Shares of KCG Corporation Plc debuted on the Stock Exchange of Thailand (SET) yesterday as Thailand's leading manufacturer of biscuits and dairy products mobilises more than 1.3 billion baht worth of fresh funds to finance its future expansion.
KCG floated 155 million new shares in an initial public offering (IPO) yesterday, representing 28.4% of the company's total paid-up capital. After the IPO, KCG's total shares would amount to 545 million, comprising 390 million existing ordinary shares and 155 million IPO shares, with a market capitalisation of 4.63 billion baht.
Shares debuted at 8.55 baht, up 0.59% from the IPO price of 8.50 baht yesterday morning. The price, however, closed at 8.30 baht yesterday, down 2.35%, in trade worth 1.48 billion baht. The overall SET index closed at 1529.01 points, down 1.37%, in trade worth 51.3 billion baht.
Watit Tamavimok, chief executive of KCG, said about 297 million baht of the proceeds would be used in the construction and development of KCG Logistics Park at its existing manufacturing site in Bangplee, Samut Prakan.
The company's investment plan for this year and 2024 includes doubling the production capacity of individually wrapped processed cheese slices to 4,212 tonnes per annum, from 2,106 tonnes per annum at present. The butter production capacity at its Teparak factory will be increased to 23,261 tonnes, from 18,596 tonnes, next year.
Roughly 47 million baht would be spent in upgrading the production efficiency and quality of dairy products, while 548 million baht would be allocated to repay existing debts. The remaining 380 million baht would be used as working capital.
Bualuang Securities (BLS) expects KCG to have a net profit of 326 million baht this year, up 64% from 2022. Earnings are projected at 401 million baht for 2024 and 473 million for 2025, representing growth of 23% and 15%, respectively.
Earnings growth is driven by expanding product lineups, online distribution channels, higher gross margins, and capacity expansion, BLS said.
Growth from existing business (organic growth) is estimated at 6-8% per year in line with the growth of the cheese, butter, yeast, flour and biscuit industries, benefiting from changing consumer preferences.
The food industry has also been supported by the post-pandemic tourism recovery, the brokerage added.
KCG had net profit of 240 million baht in 2019, 279 million baht in 2020 and 303 million baht in 2021, representing an average growth rate of 12.3% per year. In the first quarter of 2023, the company reported a net profit of 52.5 million baht, up roughly 105% compared with the same period last year.
Butter and cheese accounted for 55% and 36.1% of KCG's sales, respectively.
The Western food and bakery industry has grown continuously since 2022. BLS expects the butter and cheese market in Thailand to expand by 6-8% per year between 2023 and 2026.