BAM's IPO marks successful debut

BAM's IPO marks successful debut

Opened at B18.40, finished at B17.50

A BAM booth at Money Expo 2019. Executives at BAM expect a revenue surge this year. Patipat Janthong
A BAM booth at Money Expo 2019. Executives at BAM expect a revenue surge this year. Patipat Janthong

Bangkok Commercial Asset Management (BAM) has posted the country's second largest IPO by market capitalisation this year, finishing at 17.50 baht after a wild ride on its first day of trade on Monday.

The asset management company's stock opened at 18.40 baht, the day's highest level, before sliding to close at 17.50 baht, in trade worth 6.06 billion baht.

The benchmark SET index fell 1.54% on Monday to 1,549.74 points.

Last month BAM, the country's largest asset management company, allocated 1.54 billion IPO shares to the general public and set the offering price at the upper range of 15.50-17.50 baht.

Of the total IPO shares, 1.26 billion were sold by the Financial Institutions Development Fund (FIDF), 280 million were newly issued shares and 230 million shares were for over-allotment.

After the IPO, FIDF's shareholding in the asset management company was diluted to 49.1% from 99.9%.

BAM's market capitalisation at the time of the IPO amounted to 52.8 billion baht, only falling short of Asia World Corporation (AWC), a hospitality and property firm that is majority-owned by Thai billionaire Charoen Sirivadhanabhakdi. AWC raised 186 billion baht in its IPO this year.

Thongurai Limpiti, BAM's chairman, said she believes non-performing loans will increase during the economic slowdown, presenting a business opportunity for the company.

BAM has conducted a study on the impact of losing tax exempt privileges following listing on the SET and from the adoption of Thai Financial Reporting Standards 9 (TFRS9), she said.

Bunyong Visatemongkolchai, BAM's board chairman, said revenue is forecast to surge to 20 billion baht this year from 17 billion in 2018.

In 2020, BAM aims to acquire bad loans and assets matching this year's value at 12 billion baht, and plans to open four more branches, starting with Don Mueang district late this year, he said.

Mr Bunyong was satisfied with BAM's debut as it gained from the indicated price IPO price despite the unfavourable stock market.

BAM's net profit jumped to 4.88 billion baht for the nine months through September from 3.31 billion a year earlier.

Yuanta Securities said in a note BAM is a defensive stock given its business nature, which is not sensitive to economic circumstances and has a wide moat discouraging newcomers. BAM has high bargaining power and an economy of scale as the country's largest asset management company.

However, debt collection regulations, the implementation of TFRS9 starting from Jan 1 and the potential for greater competition, particularly from foreign asset management firms, are considered threats to BAM.

The brokerage forecast BAM's net profit will surge 135% to 12.2 billion baht this year, largely thanks to a one-off gain from deferred tax assets, then falling to 5.11 billion in 2020 as BAM begins paying corporate income tax after listing. Yuanta estimates a fair value of 20-22.7 baht per share.

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