Southern Steel expects September public offering

       Steel products trader and manufacturer Southern Steel (2S) will float 60 million shares priced 1.9 baht each in its initial public offering on the Market for Alternative Investment, with the first day of trade scheduled in September.
       After the IPO, the company's paidup capital will increase to 200 million baht from 140 million baht, with a par value of one baht per share. Debt-toequity ratio will dilute from 0.63 times to 0.49 times, according to financial data ending June.
       Funds raised will be used for business expansion and working capital for materials purchasing to increase bulk orders and improve the delivery process, said director Sangrung Nitipawachon.
       Steel prices remain volatile. After dropping to $400 per tonne in the first quarter from last year's peak of $800, the price rebounded to the current $600.
       "It's a capital-intensive industry. Cash will allow us to grab low prices to help maintain our margins," he said.
       2S is a manufacturer of steel sheets,steel pipes, C-channel pipes and wire mesh. Steel pipes and C-channel pipes contributed about 30-35% each to total revenue, with other products making up the remainder.
       President Sombat Leeswadtrakul said the company reported total revenue of 2.8 billion baht last year. In the first half of this year, it recorded a net profit of 50 million baht on revenue of 1.2 billion baht.
       This year's total revenue might drop slightly due to softening prices. However,sales volume is likely to increase.2S's net profit margin is targeted at more than 4% after reporting 4.9% in the first quarter, he said.
       The company is one of the biggest steel-product manufacturers in the South and Northeast of Thailand, with factories and warehouses located in Songkhla,Surat Thani, and Nakhon Ratchasima.It has almost 400 customers in Thailand and Malaysia.
       "We plan to expand more in the Northeast due to its area and population size.The region also has potentially large demand from government projects. The dustless road project, for example, will be able to drive demand for wire mesh,"said Mr Sombat.
       Chupong Tanasettakorn, managing director of Country Group Securities,2S's financial adviser, said the share booking date is set from tomorrow to Friday.The price-to-earnings ratio of 1.9 baht per share will not exceed 5 times compared to the MAI's average of 13 times over the last three months.