The upcoming initial public offering (IPO) of PTT Oil and Retail (OR) will likely cause prices of other stocks in the energy sector to drop during the subscription period after institutional investors rebalance their portfolios, analysts say.
The subscription period may provide an opportunity for retail investors to buy up shares in other listed energy firms with strong fundamentals before the market corrects.
OR is poised to meet the fast-track criteria to be listed on the SET50 at the end of the first trading day, and will likely be larger than the top 20 ranked firms in the index because of its large market capitalisation.
The company is the retail arm of state-owned oil and gas conglomerate PTT Plc and best known for operating Cafe Amazon coffee chains. It announced its IPO price range of 16-18 baht last week, offering up to 3 billion newly issued ordinary shares.
"Energy and petrochemical stock prices have fallen over the past few trading days of last week," said Nuttachart Mekmasin, an analyst at Trinity Securities. "One factor driving these prices down is the IPO of OR, which will make institutional investors adjust investment weights."
Mr Nuttachart said this trend will continue this week up until the end of the subscription period, scheduled for Jan 24 to Feb 2 for retail investors, and Feb 3-5 for institutional investors and initial purchasers.
He recommended buying cyclical stocks in oil, gas and petrochemicals as the sector should benefit from a global recovery, despite no clear signals of a turnaround domestically.
Trinity Securities suggests buying Indorama Ventures Plc (IVL) and Siam Cement Plc (SCC).
Natapon Khamthakrue, vice-president of Yuanta Securities, suggested investors purchase shares in PTT Plc (PTT) at a support line of 40 baht, and PTT Global Chemical (PTTGC) at a support line of 60 baht.
He said PTT and PTTGC prices have rallied in conjunction with investor speculation around the OR IPO.
Following the offering, share prices should return to normal, said Mr Natapon.
Therdsak Thaveetheeratham, executive vice-president for research at Asia Plus Securities, said the price pressure impact from OR would not increase as the company is estimated to contribute about 5% of the market share in the energy sector.
