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SET-bound Khonburi sugar eyes funds for output hike

Executive director Takon Tawintermsup said yesterday that the main factor supporting the company’s plan to list on the SET was the continuously increasing sugar price in the world market.

The company’s revenue and profit have increased significantly during the past three years thanks to high sugar prices, with average revenue growth of 27 per cent per annum.

“We expect the sugar price in the world market will maintain a high level in the 2011-12 sugar-cultivation season, resulting in good revenue for the company,” he said.

SURGE IN REVENUE

Khonburi Sugar generated revenue of Bt4.774 billion in the 2010 fiscal year (ended September 30, 2010) in comparison with Bt3.808 billion in the 2009 fiscal year. Its net profit in the 2010 fiscal year also rose to Bt167.9 million from Bt145.7 million in 2009 and 59.8 million in 2008.

Worawat Suvagondha, managing director of the investment banking department of Kasikorn Securities, the financial adviser of Khonburi Sugar, said the sugar company was expected to trade 176 million shares, 35 per cent of total shares, on May 27 under the symbol “KBS”. Sixty-five per cent will be offered to retail investors and the rest will be sold to institution investors.

“The sugar price in the spot market right now is the highest recorded in 30 years. This is the important factor that supports investment in a sugar company,” he said.

Takon said the company would mobilise funds to expand cane-crushing capacity from 21,000 tonnes per day to 23,000 by next year. It invested Bt300 million for this purpose last year and will invest another Bt300 million this year.

It will spend another Bt300 million in addition to Bt200 million invested in 2010 to increase generation capacity in its power plant from 3 megawatts last year to 5MW this year. The power business generated revenue of Bt67 million in the last fiscal year. It aims to increase power-generation capacity to 8MW by 2013.

Khonburi Sugar currently uses 2.5 million tonnes of sugar cane to produce 200,000 tonnes of sugar. Seventy per cent of its product is exported, with Japan, Indonesia, Malaysia, China and South Korea the main markets. It is the No 9 sugar producer in Thailand by production capacity, with market share of 3.6 per cent.

“We’re likely to increase the export proportion after we increase the crushing capacity,” Takon said. “Our average selling price in the 2010-11 sugar-crop season was 22 cents per pound, while the price for future contracts already sold for next year’s delivery is 24 cents per pound. We’re confident that focusing on the export market will boost our growth next year.”

Source: The Nation

ThaiVest Editorial Team