Refiner ThaiOil’s IPO got off to a flying start with a retail tranche that was 15-16 times versubscribed, with strong institutional interest expected as well next week thanks to prevailing strong refining margins, analysts surveyed said.

But the company would not be offering more shares to retail investors, a Thaioil source said.
The retail tranche of 60 million shares accounts for only a small portion of the total 912 million shares on offer, with the remainder scheduled for institutional subscription over. Of the total 912 million shares, 90 million are new shares, with the remaining held by creditors which currently have a 49 per cent stake in the company.
With an indicative IPO price range of Baht 27-32 per share (65-77 cents per share), Thaioil is under-priced and offers an attractive buy for institutional investors, the analysts said.
A fair price for Thaioil would be Baht 45 per share, calculated on discounted cash flow based on estimated refining margins of $6.50 per barrel and $5.00 per barrel respectively in 2004 and 2005, a Bangkok-based analyst said.
 “The current high refining margins will be here to stay for a while, due to the trend of tightening environment specifications for oil products in the region,” said the second Bangkok-based analyst.
Thaioil’s 220,000 bpd refinery is a relatively modern and complex plant, compared with another Thai refinery Bangchak (120,000 b pd), which is relatively simple, giving Thaioil an edge in the domestic market, the first analyst noted.
Thaioil’s 220,000 bpd accounts for around 22 per  cent of Thailand’s total refining capacity of around 1 million b per d. The other refineries include ExxonMobil’s 160,000 bpd Sri Racha plant, the 145,000 bpd Rayong refinery and the 150,000 bpd Star Petroleum Refining.