Acleda taps into e-wallet market
Port launches IPO roadshow
SIHANOUKVILLE Autonomous Port (SAP) kicked off a road show and bookbuild process for its initial public offering (IPO) yesterday to prospective investors, following the announcement last month that it would seek to become the fifth listed company on Cambodia’s sleepy stock exchange.
SAP, the state-owned enterprise that operates Cambodia’s sole deep-sea port, is seeking to raise as much as $27 million for the expansion of its facilities when it lists on the Cambodia Securities Exchange in late May. It will offer a 25 percent stake by issuing some 21.44 million shares at a price range between $0.88 to $1.29 per share, with the final price to be announced after the six-day bookbuild session.
If SAP can successfully raise $27 million, it would be the largest Cambodian IPO to date on a local stock market that has struggled with persistent low-level trading.
Despite the allure of the company, turnout yesterday at the Raffles Hotel Le Royal was dominated by uniformed port employees, with only a few dark-suited prospective investors and mix of students from the capital’s business schools showing up.
However, Eiichiro So, chairman of SBI Royal Securities, the sole underwriter for the port, book-runner and lead manager of the IPO, said that the there was already a high level of institutional interest in the stock, with the Japan International Cooperation Agency, or JICA, already snapping up 54 percent of shares before the price had even been determined.
“For JICA to commit like this to the port, it shows that they have faith in its growth potential, not that we lack investors,” he said, adding that the Securities and Exchange Commission of Cambodia eagerly approved the purchase order from a development agency. “I believe this is the first time JICA has done something like this.”
He explained that the company has specifically targeted investors from Hong Kong, Taiwan, Japan and Thailand, claiming that many had already shown an interest to buy in.
“We have already been approached by numerous international investors as well as some from Cambodia,” he said.
The CSX has struggled to spur investor interest since launching in 2011 and has just four listed companies, including state utility provider Phnom Penh Water Supply Authority (PPWSA), Taiwanese garments manufacturer Grand Twins International (GTI), industrial park operator Phnom Penh SEZ and the Kingdom’s state-owned river port in Phnom Penh, PPAP.
Sou Socheat, director of the SECC, said that the SAP listing, the third state-owned company to do so, should improve investor confidence.
“Unlike other IPOs this one is attractive and from what I have seen everybody wants a piece of it,” he said.
The proceeds from the IPO will be used to purchase an additional 52 hectares of land to construct a new dry port and expand the existing container yard. SAP will also look to purchase new heavy machinery and begin to pay back a $74 million loan from JICA that is being used to build a new multipurpose terminal by 2018.
At the same time, the port has put forward a massive $300 million master plan for expansion, earmarked with government financing to be completed by 2022 to triple its current capacity.
Ty Sakun, director and head of the port’s IPO team, said SAP continued to show growth in 2016, unveiling in an investor presentation that revenue had increased to $51 million and net profit reached $7.8 million. However, profit dipped compared to 2015 when it stood at $9.4 million off of the back of $49 million in revenue.
“According to our underwriter and advisers from the government, we comfortably project that in 2017 we will have $55 million in revenue with profits at $13.8 million, which would be an increase of 8 percent compared to 6.8 percent growth in 2016,” he said, adding that the anticipated indicative price-earnings (P/E) ratio would range between 8.5x to 12.5x based on 2015 financials.
“Even if the bookbuild puts our stock at $0.88 per share, we will still raise at least $18 million,” he said.
To sweeten the deal, SAP has offered private investors a guaranteed 5 percent dividend yield on the initial share price for the next three years.
Rasmei Som, business development executive for Bureau Vertis (Cambodia) Ltd, a firm with plans to buy a stake in the port, said the guaranteed dividend was a key selling point.
“The dividend is good to secure investors in the beginning until the port completes its expansion and improves logistics,” he said. “But in my opinion I think the port projections are too optimistic for 2017 and returns will be underneath their prospects.”
“Still, if they can achieve 50 to 70 percent of their projections we will be happy because we think that the port is the best company to go public yet, with the highest growth potential,” he said, adding that the firm has passed on previous private and state-owned IPOs.
Brian Erskine, head of asset management for Forte Insurance, said the company had yet to make an investment decision. However, he also lauded the dividend policy.
“It gives investors security,” he said. “And plus ports grow faster in developing economies and getting the country’s key infrastructure companies on the stock exchange is a needed step before others consider listing.” ACLEDA Bank unveiled a new cashless-based e-wallet product yesterday that allows customers to use their smartphones for transactions without incurring service fees.
The product, called Acleda Unity ToanChet, is a fintech application that allows customers to transfer funds and pay bills wirelessly on both iPhone and Android devices.
In Channy, CEO of Acleda, said that the service would help boost financial inclusion in Cambodia by allowing customers to conduct online banking services while reducing the need to carry cash. He declined to disclose how much ToanChet cost to develop internally but said the bank would spend $2 million to deploy the necessary infrastructure.
“From now on, people do not need to withdraw cash like before because Acleda Unity ToanChet takes over the role of a traditional wallet,” he said. “All Cambodians including vegetable sellers, moto-dop drivers, tuk-tuk drivers and all classes of people can use the service to make payments for products and services.”
Acleda, which launched its online Unity product in 2010, allowed customers to pay bills through their phones but charged a service fee. The ToanChet upgrade will enable customers to make transactions from $2,500 to $0.25 without a fee and allows them to transfer funds from one phone to another with a maximum transaction amount of $500.
Channy claimed that the bank already had 12,000 users signed up for ToanChet yesterday and expects it will be used by at least 2 million customers in the next five years, holding nearly $1 billion worth of funds digitally.
Ngeth Chou, a senior consultant at Emerging Markets Consulting (EMC), said that the launch of the product was a good step towards the greater adoption of fintech solutions while still keeping funds within the banking sector.
“Making payments directly through smartphones allows the money to remain in the banking system because the transaction is done digitally,” he said.
Chou added that the product would also help develop the nascent e-commerce sector.
“The challenge for e-commerce is that we do not have a complete payment system,” he said. “When more people use digital products to access banking and payment services, it will help to boost the sector.”