What the PACE?!
PACE IPO’ed at THB 3.50/share earlier this month on the 7th August only to finish at THB 2.7/share on its first day down some -23%. Now how on earth can a company that doesn’t have any net profits to speak of be allowed to list on the stock exchange? Well the SEC enacted a ruling with market-cap-based listing regulations which means that companies with a market cap of more than THB 5 bn can list on the SET REGARDLESS of its net profits, this opposed to the normal ruling which requires companies to have combined net profit from operations of at least THB 50 mn over the past two or three years and the latest full year having at least THB 30 mn worth of profits.
So what is PACE? Well a “high-end” residential developer in Thailand that has completed 2 projects to date (www.pacedev.com) and has this white elephant of a project (Mahanakorn) which I doubt will ever be
complete although construction is finally underway – sidenote: a leasehold property in that location for that price just seems incredible unfeasible and unattractive – and some hill side residential project in Hua Hin thats km’s away from the beach..hmmm…right.
complete although construction is finally underway – sidenote: a leasehold property in that location for that price just seems incredible unfeasible and unattractive – and some hill side residential project in Hua Hin thats km’s away from the beach..hmmm…right.
And what’s happened to a stock price that has ipo’ed within an visible earnings for next year or 2, well it closed on Friday @ THB 1.59/share some 55% below its IPO price.
The underwriters/company can argue whatever they want that its a bad timing and the whole market has dropped, but please a 55% drop in 3 weeks just shows this is one rubbish stock to be invested it. But the company got the funds it needs to operate further, the underwriters got their fee’s, the bank that loans them funds will now likely be repaid so all-in-all a win for all parties except for the investors that participated in the IPO.
So anybody have a piece of land that’s worth THB 2 bn? Come lets go start a company, say its a THB 5 bn project and list the co, seems to be an easy game.