Although debut stocks have performed disappointingly so far this year, the results have not spoiled stock investors' appetites for the impending Rayong Refinery Plc initial public offering.

The skyrocketing price of fuel, the anxiety of a possible terrorist attack and lingering uncertainty about the political situations in some oil exporting nations, including Iran and Bolivia, has made oil refinery stock one of the sexiest investments, despite some analysts comments that the oil price has already peaked.

Take Thai Oil Plc for example. The stock has given a double windfall to its shareholders. Its share price has swelled dramatically from its IPO price at Bt32 apiece in late 2004 to around Bt70 currently.

The company also paid shareholders a Bt1.90-baht-per-share dividend for its 2004 operations and Bt3.50 for 2005.

Rayong Refinery, a wholly owned unit of oil and gas conglomerate PTT Plc, plans to sell 1.38 billion new and existing shares during its IPO, scheduled for May 18-19. The company has set aside an additional 200 million shares in case shares are oversubscribed.

Of the 1.38 billion shares, 698 million shares will be earmarked for foreign investors, 479.5 million will be allocated for retail investors and the remainder will be available to local institutional investors.

The shares offered to retail investors will be sold at Bangkok Bank, Krung Thai Bank, and TMB Bank branches across the country and will be allocated randomly via Settrade.com's computer system.

The initial price range has been set at between Bt18 and Bt23 a share, the latter of which could raise the company up to Bt32 billion in new capital, which would make it the country's second-largest IPO, only marginally smaller than Thai Oil which raised Bt32.6 billion.

Like its predecessors, which sold their IPO shares through banks, Rayong Refinery requires those who buy its shares to pay Bt23 each on the subscription date. If the final price is less than Bt23, Rayong Refinery will reimburse the investors the difference later.

The final IPO price is scheduled to be set on May 25, the same day as the random share-allocation process. The list of those who receive the share allotment will be announced the following day. Trading will start on the SET on June 5.

Retail investors are required to subscribe to a minimum of 1,000 shares and each person can submit only one subscription form, available at branches of the three banks shortly ahead of the subscription date. Rayong Refinery's IPO allocation method for retail investors includes three steps.

1. Retail investors are entitled to subscribe to between a minimum of 1,000 shares and a maximum of 25,000 shares.

2. Shares left over from the first step will be earmarked to retail investors who subscribe to between 25,000 and 75,000 shares.

3. Shares left over from the second step will be allocated to retail investors who subscribe to more than 75,000 shares.

Given the expected feeding frenzy for Rayong Refinery shares, it is recommended taht retail investors subscribe to between 1,000 and 25,000 shares. That way they will have a better chance of being randomly selected to buy shares, than those who attempt to subscribe to more shares.

Although all retail investors are eligible to submit subscription forms during the three bank's operating hours, waking up earlier than normal and checking out the required documents including a copy of your ID card will at least guarantee your orders have a chance of joining the random process.

Oranan Paweewun

The Nation