B.Grimm Group is betting on overseas expansion to take revenue over the 150-billion-baht mark by 2028, with the recent IPO of B.Grimm Power, the largest business unit, expected to give the 139-year-old company the funding and expertise to keep growing.
B.Grimm Power's early investors stand to realise an upside after the IPO, said group chairman Harald Link. He believes that the company is still undervalued, and that the market has yet to factor a strong project portfolio into the stock price.
The group is one of Thailand's oldest conglomerates. Other than the energy business of its power unit, the company also deals in building and industrial systems, healthcare and lifestyle, transport, real estate and digital businesses.
In energy, the company has set aside 55 billion baht to carry out its projects in Thailand and Laos until 2019, though new projects are added to the pipeline frequently. The current portfolio extends through Cambodia, Laos, Vietnam, Malaysia, Philippines and Myanmar.
In Thailand, B.Grimm Group is investing 30 billion baht in five new power plants that will have a cumulative capacity of 419 megawatts.
"The company has been working on renewable energy projects since 2015," Mr Link said. "We secured a wind power plant concession, and we recently won a concession for a solar power plant, although we don't have exact investment numbers yet.
"We also have a number of hydropower plant investments in Laos, the first one of which will go on stream next month, and we have eight more coming up."
B.Grimm Power started trading on the SET on July 19. On July 25, its stock closed at 18.30 baht, a 7.6% premium to its IPO price. A week after the IPO, the stock is still one of the most traded in the energy sector, behind IRPC Plc and Superblock Plc.
High trading volume indicates that the stock price has yet to stabilise. The stock gained 17.1% in its first three days on the market, losing 3% the following two.
Mr Link said he decided to go public this year because the company is working on expanding its presence abroad, and the market is an additional source of funding. The Link family, which previously had a 100% interest in B.Grimm Power, retained a 75% interest after the IPO.
B.Grimm Group is expected to log 44 billion baht in revenue in 2017, and 50 billion in 2018. Its balance sheets exhibit a strong track record. In the past three years, the group's income has grown 17% and its adjusted net profit has increased 89%.
The IPO was underwritten by Deutsche Bank, Bangkok Bank and Kasikornbank, among other financial institutions.
B.Grimm has had a long relationship with the underwriters, and Mr Link said he was happy with the price.
"The company is still undervalued, although the increases in the last few days have taken us closer to an accurate valuation," he said. The low IPO price gave more than 10,000 investors the opportunity to be part of the company.
"We treat each shareholder as a partner and are excited for the knowledge and insight they can provide," Mr Link said. "We are happy with the price because they are happy."
B.Grimm Power is trading at a 32.65 price-earnings (P/E) ratio, which compares favourably with that of competitors. IRPC, for example, is trading at a 12.05 P/E, and Banpu Plc trades at a 25.53 ratio.
The company's high ratio could indicate market confidence in future earnings.
Mr Link said B.Grimm Group enjoys stable revenue streams from long-term purchase contracts with the Electricity Generating Authority of Thailand (spanning 21 to 25 years), the Provincial Electricity Authority (25 years) and Electricite du Laos (25 years). In addition, it has secured natural gas purchase agreements with PTT Plc.
"The IPO was also an opportunity to endow our workers with a greater sense of ownership and control," Mr Link said. All of B.Grimm Group's 700 employees received six-month bonuses to purchase stock. The average employee now holds the equivalent of 1.5 years' salary in company equity.
Mr Link is adamant that the IPO will not change the management style of the company. While the group has been under family control for 139 years, the company has been professionally run for a long time now, he said. The company's board includes five independent directors.
Moreover, the chairman, 62, said his retirement will not be on the table any time soon. This is good news for investors, who will benefit from Mr Link's vision and management style "for at least 10 more years".