Posted on 23 Apr 2008
Thai-German Products Plc (TGPRO), a SET-listed stainless
pipe and sheet producer, says it requires between 800 million and 1.3 billion
baht in working capital to run at full capacity. Managing director Rachata
Leelaprachakul said the company was negotiating with banks and potential
strategic partners in order to seek additional loans to improve production
efficiency and expand capacity of its plant in Rayong province.
The company is now in talks with potential partners, which
include its major creditor Siam City Bank Plc and some funds, on the
possibility of private placement deals. He declined to disclose further
details.
''There are a lot of funds that have approached us after they
acknowledged that we are open to new partners,'' he said.
However, he denied any involvement in speculative trading of
the company's shares, which have risen to close at 1.60 baht yesterday in heavy
trade worth 177.4 million baht from 0.95 baht last Thursday, when trade was
only 6.3 million baht.
''I don't know whether the news about the new partners is a
factor or not, but I can assure you that the company's executives and I haven't
gained anything from the active trade,'' he said.
''In fact, we noticed only recently that our shares have
surged this much.''
The company's stainless pipe and sheet plant now is
producing 15,000 tonnes a year, far below its full capacity of 50,000 tonnes.
''The low utilisation rate has resulted in a high production
cost per unit,'' he said. ''I also hope that we will succeed in obtaining fresh
loans this year because I don't want to miss the chance of a higher margin at a
time when stainless steel prices worldwide are surging.''
The gross margin would exceed the 13.5% earned at present if
the company receives new working capital and runs at full capacity. He said the
company expected sales this year to grow between 5% and 10% from 1.9 billion
baht a year earlier. It earned a net profit of 10.4 million baht in 2007 even with
the low annual output.
Of the total sales, 69% were from domestic sales and the
rest were from exports, mainly to the
Apinun Ratchatasombat, the deputy managing director, said
demand for stainless products in the domestic and global markets would remain
strong over the next several years.
The government's economic stimulus through spending on
megaprojects would require a huge amount of construction materials, resulting
in even higher growth for the products.
Shares of TGPRO closed on the Stock Exchange of Thailand at
1.60 baht yesterday, up three satang, in trade worth 177.44 million baht.
