A gravity-defying rally in Thailand’s beauty-pageant organiser Miss Grand International Plc (MGI) is finally seen petering out on concerns that the valuation has become overstretched.
The stock has surged more than 900% since its debut at 4.95 baht apiece mid-December, making it the second best-performer of any new listing in Asia Pacific the past three months. It’s now trading at 65 times 12-month trailing earnings, compared with about 17 for the benchmark SET Index, according to Bloomberg calculations.
The bull run in the stock prompted the Thailand stock exchange to pause trading in it on Tuesday and make cash prepayments mandatory for prospective buyers. Investors shrugged off the new rules, with shares surging on Wednesday and Thursday.
MGI gained investors’ interest on optimism over growth from product sales and beauty contests after robust profit in 2023, but the share gain has exceeded fundamentals, according to Thakol Banjongruck, an analyst at Yuanta Securities (Thailand).
“Excessive valuation and regulatory risk from the exchange’s tight control will make most investors cautious about the stock,” he said.
The company reported net income of 119 million baht in 2023, a 149% increase from a year earlier. Expansion into the TikTok shop platform and greater use of direct sales channels to widen margins and “almost eliminate intermediary costs” were key reasons for the rise.
MGI started beauty pageants about a decade ago, and has used events and contestants to promote and advertise products to build awareness and sales.