Investors wait to capitalize on ‘undervalued’ ACLEDA stock currently trading 20% below IPO

Both retail and institutional investors are yet to take full advantage of the Cambodia Securities Exchange’s (CSX) largest listed company ACLEDA Bank (CSX:ABC) stock price which is currently trading 20% below its IPO price.

The price drop occurred after more than 11,000 members of the ACLEDA Bank staff association was able to partially sell their shares on the open market last month.

Industry insiders have cited the investment hesitancy is mainly due to the potential for ongoing selling pressure as an additional 89 million shares (20% of total company shares) may need to be absorbed into the open market over the next few years.

Adding, investors may need large margins to cover the kind of selling pressure that is there at the moment from staff who are generally not as concerned about what price they sell at.

Prior to the divestment, ABC shares were trading at around KHR 16,700 falling to KHR 12,840 a share this week, representing a fall of around 20% below the KHR 16,200 a share of the company’s IPO was sold at in May of last year. 

Group Chief Financial Officer at ACLEDA Bank Mar Amara told Cambodia Investment Review, “the floating of legalized shares this year is equal to four times of IPO shares (4,344,865 shares) which is a huge amount of supply and resulted in significantly decrease the share price.”

Amara added fundamentally the company is achieving record profits and exceeding targets despite the current impact of the COVID pandemic. “ABC is one of the best-listed companies in the CSX worth taking into consideration, trading, investing, purchasing, and owning,” Amara said.                       

“In fact, the Bank’s net profit & other comprehensive income increased very well during the first quarter of 2021 and exceeded our target. The key drivers of such achievements were the growth of loans outstanding, good loan monitoring, and the proper management of operational expenses, along with the attainment and receipt of targeted funds that bore at low costs,” she said.

“However, ASA has brought luck to all good strategic investors to invest in the Bank which is The Bank You Can Trust, The Bank for the People and growth together with all stakeholders,” she added.

Managing Partner of the investment and advisory firm Mekong Strategic Partners Stephen Higgins tweeted at the time, “ACLEDA trading at 12,300 is not based on fundamentals. Maybe some more pain in short term from poorly managed selling pressure, but long term is a good buy at these levels.”

Managing Director of brokerage firm Yuanta Securities Kyung Tae Han was quoted saying, “the stock price of ACLEDA Bank appears to be undervalued based on its ROE [return on equity] of 15% and PE [price to earnings ratio] multiple of nine times.”

The bank is currently holding an Extraordinary General Meeting (EGM) to make an amendment to its article association that will change the composition of its Board of Directors and the legalization of the shares owned by ASA.

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