Seaport operator cruises toward IPO

An aerial view of the Sihanoukville Autonomous Port in Preah Sihanouk province. Heng Chivoan

Fri, 31 March 2017

Hor Kimsay

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The state-owned enterprise that operates Cambodia’s only deep-sea port is aiming to raise $27 million by floating a 25 percent stake on the Kingdom’s stock market, a company executive said yesterday.

The initial public offering (IPO), to be held following a six-day bookbuild in late April, could end up being the largest public offering on the sleepy Cambodian Securities Exchange (CSX) to date.

Lou Kim Chhun, director general of Sihanoukville Autonomous Port (SAP), said the port operate plans to kick off a roadshow ahead of the Khmer New Year holiday, which starts on April 14, followed about a week later by a bookbuild session to gauge investor interest and finalise valuation.

“We plan to make the public announcement about our IPO somewhere from the 11th to 13th of April and we plan to hold a bookbuild for six days from the 19th to 25th of April,” he said.

According to Chhun, SAP will float a total of 21.44 million shares, or about 25 percent of its total shareholding, with the final share price to be determined by investor response to the bookbuild session. He said the shares would be offered to institutional investors participating in the bookbuild at a price range of between $1 and $1.25, putting the “maximum proceeds from the share offering at $27 million.”

Chhun declined to provide the port operator’s financials for 2016. The Post previously reported that SAP had a net profit of $45 million in 2015 – its fourth consecutive year in the black.

While double-digit growth in container traffic had driven the company’s profits during these years, 2016 data showed the first significant slowdown in growth. Last year, SAP handled 400,187 TEUs (20-foot-equivalent units), an increase of just 2.1 percent compared to the previous year.

However, Kim Chhun said yesterday that the slower growth should not diminish investor appetite as ports around the world have struggled to maintain high volumes amid a contraction of global trade.

“The slower growth does not concern us,” he said. “We see a noticeable increase of cargo traffic already this year and we believe that our performance in 2017 will be much better than last year.”

If Sihanoukville Autonomous Port can raise $27 million, its public offering would surpass the IPO of Phnom Penh Water Supply Authority’s (PPWSA), which raised $20 million when it floated a 15 percent stake on the CSX in 2012. It would also outstrip the offering of the capital’s port operator, Phnom Penh Autonomous Port, which raised $5.2 million when it floated a 20 percent stake in late 2015.

Contacted yesterday, a representative of the Securities Exchange and Commission of Cambodia (SECC) confirmed that the market regulator had received SAP’s proposal for its IPO and was evaluating it.

The port operator first announced its intention to list on the CSX in 2012 but the plan has faced a number of setbacks, including listings compliance and tax issues. In August 2016, the General Department of Taxation slapped the state-owned enterprise with two separate unpaid tax bills for a sum exceeding $1 million. The company successfully appealed to the Ministry of Economy and Finance to have most of the bill forgiven.

Lamun Soleil, director of the CSX’s market operation department, said SAP’s listing would help improve trading activity on the stock market as its performance is directly linked to the economic health of the Kingdom’s imports and exports.

“As far as I know, there has been a lot of interest from investors looking into what would be the third state-owned enterprise to go public,” he said. “Cambodia’s economy has registered high growth and is expected to maintain 7 percent growth in the years to come. Long-term investors and foreign investors would show the most interest in this company.”

Svay Hay, CEO of securities firm Acleda Securities Plc, said he believed the port operator had completed all necessary requirements to be able to list on the main board of the CSX, and would be an “interesting contribution” to a market that has persistently been dogged by low-level trading activity.

“When there are more companies on the stock market, it provides more benefits to bring in buyers and sellers,” he said. “A market with more options can attract a lot of investors.”