Rojana Industrial Park buys 80% of Prosperity Industrial Estate in Prachinburi Province, Thailand – Rojana Stock up on news

Rojana Hedges Against Flood Risk in New Estate
From:  The Nation   July 3, 2012
Rojana Industrial Park plans to invest Bt4 billion in a new 4,000-rai estate in Prachin Buri as it seeks to diversify operations in light of the potential risk of a repeat of last year’s devastating floods. [See related article from March 2012: Update on Thailand Industrial Estates]
The company has decided to press ahead with the Rojana Industrial Park Prachin Buri project, targeting automobile, electronics and other groups of clients and opening for land reservations by investors over the remainder of the year, because investment in the industrial sector is still growing significantly due to the country’s promising overall potential, managing director Jirapongs Vinichbutr said yesterday.
The investment trend has resulted in the success of the Rojana Industrial Park Rayong 2 project in Pluak Daeng, in Rayong province, which was initiated last year and has received positive feedback from all investors, he said.
This was the core motivation for the company to acquire 80 per cent of the shares of Prosperity Industrial Estate for more than Bt800 million, as announced yesterday, he added.
The goal now is to implement the Rojana Industrial Park Prachin Buri project on 4,000 rai (640 hectares) in Prachin Buri’s Si Maha Phot district with a Bt4-billion investment.
“One of the reasons the company has chosen to develop in this area is that Prachin Buri is considered as one of the potential areas receiving attention from investors interested in expanding their ventures from Rayong. Our target is to meet rising demand in the automobile, electronics and other sectors,” Jirapongs said.
Rojana Industrial Park and six other industrial estates based in Ayutthaya and Pathum Thani provinces were severely flooded last year. The new in-vestment is seen as an effort to manage its risk by diversifying business into areas at low risk of devastating flooding.
Some factories have relocated their facilities or expanded into other industrial parks at low risk of serious flooding.
Meanwhile, Japanese companies are conducting research into how to reorganize their production chains, since the existing system is not attuned to coping with natural disaster.
The production chain for automobiles, auto parts and some key parts of the electronics industry is concentrated in Thailand because of cost savings, but global supply chains were badly affected when the floods hit the country last year.

ROJNA: Up fair value to B10.2 to reflect a plan to expand industrial estates to the East
From: Asia Plus Securities – July 2, 2012
ROJNA is preparing to acquire 80% of the business of Prosperity Industrial Estate Co., Ltd with an investment of B833.5m in June 2012. The asset of Prosperity Industrial Estate is a bare land of 3,235 rai in Sri Maha Po district in Prachinburi province. ROJNA has planned to develop the acquired land into a new industrial estate to support demands of its customers in expanding investment in the automotive, electronics, and other businesses. Previously, ROJNA has purchased a land in Pluak Daeng district in Rayong province in April 2012. This policy is believed to have benefits in a long-run as it will help distribute risks for the company in terms of income base which used to cluster only in industrial estates in Ayutthaya province.  Consequently, in order to reflect better business outlook, our analyst has revised up land sales in 2012 conservatively to 1,000 rai from 600 rai. All land sales are due to be transferred and subsequently booked as income in 2013, which would push up income from land sales by 50% to B3.3bn. Accordingly, we increase the fair value, using sum of the parts and raising PER from 12x to 14x, which is close to PER of HEMRAJ and AMATA. Combined with the value of ROJNA Power, using DCF, at B0.69/share, the new fair value is B10.22, implying 20% upside from the current fair value.
Reiterate BUY. 


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