SAV Stock Closes First Day of Trading Below IPO Price
SAV, the aviation stock of Samart Aviation Solutions Public Company Limited, closed its first day of trading at 15.30 baht, a decrease of 3.70 baht (-19.47%). The trading value reached 2,266.17 million baht. This price is lower than the IPO price of 19.00 baht and the opening price of 18.80 baht. The highest price recorded during the trading day was 19.10 baht, while the lowest reached 15.30 baht.
The Director of Samart Aviation Solutions, Mr. Watchai Vilailak, believes that the stock’s performance on its first day of trading can be attributed to various negative factors influencing investment conditions. This includes the decline in the American stock market and the troubles faced by major Chinese companies, which have had a significant impact on the overall investment climate.
Despite the initial decline, SAV is considered a fundamentally solid aviation stock with high growth potential. The company benefits from the continuous increase in tourism and maintains a strong financial status with no interest-bearing debt. Moreover, it has a policy of paying dividends of not less than 50% of net profit. The board has already approved an interim dividend of 0.75 baht per share, equivalent to a yield of around 4%. The company is expected to announce the dividend payment date soon.
“SAMART, the parent company of SAV, has secured all of SAV’s original shares for a lock-up period of 6 months. This means no shares will be sold in the market. Institutional investors have subscribed to 45% of all IPO shares, demonstrating their confidence in the company’s business fundamentals. Additionally, more than 10 leading brokerage analysts have provided a reasonable price range of SAV at around 25-29 baht,” said Mr. Watchai.
TISCO Securities has identified SAV as a business that provides air traffic control services throughout Cambodian airspace, benefitting from a monopoly position in this market. The company obtained the concession from the Cambodian government after negotiations, with no competition from other bidders. This reflects the limited number of players in the industry. The business of air traffic control management requires expertise, high investment in systems and equipment, and skilled personnel. Thus, finding a competitor to replace SAV is challenging. The company has received four concession extensions from the Cambodian government and still has 28 years remaining on its concession period.
The purpose of the recent fundraising was to facilitate the share restructuring. SAV needed to acquire CATS from SAMART, which resulted in some remaining debt. The funds raised will help alleviate this burden. The total amount received from the fundraising, after deducting fees, is 3,154 million baht.
Regarding recent media reports suggesting that a large investor purchased IPO shares at a price lower than the reserve price of 19 baht, the company clarifies that this news is fake and misleading. SAV sold all 166 million shares through leading brokers and received the full payment from the investors. The company urges investors not to believe such misinformation.
Factors to Monitor and Potential Risks
TISCO Securities has provided insights on various factors that investors should monitor in relation to SAV:
- Opening of a new airport in Cambodia
- Support from the Cambodian and neighboring countries’ governments in promoting tourism
- Economic growth of Cambodia and neighboring countries
- Restructuring of Cambodian affiliated companies
However, certain risks need to be considered, including:
- Political stability in Cambodia
- Reliance on revenue solely from air traffic control management in Cambodia
- Possible cancellation or termination of the concession contract
- Global economic slowdown
Based on preliminary valuation, the IPO price is considered relatively high compared to the price-to-earnings ratio of competitors in related industries, which stands at around 25.4x times.
SAV operates as a holding company, with its subsidiary, Cambodia Air Traffic Services Company Limited (CATS), solely responsible for providing air traffic control services throughout Cambodian airspace. The concession contract, granted by the Cambodian government, will last from 2002 to 2051 (49 years). Cambodia is served by six airports, including Phnom Penh International Airport, Siem Reap International Airport, Sihanouk International Airport, Battambang Airport, Koh Kong Airport, and Stung Treng Airport.
Looking ahead, SAV expects to see improved revenue in the short term as economic activities recover and return to normal levels. However, it anticipates a slower growth rate once income normalizes. While net profit margins are likely to recover in the short term due to increased flight numbers, the company faces challenges such as fixed service rates specified by the Cambodian government, infrequent adjustments, and higher administrative costs resulting from increased employee numbers. Nevertheless, in the long term, SAV expects the net profit margin to continue expanding alongside revenue growth.
SAV closed the first day of trading at 15.30 baht, down 3.70 baht (-19.47%), trading value 2,266.17 million baht, from the IPO price 19.00 baht, from the opening price 18.80 baht, the highest price 19.10 baht, the lowest price 15.30 baht.
Mr Watchai Vilailak, Director of Samart Aviation Solutions Public Company Limited (SAV), said that the fact that SAV opened its first day of trading below the reserve price was likely because there were many negative factors affecting investment conditions. The American stock market is in decline and major Chinese companies are in trouble. It has a significant impact on the investment climate.
SAV is a fundamentally sound aviation stock. There is a high opportunity for growth. From the amount of tourism that continues to increase and has a good financial status No interest bearing debt But there is a policy to pay dividends of not less than 50% of net profit and the board has approved an interim dividend of 0.75 baht the share, which equates to a yield of around 4%, is expected to set a dividend payment date soon. .
The Company would like to clarify that currently some media have reported that a large investor has bought IPO shares at a price lower than the reserve price of 19 baht. The Company would like to confirm that this news is fake news and is not n true Because the company Sold all 166 million shares through leading brokers and received all the money. (Before deducting fees) 3,154 million baht Investors are requested not to believe such fake news.
“I would like to confirm that SAMART, the parent company of SAV, has locked up all the original shares of SAV 100% for 6 months…therefore no shares will be sold in the market. Let investors be comfortable and in keeping IPO shares Many institutional investors have subscribed to 45% of all IPO shares because of their confidence in the company’s business fundamentals. which is expected to have high and stable growth In addition, there is a high dividend policy and more than 10 leading brokerage analysts give a reasonable price of SAV of around 25-29 baht,” said Mr Watchai.
TISCO Securities said that SAV is a business that provides air traffic control services throughout the airspace of its subsidiary Cambodia (CATS) It is a monopoly business from which the company benefits greatly. This is because the company negotiated with the Cambodian government until it received the only concession. It is not a competitive bid with other competitors. It reflects the lack of competitors in the industry. Air traffic control management content requires expertise and high investment in both systems, various equipment, and the skills and abilities of the working personnel. So it is difficult to find a competitor to replace him. The company has received a total of 4 concession extensions from the Cambodian government following investment in the development of additional equipment and systems. As a result, the concession period still has 28 years left.
The objective of raising money this time is the result of the share restructuring. So SAV must buy CATS from SAMART and some debt remains in this area. Therefore, the money received from raising money will relieve SAV of a burden Total. current debts We therefore believe that it is appropriate to raise money this time.
But there are issues that need to be pursued in the case of SIH offering ordinary shares for sale this time too. The offer of 166 million ordinary shares is part of an additional 64 million ordinary shares and the other 102 million shares are ordinary shares of SIH offered for sale on this occasion. In addition, the company plans to pay interim dividends at a rate of 0.75 baht per share to all the company’s shareholders. This includes investors who purchase shares after the Company’s ordinary shares have expired. Also enter trading on the Stock Exchange (First Trading Day) if the meeting approves another round.
The analysis shows that the company’s revenue varies according to the number of flights and the rates depend on the type of flight. and the size of the aircraft In the past Its main income comes from providing flights through Cambodian airspace (Overflight), which accounts for about 60-70 percent of total revenue, followed by income from international take-off and landing flights, about 20 -30 percent of total revenue. return to normal, both types of income will return to the same level.
In the short term, we see that income will improve. of economic activities that have started to recover and return to normal levels Including a low base during COVID-19, 1H23 the number of Chinese tourists Only about 10 percent returned (Main tourists) compared to the total number of Chinese tourists in 2019 , and after income has recovered to normal levels. It is seen that income will grow more slowly than during the recovery period.
In the short term, net profit margins are likely to recover. This follows a recovery in flight numbers and a low base during COVID-19. But the service rates are as specified by the Cambodian government. and has not been adjusted often Including the trend of higher administrative costs. from the increase in the number of employees It is a factor that puts pressure on the amount of net profit. Meanwhile, in the long term, it is expected that the net profit margin will continue to expand as income expands.
Factors that need to be followed: 1) Opening a new airport in Cambodia 2) Support for the tourism industry of the government of Cambodia and neighboring countries 3) Economic growth of Cambodia and neighboring countries 4) Restructuring the business structure of Cambodia Affiliated companies
Risks 1) Politics in Cambodia 2) Total reliance on revenue from air traffic control management in Cambodia 3) Cancellation or termination of concession contract 4) Global economic slowdown
From the preliminary valuation the fair value at the IPO price is considered too high compared to the PER of competitors operating in related businesses in the industry at 25.4x times.
SAV operates its business by holding shares in other companies (Holding Company) with a subsidiary in which the Company holds 100 percent of shares, namely Cambodia Air Traffic Services Company Limited (CATS), which is registered and ‘to be established in Cambodia Carry out the business of establishing a system and providing air traffic control services throughout the Cambodian airspace in accordance with the concession contract received from the Cambodian government only. Lasting from 2002 to 2051 (49 years) Cambodia is served by 6 airports: Phnom Penh International Airport, Siem Reap International Airport and Siem Reap International Airport Sihanouk International Airport is an airport that serves flights domestic and international. Including Battambang Airport, Koh Kong Airport and Stung Treng Airport, which only serve domestic flights.
#HILITE #SAV #closes #day #trading #baht #order #SAMART #counters #Fake #News