ECF surges on IPO listing

ECF surges on IPO listing

Shares of newly listed companies continue to appreciate despite uncertainty following a free fall in the stock market last week.

Shares of East Coast Furnitech Plc (ECF), which began trade on the Market for Alternative Investment (MAI) yesterday, doubled from their initial public offering (IPO) price.

The stock surged 101.67% to close the day at 2.42, after briefly hitting a high of 3.34 baht, in trade worth 837.65 million baht.

ECF, which makes and sells particle board and rubber-wood furniture, floated 120 million shares at a par value of one baht each to the public, with the IPO price of 1.20 baht apiece.

Four other stocks listed on the Stock Exchange of Thailand (SET) and the MAI have provided attractive returns to investors _ Eureka Design Plc (EUREKA), Akkhie Prakarn Plc (AKR), Energy Absolute Plc (EA), and Premier Products Plc (PPP).

Two of these stocks hit the 200% ceiling on the first day of trading, heightening speculation fears on the SET and prompting the regulator to consider halving the ceiling price on the first day of trading to 100%.

The SET dipped 7.46% last week, though retail investors were still net buyers throughout the downturn.

Arak Suksawad, ECF's managing director, said the company projected 15% sales growth this year from 1.08 billion baht last year, with a 25% rise in the first quarter.

Strong demand in both local and overseas markets has contributed to the anticipated increase in first-quarter sales.

ECF's exports account for 60% of total sales, with Japan making up 70% of exports, the Middle East 20% and Asean 10%.

"ECF's outlook is strong, and the baht appreciation will not affect us for now," said Mr Arak.

The company plans to allocate 40% of its net profit of 35 million baht last year for dividend payments, subject to shareholder approval at an April meeting.

Though the baht has appreciated by 3-4% against the US dollar this year, ECF's first-quarter earnings are expected to be shielded because it hedged against foreign exchange risk at 27 baht to the dollar, said Mr Arak.

The company plans to reduce operation costs by talking with dealers about reducing material costs by 3-5% in June, which it expects them to support.

ECF also plans to spend 60 million baht to purchase new machinery this year, with the goal of reducing labour costs. The machinery will raise production capacity by 15%.

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