On Wednesday, the Parliamentary regulatory bodies held a conference on the subject of CP Axtra Public Company Limited (SET: CPAXT) holding 95% of The Happitat at Forestia Company Limited (HATF) through its subsidiary. HATF is a mixed-use development company, with its THB 7.97 billion The Happitat project allegedly being a related transaction.
Representative of the Securities and Exchange Commission (SEC) remarked that the CPAXT investment in The Happitat is not a related transaction due to the transaction structure being an establishment of a new company (with CPAXT holding 95% of its share, while MQDC holds 5%) and that it is not a purchase, thus it does not deem a related transaction. Additionally, the regulators would order the SEC to readjust its guidelines to prevent a loophole for such a transaction in the future.
Bualuang Securities stated that after the SEC representative commented that CPAXT’s investment in The Happitat is not a related transaction, the Association of Investment Management Companies (AIMC) is preparing to remove CPAXT from its watchlist. The securities saw positive signs from the SEC’s comment, which could unlock the previous overhang to CPAXT share prices, currently, its price has gone down to THB 26.25 (down THB 8.50 per share after the investment announcement in The Happitat). The securities also expect profit in 4Q24 to grow year-on-year, and quarter-on-quarter, thus saw this as an investment opportunity, with a 2025 target price of THB 37.
UOB Kay Hian Securities assessed that CPAXT has proven to not have trouble in transactions, which could recover the stock from concerns, thus saw a positive in both CPAXT and CPALL, which would also help its overall momentum from the clearing of overhang in CPALL and CPAXT stock prices. The tone of the SEC and the AIMC meetings was also positive.
Chavinda Hanratanakool, Managing Director of Krungthai Asset Management, revealed to “Kaohoon” as Chairman of AIMC that after the SEC representative remark that CPAXT investment in The Happitat is not a related transaction because it is an establishment of a new company, the association is in the process of scheduling a meeting with every investment management company to discuss the subject as soon as possible, with the meeting date expect to come out soon.
In the discussion, not only the AIMC would reevaluate CPAXT’s watchlist, but there would also be a discussion toward investment in CPAXT after the reevaluation. Even if the SEC has said that it is not a related investment, the investment in CPAXT from Investment Management Companies (IMC) would mainly weigh on AIMC’s investment policy toward good governance of each IMC.
Ariya Diranaprakij, Vice Managing Director of the Thai Bond Market Association, revealed that in the case of CPAXT holding 100% of HATF under The Happitat project with Magnolia Quality Development Co., Ltd. CPAXT investment in the project according to its plan has pleased both the bond market and MQDC’s bond investors because MQDC’s project is valued in tens of billion THB, while trust in MQDC’s bond has been improved from new funds into the project. If the future did not go according to the plan, MQDC would return to its former state without investors.
