Corporate Financing Analysis - Thailand A Rising IPO Star In Asia - 04 DEC 2017


With local equities on a bull run and the country's real GDP outlook remaining positive, the IPO market in Thailand is supported by a favourable backdrop at present, which we expect to continue going forward. Against this backdrop, the Thai IPO arena has seen a post global financial crisis high of deals announced in the y-t-d period: data from Zephyr, a Bureau van Dijk product, show that there have been 41 announced floats recorded in Thailand so far in 2017, outpacing the 38 deals during the equivalent period in 2014. We highlight that this year's tally of deals remains only just shy of the 47 floats recorded across the 2014 full-year period, and with a further flurry of deals before the year-end it could even surpass it. In contrast with the increase in deal volume, we highlight that the combined value of deals in the Thai IPO market is trending in the opposite direction and is on track to record its second annual decrease in 2017. This increase in activity, combined with a decline in total value, means that floats in Thailand have been getting smaller, a trend that suggests that both issuers and investors have been becoming more risk averse across the course of the y-t-d period.

A Positive Macro Story

Given this, we believe that the successful USD733mn listing on the Stock Exchange of Thailand (SET) of Gulf Energy, one of the country's largest independent power producers, is the shot in the arm that the market requires to begin building momentum and playing a more leading role in the regional Asia IPO arena once more. Equity capital market (ecm) investors show strong interest in the deal and is subsequently priced at the top end of its indicative range. In BMI's view, the Bangkok-headquartered firm's float, which ranks as the largest to hit the market in Thailand this year, and which surpasses waste-derived power producer TIP Polene Power's USD500mn Q117 deal, should encourage both larger issuers and deeper-pocketed investors to turn their attention towards the market going forward. The bull run currently being enjoyed by local stocks is another strong selling point: according to Bloomberg data, the benchmark SET50 index has returned 12.41% since the turn of the year and is up by 19.83% from where it stood a year previously. Moreover, Thailand's strong economic backdrop suggests that the rally has further to run. Indeed, as BMI's Asia Team notes, we are maintaining our relatively positive view on Thailand's real GDP growth outlook over the coming years, in spite of the risks posed by the return to elections in 2018. As such, we forecast the Thai economy to grow by an annual average rate of 3.5% over the next five years as the country's new constitution should provide policy continuity regardless of the election outcome. Furthermore, continued business environment improvements, potentially including big-bang SOE reforms, should further boost productivity too.

A 2017 Slump
Full-Year Announced Thailand IPOs By Deal Value, USDmn
Source: Zephyr (a Bureau van Dijk product), BMI

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