the next business. Net profit in 2023 was 13.93 million baht, a decrease of 50.69 % from fluctuations in palm oil prices Prices of crude and fresh palm kernels at certain times Before returning to continue growing to 41.48 million baht and 60.36 million baht in 2024-25, or growing at an average annual rate of 108.2%.
Evaluate the appropriate value of APO shares in 2024 based on a PER of 11.50 times at 1.40 baht by selecting the P/E method to evaluate the appropriate value. Compare with listed companies operating similar businesses in the agriculture and food industry, such as CPI, LST, UPOIC, and UVAN, with an average PER over the past 3 years of 8.8 times, but from the trend of APO’s earnings per share, there is an opportunity to grow at a higher rate than the group. The main reason is the internal efficiency improvement project. Therefore, the value is assessed using a PER Multiple at a level of 11.50 times (+1SD of the Peer).
KCS considers that the palm oil industry has a direction to expand domestically and abroad. In addition, the United States Department of Agriculture is planning a strategy to reform the entire oil palm system, and it is expected that there will be a net profit of 37 million baht in 2024, an increase of 112% due to sales and gross profit margin. Including more electricity sales revenue. Efficient palm fruit sourcing Leading to a 14% increase in palm fruit coming into the factory. In addition, palm sourcing through the Asian Plus+ project, which provides palm fruit prices higher than the market for high quality palm fruit with a high percentage of oil. As a result, sales volume increased by 16%, while selling prices tended to increase, resulting in a 25% increase in sales. Power plants increased production capacity from 400 KW to 1 MW from 4Q20, making it expected that electricity income would increase. from 6 million baht in 2023 to 22 million baht in 2024.
Estimate the underlying value of APO in 2024 at 1.10 baht with a target P/E of 10 times (10% higher than the palm oil group average of 9 times) below the trend of net profit recovering to grow 112% and EPS after increasing capital. growing by 81% in the year 67 because it is expected that the quantity and price of palm oil sales will grow. including power plants to expand production capacity If this year’s palm oil sales volume and price are higher than assumptions, it will cause the estimate and target price to be higher than the original forecast.
By InfoQuest News Agency (28 Mar. ’24)
Tags: APO , stock exchange , palm oil , Somsak Sirichainaruemit , Thai stocks , food industry , Asian palm oil
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