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PPWSA stock to list today

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Investors, along with the next two companies expected to list on the Cambodia Securities Exchange, will watch carefully this morning the action on the country’s first initial public offering, nine months after the CSX officially opened.

After a book-building process that was 17 times over-subscribed, Phnom Penh Water Supply Authority shares will sell at about a penny below the maximum bidding price originally set by the Securities and Exchange Commission of Cambodia.

PPWSA was valued at 6,300 riel, or US$1.57, a share in late March, and 514 investors bought 474,143 shares during book-building.

Investor behaviour today would have a significant impact on the listing of Telecom Cambodia and Sihanoukville Autonomous Port, the two state-owned companies also expected to list this year, Tong Yang Securities (Cambodia) managing director Han Kyung-tae said.

Tong Yang is the underwriter for PPWSA and Telecom Cambodia.

“Everybody is excited to see the movement of the price, and it will definitely have an impact on the other companies,” Han Kyung-tae said.

The price today will be allowed to fluctuate upward by as much as 50 per cent, and downward by 10 per cent, although some analysts have said the price is already high for a public utility.

From tomorrow, prices will be allowed to rise or drop by five per cent in a given trading day.

Despite shares being valued at the high end of the spectrum, strong annual growth at the water monopoly and a diversified base of retail and institutional investors would allow for price increases, Han Kyung-tae said.

The Lao Securities Exchange, which launched in January last year, saw an 86 per cent increase during the first three weeks of operation, but shares in its two listed companies have since fallen by about 50 per cent.

“If the market has many speculators, the price will boom for a while, then drop sharply,” ACLEDA Securities president and managing director Svay Hay said, pointing to the Lao and Vietnamese exchanges as an example.

“Cambodia learned a lot from those two markets and other markets in the region.”

But high demand for PPWSA shares would contribute to stable trading and reasonable price fluctuations, Svay Hay said.

With a $1.57 share price and expec-ted 2012 earnings of $0.08 a share, the stock would trade at an 18.7 price-to-earnings ratio – a sizeable jump over comparable companies researched by SBI Royal Securities in March.

A trial run incorporating all elements of the CSX system had not yet been carried out, a source close to the bourse, who did not have authority to talk to the media, said yesterday.

Although no technical errors are anticipated, the lack of testing has generated some unease among brokers.

“There’s a lot of things that haven’t been tried out yet. When trading starts tomorrow, the system has not been completely tested. Anything could happen.”

A previous version of this story incorrectly stated that Electricite du Cambodge was slated for an IPO this year. In fact, it was Sihanoukville Autonomous Port.

To contact the reporter on this story: Don Weinland at don.weinland@phnompenhpost.com

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