MK heats SET to a frothy boil

MK heats SET to a frothy boil

Shares of the suki (hot pot) restaurant chain operator MK Restaurant Group Plc (M) rose as much as 13.3% on their market debut on Thursday, indicating investors remain hungry for public offerings.

Mr Rit (right) and former prime minister Anand Panyarachun toast afterMbegins trade Thursday. APICHART JINAKUL

The stock was the SET's most active Thursday, starting trade at 54.50 baht before hitting the day's high of 55.50 baht, finally ending the day at 53 baht or 8.16% above its initial public offering (IPO) price in brisk trade worth of 7.07 billion baht.

M set its IPO at the top end of its indicative price range of 45-49 baht apiece, raising 9.1 billion baht from allocating 185.85 million shares to the public. This made it the second largest IPO this year after BTS Group Holdings Plc (BTS) in April raised 62.5 billion on the sale of its infrastructure fund, the BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF).

M's share surge came after a recent disappointing opening-day performance by Pace Development Corporation Plc (PACE), a luxury residential property developer, which offered a 22.86% discount from its IPO price at 3.50 each.

''Hot pot restaurants are an active business, with plentiful new players continually entering the market. Our challenge is how to secure market leadership and remain No.1 in the customer's mind,'' said Rit Thirakomen, M's chairman.

The company just started its pilot project in Singapore outlets last week _ using iPads to serve customers. Customers can order from their table via the iPad. The model is expected to improve service efficiency and reduce the need for two or three staff per branch or almost 1,000 staff for the whole group, he said.

The company has two main restaurant brands _ MK and Yayoi _ with 460 outlets in Thailand and 42 outlets in Japan, Singapore and Vietnam. It plans to open its first branches in Indonesia this quarter and the Philippines and Myanmar in the near future.

It will use the IPO proceeds to build a central food-processing plant, expand additional outlets, and reserve some as working capital.

Kiatnakin Securities recommended M as a buy with a target price of 63.60 baht, equivalent to 25 times its price-to-earnings ratio, the same level as the restaurant industry.

M's earnings prospects are thriving thanks to growing urbanisation and the upcoming Asean Economic Community, which is slated to begin in 2016, the research house said.

M plans to open 65 new outlets a year.

Kiatnakin Securities estimated M will post a net profit of 2.31 billion baht this year, up from 2.04 billion in 2012.

Earlier this week M reported a reviewed second-quarter net profit of 481 million baht, down by 10.5% year-on-year. From January-June, the reviewed net profit totalled 967 million baht, down by 11.5% year-on-year.

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