BAM: The Unbreakable Greenshoe

Investors are focusing on Bangkok Commercial Asset Management Public Company Limited (BAM) more than any other shares due to the greenshoe options is about to expire after the share has been traded in the target for almost a month.

 

This leads to concerns that BAM will follow the step of Asset World Corp Public Company Limited (AWC) due to the fact that the share price of AWC plunged right after the expiration of greenshoe. On November 11, 2019, the first day of expiration, AWC fell 10.74% to close at ฿5.40/share, lower than its IPO at ฿6.00/share. To this day, AWC is still traded lower than its IPO.

 

However, BAM is on a roll since its first trading day. The share price soared to a new high at ฿23.20/share at the closing on Monday, January 13, 2020, making a return of 32.57% from its IPO at ฿17.50/share.

It appears that the share price is too high to be worried about the expiration of greenshoe, unlike AWC that were traded around its IPO price until the expiration of greenshoe. In this regard, the phenomenal of a broken greenshoe should hardly happen to BAM.

 

The analyst has stated that the strength of BAM is the ability to acquire non-performing assets at a lower price and being able to sell at a higher price, resulting in a net profit margin at 69%. Currently, BAM has assets worth 700 billion baht in its portfolio waiting to be sold. Looking ahead, BAM still has more room to grow.

BAM’s 2019 profit is forecasted at 12,675 million baht, increasing 144% from the same period of last year mainly due to an extraordinary item from Deferred Income Tax Assets (DTA) around 5,000 million baht. The growth would return to normal afterward at a rate of 5% during 2020-2021.

Due to this reason, BAM has been categorized as an interesting Growth Stock in the market.

More importantly, the most outstanding point of BAM is its considerably low P/E at 10.68x while other stocks in the sector such as CHAYO has P/E at 29.30x and JMT at 29.51x.

 

The potential for continuous growth, high margin and low P/E are the main reasons why investors are still interested in BAM.