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KSL Shares Surge on Sugar Price and Ethanol Demand

Posted on: Monday, 8 May 2006, 12:03 CDT

By Nuntawun Polkuamdee, Bangkok Post, Thailand

May 6--Shares of Khon Kaen Sugar Industry have more than doubled in price over the past seven months on investor expectations of a strong performance thanks to high global sugar prices and ethanol demand.

KSL shares, which were trading below six baht in early September, closed at 11.90 baht on Thursday, just off a 12-month high of 12.10 baht.

The hike in domestic sugar prices and the firm's expansion into ethanol, a key material in the production of biodiesel, has helped bolster its prospects.

KSL reported a first-quarter profit of 243.8 million baht on revenue of 1.29 billion, slightly off profit of 246.5 million on revenue of 1.03 billion in the same period last year.

The company, which operates four local sugar plants, plans to form a joint venture with the Cambodian government to plant 125 rai of sugar cane on Koh Kong. The two-billion-baht plan will be 51 percent held by KSL, operator of a similar venture in Laos. DBS Vickers Research estimated that KSL would be able to increase its sugar exports under Cambodian quotas. The new venture was expected to become operational within three years.

Sugar prices are expected to remain high over the next year, thanks to higher demand from India and China and the continued use of sugar cane for ethanol production by the EU and Brazil.

Far East Securities estimated that KSL's revenue this year should rise to 7.56 billion baht, or 9.24 percent higher than last year. But profit could fall 28 percent this year to 718 million baht thanks to higher operating costs.

KSL chief executive Chamroon Chinthamit projected sugar prices would rise by another 10 percent this year from 2005.

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Source: Bangkok Post

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