Singapore: Thai Beverage shares slump at trading debut

Shares in Thai Beverage fell more than 7 percent below their IPO price on their debut on Tuesday as cautious investors questioned the value of the S$1.37 billion ($867 million) offering, Singapore's biggest in over a decade, Reuters reported May 30.

Shares in Thai Beverage (TBEV.SI: Quote, Profile, Research), known for its Chang Beer and Mekhong whisky, fell to a low of S$0.26 from the offering price of S$0.28. It was by far the most actively traded share on the Singapore's stock market.

Market participants said expectations had been muted from the start, due to valuation concerns and investor nervousness in the face of jittery markets.

"Given the volatility of the market, the performance is quite credible," said Netresearch-Asia Managing Director Kevin Scully.

"It's coming out at a fairly bad time, and it's too early so investors cannot ascertain whether it's a good stock to own."

According to Credit Suisse estimates, the stock is valued at 14.2 times forecast 2006 earnings, while Singapore stock broker CIMB-GK estimates a price/earnings ratio of 16.3.

That is cheaper than Japan's Kirin Brewery's ratio of 29.7 times, Australia's Foster's Group Ltd. 18, and the 16.5 times for Singapore's Asia Pacific Breweries Ltd. , according to Reuters data.

The IPO was the city-state's biggest since Singapore Telecommunications' S$4.2 billion offer in 1993.

Thailand's largest brewer and distiller sought a Singapore listing for 20 percent of the firm after failed attempts to go public in Thailand, where it faced wrangling over whether alcohol firms were allowed to list.

Thai Beverage Chairman Charoen Sirivadhanabhakdi, Thailand's richest man according to Forbes magazine, told reporters at the Singapore Exchange that he was not disappointed with the debut.

"I'm looking for long-term performance, not short term," he said.

The company plans to use the proceeds to pay down its debt, which stood at around $966 million at the end of March.

Credit Suisse said in a note to investors that while Thailand had been one of Asia's fastest-growing beer markets, growth might moderate to 3-5 percent given a high per-capita consumption. It has a "neutral" rating on the stock with a S$0.30 price target.

ThaiBev sold a total of 4.89 billion shares at S$0.28 each, at the low end of the S$0.26 to S$0.36 indicative price range.

The share ended its first trading session 3.6 percent below issue price at S$0.27, underperforming a flat Straits Times index <.STI> and valuing the firm at around S$6.6 billion.

Half the shares offered were new, while the remainder were "vendor shares" owned by the family of Charoen. His family will remain the company's leading direct and indirect shareholder.

The deal comes at an unfavourable time for equities as turmoil in financial markets has kept investors cautious.

World stock markets have fallen in recent weeks. Singapore stocks have slumped to levels last seen in January on worries over rising inflation and higher U.S. interest rates.

Last week, Singapore-based shipping firm Pacific King postponed its IPO plans, while units in Pacific Shipping Trust fell below their issue price on their first day of trading.

Thai Beverage said last Friday it was still open to a second listing at home, given the opportunity.

Deutsche Bank , J.P. Morgan and Merrill Lynch managed the issue with DBS Bank, which was the lead manager for the Singapore offer. ($1=1.580 Singapore Dollar)

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