Thai Life Insurance Public Company Limited (SET: TLI) will not be included in the SET50 Index after closing THB15.90 per share on its first trading day, which failed to meet the fast-track measure criteria.
With a trading value over THB10 billion on July 25, 2022, the share price of TLI dropped below its IPO level by THB0.10 or 0.62% to close at THB15.90 on its first trading day on the SET Index.
The fast-track measure wrote that any new IPO that has more than 1% of the current market capitalization at the closing of its first trading day will be included automatically in the SET50 Index, of course along with several other criteria.
Thai Life Insurance only needs 2% gain at the closing on its first trading day to raise its market cap from THB183 billion to THB186 billion, topping SET Index’s market cap of THB18.5 trillion and representing a little over 1% of the total market cap.
The SET50 Index is one of the main goals for listed corporates in the Thai stock market in which any listed companies can expect higher foreign flows through various types of funds, typically focusing on investing in SET50 and SET100.
Sadly, not only TLI could not enter the SET50 Index, but the share price also closed lower even with 161 million shares of greenshoe options.
Thai Life Insurance will surely be among the SET50 constituents, but it will be by next year after a rebalancing of the index that occurs every January and July. Assuming the share price does not fall to the point of no return by that time, TLI should be listed in the SET50 in the second half of 2022.
Being the biggest insurer in the Thai stock market, TLI is seen as one of the top companies to record around 20% profit growth this year and should benefit from rate hike trends. Capital Nomura Securities gives the highest target price for TLI among all brokers at THB21.29 per share. SCB Securities sees a target price at THB17.82 and Thanachart Securities at THB17.66 per share.
Fitch Ratings stated that Thai Life Insurance Public Company Limited (TLI, Insurer Financial Strength (IFS): A-/Stable) will strengthen its capital position and retain its ‘Favourable’ company profile after completing its IPOs by end-July 2022. The firm said that it believed the proceeds from the newly issued shares should allow the company to sustain its competitive and market position as well as provide a further buffer against any downside risk.
Fitch Ratings also noted that it believed the IPO would benefit the overall local life insurance industry because of higher accountability and transparency, as TLI is the second-largest life insurer in the country (2021:15% share of total premium written). The insurer will also be the second listed life insurer after the smaller insurer, Bangkok Life Assurance PCL.
Fitch Ratings expected the IPO to encourage more life insurers to list on the local exchange over medium term, and to attract more foreign investors, resulting in an inflow of foreign capital into the market.