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Logo of Phnom Penh Post newspaper Phnom Penh Post - PPWSA settles on IPO price

PPWSA settles on IPO price


A price has been set for Phnom Penh Water Supply Authority’s initial public offering, according to the Securities and Exchange Commission of Cambodia, after what was reported to be a significantly oversubscribed book-building process.


PPWSA will sell for 6,300 riel, or US$1.57, a share, putting the price at the top end of the expected $1 to $1.57 range, according to the SECC.

The state-run water authority is now on track to generate as much as $20.4 million from its April 18 IPO.

“The number of book-building participants was above our expectations, and there were a lot of local and foreign investors,” SECC director general Ming Bankosal said yesterday. “That’s good progress.”

Shares were 17 times oversubscribed, an SBI Royal Securities report released yesterday stated, indicating a high level of interest in the IPO.

More than 800 investors participated in the book building, with 516 of them successful bidders for 9.1 million shares, according to the SECC documents.

The remaining 3.9 million shares will be offered during the IPO subscription period, between March 29 and April 4.

Han Kyung-tae, managing director of Tong Yang Securities (Cambodia) Plc, the underwriter for PPWSA’s offering, said the subscription process should attract even more interest. “Eight hundred people were a lot more than we expected for the book building, and I think this was a good sign that many more will participate in the actual subscription process beginning this week,” he said.

SBI Royal Securities noted in its report that the valuation for PPWSA indicated expectations of high growth and return on equity.

With the $1.57 share price and expected 2012 earnings of $0.08 a share, the stock would trade at a 18.7 price-to-earnings ratio – a sizeable jump over comparable companies researched by SBI.

The average price-to-earnings ratio for six water companies tracked by SBI – Manila Water Co, Puncak Niaga Holdings, Hyflux, China Water Affairs, ThaiTap Water and Eastwater – would be 11.3 times 2012 earnings, according to SBI.

P/E ratios are often used as an indicator of how expensive a stock is relative to the market, similar stocks or the company’s past stock prices. SBI estimated that PPWSA would trade at a 65 per cent premium to those other water companies.

“These multiples are likely driven by expectations that PPWSA will enjoy high growth, given Phnom Penh’s early-stage, rapid industrialisation and urbanisation as well as favourable demographics, with its very young population,” SBI stated in its report.

SECC’s Ming Bankosal said PPWSA would meet the anticipated trading deadline of April 18.

To contact the reporter on this story: May Kunmakara at



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