Laos’ Third IPO Ever Was Pretty Quiet

A somewhat significant event in a quiet place was pretty quiet. Laos had its third ever IPO. It’s been a while since the Laos Securities Exchange (LSX) had an IPO. Lao World because public on December 24th. Bloomberg didn’t even picked it up. The other stocks on the LSX are Banque Pour Le Commerce Exterieur Lao (BCEL) and Electricité du Laos Public Company (EDL-Gen). I suspect that the reason why this opportunity was under radar is because it’s not that great. People on the ground told me that their locations are mediocre and the competition is better. Before getting in these markets do your homework and due diligence. Such market has liquidity and trading is rare. I would suggest that you do your research.

Background information provided by KT-ZMICO
Lao World is Laos’ leading operator of exhibition halls, with operations in Vientiane (Lao ITECC), Champasak (Pakse) and Savannakhet (Lao World Savan) provinces. The company generates 34% of its revenue from events at its halls, and the remainder from consumer businesses that are mainly operated out of these halls, including supermarkets, cinemas and bowling.

Two new locations to drive surge in growth
Lao World will open two new venues next year; 1) Savan ITECC in Savannakhet in early 2014 and 2) Vientiane ITECC Market near the end of 2014. Management forecasts that these new locations will boost revenue over 300% in 2014E, and a further32% in 2015E. The company also targets an EBIT margin improvement from 23% in 2012 to 35% by 2015E, driving EPS growth of 300% in 2014E and 32% in 2015E.

Market capitalization of US$50mn at offering price
Lao World will offer 3,956,100 new shares to the public in its initial public offering (IPO) at LAK10,200/share, raising LAK40,352mn (80% of which will go to financing the two new locations). The offering will bring the total number of shares to 35,604,809, for a market capitalization at the listing price of LAK403bn (US$50.5mn). Under management forecasts, between the new equity, new debt this year of LAK46bn, and internal cash of LAK171bn over 2014E-2015E the company will have more than sufficient funding for a planned LAK126bn in capex.

Lao World


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