What Could be the Reason Behind the Disposal of COM7’s Shares from Major Shareholders?
What could be the reason for Mr. Sura and COM7's executives to dispose of almost 6% of paid-up capital (5% to BTS)?
It was an unusual phenomenon that a share price would rally after one of the major shareholders disposed of some of the stake, but it did happen to Com7 Public Company Limited (COM7).
COM7’s share price rose ฿1.90/share or 8.41% on July 9, 2019, after Mr. Sura Khanittaweekul and other executives disposed a total of 59,000,000 shares, equivalent to 4.91% of paid-up stocks, to BTS Group Holdings Public Company Limited (BTS), and 11,500,000 shares, equivalent to 0.96% of paid-up stocks, to individual investors. Eventually, the share price slightly dropped on the next day.
The big lot transaction on the 9th of July had instantly made BTS become the 5th major shareholders of COM7. The coming of BTS has been highly anticipated to be a positive sentiment to COM7, especially in the part of synergy.
It is possible for COM7 to expand its network to BTS stations and install its product line ups in soon to be opened Lawson 108 on the station. Meanwhile, BTS could use a total of 622 branches of COM7 as Kerry Express stations (through VGI Global Media Public Company Limited or VGI).
Come to think of it, if the company really has good performance, why would major shareholders continue to sell their stakes?
Even though, Mr. Sura had affirmed that he would not sell another portion of his stake, there is no guarantee about that when the decision has to be made at a certain point.
He, who is the owner and the major shareholder who once held a total of 32.7% stake after the IPO, to continuously sell his shares until the portion decreased to 25.05% may lower his eagerness in making a profit for the company.
Will this affect or limit COM7’s performance which has always made constant growth?
COM7 recorded a profit of THB 268 million in 2015, THB 406 million in 2016, THB 608 million in 2017, THB 891 million in 2018, and THB 250 million in the first quarter of 2019, increased 43% YoY.
More importantly, will there be more disposal of shares from Mr. Sura? Something like this had happened in the past to various stocks such as B…. that was once considered a growth stock.
But those stocks had to face a devastating turn of events after their major shareholders sold the stake and booked the money to their own pockets.
And right now, COM7 could be walking on the same path.