Sri Trang's IPO is the largest by far of the five listings in January that raised a total of $419.27 million. But, it is just over half the size of the $636 million that Sabana Shari'ah Compliant REIT raised in late-November and a mere fraction of the $3.45 billion that Global Logistics Properties pulled in last October. Yet, its IPO price of %1.20 apiece was well below the maximum $1.60 that its book-runners had indicated. And, the price fixing on Jan 26 came 1.5 days later than initially expected. amid talk that IPO had been cancelled for a second time. Sri Trang says the delay was due to "unfavourable market conditions", and it retracted an earlier statement to the Thai Stock Exchange that said the exercise had been scrapped.


Investors have been spoilt for choice on new issues recently. And, many are waiting in anticipation for the listing of Hong Kong billionaire Li Ka-Shing's port assets that could raise some US$6 billion ($7.7 billion), bigger even than Singapore Telecommunications' $4 billion offer over 17 years ago.


No surprise then that the performance of recently listed stocks has been mixed. Half of the 14 SGX debutants since October are now trading below their IPO prices, according to Bloomberg data. Of these, STX OSV Holdings and Yamada Green Resources are exceptions, up over 40%, while Mapletree Industrial Trust's gains were a decent 17%. On the other hand, shares of pub and restaurants operator Harry's Holdings tumbled 11.36% when they began trading on Jan 26, closing 2.5 cents lower than its 22 cents IPO price. On Jan 27, Malaysia Smelting Corp, the first to dual-list on both sides of the Cause-way since CLOB days to catch rising tin prices, ended with a small 1.7% gain over its offering price of $1.75 on its maiden trading day.


Will Sri Trang fare better? To be sure, the company is a sizeable rubber play. And, its shares listed in Thailand have done exceptionally well in the past year, rising more than 600% at its recent peak of THB41 ($1.69). At its $1.20 IPO price, the company would have a market capitalisation of $1.54 billion. That's somewhat ahead of the only other SGX-listed rubber play, GMG Global, which as a market value of about $1.2 billion. On the other hand, less than 92% of the IPO of 280 million shares was taken up by investors, with Sri Trang's underwriters being left with 23.07 million shares.


Viyavood Sincharoenkul, chairman and managing director of Sri Trang, tells The Edge Singapore that he is satisfied with the investor response to his company so far. "We're happy [with the pricing]. It takes time to educate investors. The rubber industry has been battered for the past 50 years. It's only now that more people realise that years of under-investment and acreage loss to oil palm is coming back to bite," Viyavood says.


Indeed, the steep run0up in Sri Trang's Thailand-listed shares over the past year has mirrored the rally in rubber prices, driven by growing consumption. Rubber futures traded as high as 483.2 yen per kg (US$ 5,848 per tonne) on Jan 24, versus 279.4 yen (US$ 3,381) a year ago.


Despite ongoing research in synthetic rubber, the increase in natural rubber prices may not be over, because synthetic rubber prices may not be over, because synthetic rubber is a byproduct of oil, whose price is also rising, says commodities guru Jim Rogers. Now, Rogers sees dips in commodity prices as a chance to buy, because prices will run up again "until the secular bull market ends, which still may be years away".


Viyavood says he has stopped trying to second-guess the direction of rubber prices, but asserts that investment in new capacity won't happen unless rubber prices are high enough to ensure decent returns. "I don't know if rubber prices have peaked, [but] no one outside the rubber industry would want to invest and wait for seven years for rubber tress to mature, so prices need to stay high."


The Sincharoenkul family will see its stake in Sri Trang diluted from 24.7% to 19.3% following its Singapore IPO. "I don't think I know how to do anything else other than rubber. It's in our blood. Our family has more than 100 years of [rubber] experience put together, but we're open to hiring outside professional expertise to manage the group should we find the need to do so," Viyavood says.


Can Sritrang hold its industry position as other players like GMG make inroads into Thailand? Viyavood says the supply situation is expected to remain tight everywhere in the world at least until 2012. Beyond that, Sri Trang has its deep roots in the industry to reply "We have more than 10,000 people within the group with very deep grund knowledge. People in the rubber business know our name," says Viyavood, adding that the group is already out recruiting to bump up the workforce by another 5,000 people over the next 12 months. "There is a reason [why] many of our people have been in the group for a long time."


Sri Trang has processing capacity of one million tonnes per annum. In 2009, it supplied 8.2% of the world's rubber demand and 14.9% of China's total rubber imports, according to Viyavood. As a result of strong demand, the group now plans to expand its capacity to 1.5 million tonnes by end-2012. The new plant capacity is to cater for rubber trees that are coming into maturity in the northeastern part of Thailand, where the Thai government had been encouraging new plantings, Viyavood says. "We're running at 90% capacity. It wouldn't make sense for us to expand if we cannot use up what we're adding."


Still largely a mid-stream player at present, Sri Trang plans to buy 8,000ha of land in "Thailand, Indonesia or other suitable areas" over four years to plant rubber trees, adding to the 1,681ha it has now. Expanding isn't easy for a company like Sri Trang, because plantation land is largely owned by smallholders, Viyavood says. On the other hand, this also prevents other big players from acquiring large tracts of plantation land. Even in countries like China or Africa, where land is seemingly abundant, competition for arable land is evident, he says. "We have no immediate plan at the moment to venture to Africa for land, but we won't limit that possibility if there are suitable partners."


For now, Viyavood says Sri Trang wants to continue playing a part in making the industry "healthier" and more socially sustainable by improving the lives of its workers. "It's only right that everyone in different parts of the rubber value chain gets to enjoy good value," he says, adding that workers in rubber plantations are starting to be able to afford to buy cars.


Will he make investors in Sri Trang richer too? Analysts who cover Sri Trang out of Thailand have price targets on the stock ranging from THB36.56 to THB44.75