III: Reduce the Size for the Greater Benefit

Seemingly, the disposal of SAL Group (Thailand) Company Limited (SAL) shares in the proportion of 33.20% by Triple i Logistics Public Company Limited (III) to SKY ICT Public company Limited (SKY), with the total value of 157.72 million baht was likely aimed to improve its liquidity, but when look deeper, we would realize that there is something behind this transaction. 

 

SAL is a holding company currently holding 51% of total shares in AOT Ground Aviation Services Co., Ltd. (AOTGA), a company jointly invested by SAL and Airports of Thailand Public Company Limited (AOT) to operate ground and passenger handling at airports under the responsibility of AOT.

 

III used to hold 58.20% of SAL stake, but after the disposal of 33.20% in SAL shares to SKY,  the shareholding proportion of III will be reduced to 25%, resulting in losing its status from “major shareholder” to “minor shareholder”. 

 

Even though this deal prompted III being a minor shareholder but somehow worthwhile.

 

What will this transaction benefit III…? Firstly, partnership with an aviation business expert would enhance SAL growth. Secondly, SKY has a good relationship with AOT, which would support III to expand a logistic business and to improve its market cap in the long run.     

 

Despite posting a net loss of 6.78 million baht in 2018 and 13.15 million baht in 2019, SAL is expected to move into a profitable stage after SKY jointly invests.

 

As for AOT Ground Aviation Services Co., Ltd. (AOTGA), a business of providing aircraft and passenger services at Don Mueang International Airport, is still showing growth as it reported a core profit of 40 million baht in 2019 and has a plan to extend the services to other airports. 

 

For the past 3 years, III both profit and revenue are in good shape…in 2017, the net profit was 129 million baht. In 2018, III reported a profit of 150 million baht and 164 million baht in 2019. Lastly, posting a 47.4% drop in net profit for the first quarter of 2020, as well as a 40.3% shrink in total income. And has a dividend yield of 3.42%, 

 

By the way, becoming a minor shareholder might create more advantages to III than expected. Let’s keep an eye on III until the end of this year.