April 12, 2021, was the last trading day that Jasmine Telecom Systems Public Company Limited (JTS) will be traded under the “cash balance” measure, and the share price roared to a gain of ฿2.50/share or 17.12% and closed at ฿17.10/share.
The Stock Exchange of Thailand (SET) imposed the cash balance measure on JTS on March 23, 2021, due to an unprecedented surge in share price and an unusual trading volume in March.
Cash balance means each member must ensure that its customers pay the full amount in cash prior to trading.
However, due to JTS’ attractiveness, SET on April 12, 2021, reimposed the cash balance measure on JTS from April 16, 2021 until May 6, 2021.
In the clarification letter dated March 19, 2021, JTS stated that the company disclosed only one news or information memorandum on March 1, 2021; on the purchase of Jastel Network Co., Ltd. (JASTEL) shares from Jasmine Submarine Telecommunications Co., Ltd. (JSTC), at a total value of 1,201,198,383 baht.
Jasmine International Public Company Limited (JAS) is an indirect owner of JASTEL through its subsidiary, Jasmine Submarine Telecommunications Company Limited (JSTC). Meanwhile, JAS also holds 32.80% in JTS as well, making this transaction somewhat an internal transfer.
However, the cash balance measure did not slow down the red-hot JTS even by a bit. JTS rose 33.60% during the cash balance period, while gaining 477% since the announcement of acquiring JASTEL.
No wonder why JTS would surge this high since the value of JASTEL is way above its current parent company, JTS. JASTEL recorded a revenue of 1,300 million baht, and a net profit of 111 million baht. On the other hand, JTS’ revenue was 310 million baht in 2020, while recording a net profit of 44 million baht.
When acquiring an asset that exceeds itself in value, no wonder why the holder could gain this much in a short period of time. The question is how high can JTS climb.
Basically thinking with simple multipliers, assuming that JASTEL is 2.5 times bigger than JTS in net profit, then JTS’ share price should be around Bt7.5 per share. But in reality, the share price is twice as much as that, which raises the question of how high can JTS climb. Without a soft cushion, the fall could hurt badly.
Nevertheless, the share price has been mostly on a winning streak, which might put a smile on the face of shareholders, especially for those that have been holding JTS before the restructuring plan with JASTEL.