Chow steels itself for sales growth

Chow Steel Industries projects sales growth of 20-30% next year on potential benefits to be gained from the government mega-projects and post-flood rehabilitation.

Chief executive Anavin Jiratomsiri said this year's sales revenue should come in at 5 billion baht after a nine-month figure of 4.2 billion.

The upstream billet maker said overall domestic demand for this type of steel has risen to 7-10 million tonnes annually.

Chow itself has enjoyed double-digit sales growth in recent years. It caters to high domestic demand, as most billet steel must be imported.

"We have an opportunity to substitute for imports. Chow uses some domestic raw materials and imports others for the maximum profit margin," he said.

Mr Anavin said domestic demand would remain high, especially in the next quarter as flood recovery begins in earnest.

Meanwhile, Patchaporn Sankaburanurak, head of investment banking at KGI Securities, said: "Chow plans to float 200 million shares for a listing on the Market for Alternative Investment (MAI). The IPO price is only 3 baht apiece, a 28% discount to attract new equity investors."

The share subscription will be allocated from Tuesday to Thursday of next week through KGI Securities, the Country Group, Thanachart, Capital Nomura, KT Seamico, Finansia Syrus and Globlex Securities.

Trading on the MAI is expected to begin on Dec 21, said Ms Patchaporn.

After the IPO, Chow's paid up capital will increase to 800 million baht, and the Jiratomsiri family's shareholding ratio will be diluted to to 63.4% from 84.5%.

Proceeds will be used as working capital for current projects, substantially reducing funding costs from the current 7%.

Ms Patchaporn said with expansion of the overall steel industry and growing substitution of billet products for imports, Chow is seen growing throughout 2012.

For the first three quarters of this year, the company posted a net profit of 169 million baht on revenue of 4.25 billion, up by 86% year-on-year.

The company has an accumulated profit of 85%, and its dividend policy is 40% of total net profit.

Production is forecast to rise to 360,000 tonnes in 2012 from 300,000 this year.