The share price of PTT Oil and Retail Business (OR) will likely continue an upward trend until it is added to the MSCI Global Indexes weight on Feb 26 when there may be a sell-off period, analysts say.
The price may be volatile during the period as investors take profits. However, it will be able to retain its momentum as the price is currently higher than its fundamentals and all brokers' estimates.
Merchant Partners Asset Management's senior vice-president Prakit Siriwattanaket said analysts forecast the price range for OR would be at 19-25 baht per share on its debut on the Stock Exchange of Thailand (SET) last Thursday.
However, OR surpassed all research institutes' estimates by opening at 26.50 baht and closing at the highest price of 29.25 baht per share last Friday, while the price-to-earning ratio (P/E) rose to 33 times.
OR's market capitalisation also reached 350 billion baht, qualifying the company for a fast-track process to be listed on the SET50 and SET100 indexes.
There are 26 local passive funds with OR in their portfolio, with a total asset size of 53.34 billion baht, that need to be adjusted following the listing of OR on the indexes.
It is expected that the funds' purchase of OR shares is approximately 1.3-1.5 billion baht.
In addition, after OR's price rose above 27 baht per share, OR's capitalisation multiplied the current portion of free float shares also rendering the company large enough to be added into the MSCI Global Indexes, including MSCI Emerging Market Index and MSCI Asia AC ex-Japan Index.
MSCI officially announced that OR has passed the fast track criteria and will be added to the MSCI Indexes on Feb 26, giving investors opportunities to speculate on the stock as local and global passive funds will have to buy OR shares following OR's weight on the MSCI Indexes.
"We found that stocks that are expected on the MSCI Indexes will move positively until they are listed. The price will usually move less or downward after the listing," Mr Prakit said.
Terdsak Taweethiratham, vice-president of Asia Plus Securities, gave OR a fair price at 24 baht based on the assumption that earnings per share would be 1 baht and P/E ratio at 25 times.
Mr Terdsak said OR is categorised as a stock in the energy and utilities sector but most of OR's revenues have been generated from retail businesses for which the P/E ratio is normally lower than that of businesses in the energy sector.
"The market price is quite high compared to the fair value. Investors can take some profits from the price gap."
Natapon Khamthakrue, vice-president of Yuanta Securities, said institutional investors normally finalise their portfolio adjustment about a week before the new MSCI Indexes take effect. He said after the portfolio adjustment OR's price may become less bullish by next week.
OR shares closed at 34 baht on Monday with intraday high of 36.50 baht and trading worth 38.88 billion baht. Total market trading was 106.65 billion baht.