Thai Union Feedmill Pcl, producer of integrated aquaculture and economic animal feed products, Sets IPO share price at THB13.50; open for reservation October 19-21; Poised to expand aquaculture feed business in overseas markets
Thai Union Feedmill Pcl. or TFM, producer and distributor of integrated aquaculture feed and economic animal feed products, announces its IPO price at THB 13.50 per share. Open for reservations from investors between October 19-21, 2021, and trading to begin on the SET within October under the symbol "TFM", the company is determined to maintain its leading position in the aquaculture feed industry with plans for overseas investment to build a production and distribution base in Asia through subsidiaries in Indonesia and Pakistan as well as an alliance with a major aquaculture feed in India formed since 2003.
Thai Union Feedmill Public Company Limited or TFM has appointed Bualuang Securities as the primary underwriter for the IPO together with three joint underwriters, namely Kasikorn Securities, SCB Securities, and Finansia Syrus Securities.
Mr. Bunluesak Sorajjakit, Chief Executive Officer, Thai Union Feedmill Pcl. or TFM, producer and distribution of integrated aquaculture feed and economic animal feed products, expresses pride in the company's successful listing in the Stock Exchange of Thailand, saying the capital raising would boost competitiveness as the company pursues business opportunities not only in Thailand but also in countries with high growth potential in the aquaculture feed industry with a business model appropriate to each country.
These opportunities include (1) export to countries such as Burma, Malaysia, and Sri Lanka; (2) an agreement of cooperation with AVANTI, a leading aquaculture feed producer of India, by using TFM's trade name and production formulae for products sold in India; and (3) joint ventures with trading allies by setting up subsidiaries in Indonesia and Pakistan, which is expected to contribute to the company's growth in earnings and profits in the next 3-5 years.
TFM is determined to be the leader in the aquaculture feed business under a corporate vision of being producer of the best-quality aquaculture feed in order to operate a sustainable business capable of satisfying customers' demands with products of excellence. The company will achieve this, based on its experience, expertise and know-how acquired over a long period of time, supported by a highly-qualified staff and well-funded capital. The company considers itself Thailand's representative in the aquaculture feed industry for the purpose of creating food security in the Asian region.
The TFM CEO adds that the company has three notable strategic approaches to business operation:
(1) Maintaining and developing its leadership position in the production and distribution of aquaculture feed domestically through collaboration with business partners and support for aquaculture farmers, such as providing favorable credit terms, helping find solutions to their problems, counseling them about proper methods of raising aquatic animals, developing production technology and quality breeds of shrimp, providing solutions to customers' needs, and providing proof of performance of products;
(2) Improving product quality and production efficiency up to international standards to boost competitiveness through developing products and food formulae, including those for new species of aquatic animals in order to promote diversity of economic aquatic animals, such as giant sea bass, grouper, gourami, Asian redtail catfish, and crab. New formulae are also developed using new types of raw materials to reduce reliance on any specific type of raw materials, for example, using plant-based protein, and developing new formulae that reduce the use of fish oil;
(3) Expanding customer base to countries with growth potentials based on factors such as investment possibilities, expected rate of return, risks and risk management while taking into account the shareholders' best interest.
TFM currently produce and distribute products under major brands which include PROFEED, NANAMI, EGOFEED, AQUAFEED, and D-GROW. The products are categorized into three groups, as follows:
(1) Shrimp feed: TFM is one of the leading distributors with a market share of 17% in Thailand;
(2) Fish feed (including frog feed and crab feed): This is further divided into four categories, including 1. Feed for marine fish, such as sea bass and grouper; 2. Feed for fresh water fish, such as tilapia and catfish; 3. Feed for juvenile fish; and 4. Feed for frogs. TFM is a pioneer and leader in marketing sea bass feed, which has a considerably higher profit margin over feed for other types of fish and of which the company commands a share of 24% of the Thai sea bass feed market in 2020;
(3) Terrestrial animal feed: There are two types -- pig feed and poultry feed. TFM has entered the business of terrestrial animal feed at the end of 2018 and found its growth prospect to be quite satisfactory.
TFM currently has two production bases, one in Mahachai in Muang Samut Sakhon, and the other in Ranot District of Songkhla. These are locations of high potential for aquatic feed production as the central and southern regions are the country's important areas for breeding and raising aquatic animals. The two bases have a combined production capacity of 273,000 tons per year (as of June 30, 2021), composing of 153,000 tons per year for shrimp feed, 90,000 tons per year for fish feed, and 30,000 tons per year for terrestrial animal feed. The two plants are equipped with automatic and semi-automatic lines of production, controlled and commanded by computerized systems, which provide real-time capacity for monitoring production information. TFM's main customers include animal feed stores and animal farms.
Mr. Pichet Sithi-Amnuay, Managing Director of Bualuang Securities, as the financial advisor and underwriter, says Thai Union Feedmill Pcl. has set the price of IPO at THB 13.50 per share, which is the highest of the price range in the book building process with a P/E ratio of 21.7 based on the net profit earned by the company's shareholders during the past 12 months and as such is considered an appropriate price. Investors are invited to make reservations between October 19-21, 2021, while listing and trading in the SET is expected to begin within the month of October.
TFM is making available 109.3 million shares for the IPO, comprising 90 million new shares and 19.3 million existing shares held by Thai Union Group Pcl. The total number of offered shares amounts to no more than 21.9% of outstanding shares after completion of the IPO, the proceeds of which will be used in expanding the aquatic feed operations in Indonesia, paying back loans, and as working capital.
"TFM's current round of capital raising in the stock market is a proof of the strength and credibility of the Thai Union Group, arising from its strong fundamentals and position of leadership in the aquaculture and economic animal feed industry, which will be the basis for stable and sustainable growth in the long run," says Mr. Pichet.
"The IPO price per share of THB 13.50 is appropriate considering the company's strong fundamentals and its growth potential as well as investment plans in overseas aquaculture feed markets. These developments will lay down a stronger foundation for production and distribution of its products in the region, allowing TFM to pursue further growth opportunities in the future."