Commodities

Asia’s Worst Stock Loser Erases Thai Founder From Billionaire Status

(Bloomberg)

(Bloomberg) -- Somphote Ahunai, whose net worth topped $4.8 billion two years ago, is no longer a billionaire after a series of unwieldy efforts to diversify one of Thailand’s biggest renewable-power producers into a Tesla-like transport specialist. 

Shares of Energy Absolute Pcl posted a record monthly drop of 51% in June, slashing Somphote’s fortune to less than $600 million, according to the Bloomberg Billionaires Index. Even after a 11% rebound this month following Somphote’s furious defense of the company’s financial health, the stock has still lost about 70% of its value this year, the biggest decline among almost 1,400 companies in the MSCI Asia Pacific Index. 

The tumble comes after several years of Somphote’s efforts to replicate parts of Elon Musk’s Tesla Inc.: an integrated business with electricity generation, battery production, car manufacturing and charging-point installation. Somphote also invested in assembly of electric trains, ferries and buses — borrowing heavily to fund his dreams. 

“All the efforts and bets on the EV industry are in serious doubt with ongoing price wars and oversupply,” said Tiwa Shintadapong, president of Investors Association of Thailand. “Energy Absolute’s earnings slump and negative cash flow have really diminished confidence among investors.”

Somphote, 57, called urgent press conferences on consecutive days last week to clarify the company’s condition and try to calm shareholders and creditors. He defended Energy Absolute’s aggressive push into battery production and transportation, while saying that the company has sufficient cash flow to service its 37 billion baht ($1 billion) debt. 

Energy Absolute, founded as a palm oil and biodiesel specialist, spent billions to build production facilities for batteries as well as buses, ferries and trains under the Mine brand, as the Thai government joined the global push for emission cuts.

“EVs and the battery business are tougher than we anticipated, but we still have strong belief in their future,” he said at one of the press conferences, where he urged investors who “are questioning the company’s survival” to look at fundamentals and market potential. Somphote’s stake in the company dropped to slightly over 30% from about 40% after the stock’s slide forced a foreign bank to sell some of his pledged shares to repay loans, he said. 

First-quarter profit slumped by 62% from a year earlier due in part to an end to government subsidies for electricity output at one of its solar power plants. EV sales in the three months through March also fell on lower demand for its electric buses. 

Cash flow will swing into a surplus this year as most large investments on electric buses and trucks have been finished, according to Somphote. 

Energy Absolute recorded a free-cash-flow shortfall of 7.3 billion baht in 2023, up from 1.7 billion baht a year earlier, even as net income was little changed at 7.6 billion baht, according to data compiled by Bloomberg.  Still, the power division — which has generating capacity of 664 megawatts — remains strong, with annual cash flow of at least 4 billion baht through 2026, Suksit Wongwanich, Kasikorn Securities Co. analyst, wrote in a note published July 4. Its EV business. though, still faces challenges with rising competition, he said. 

--With assistance from Abhishek Vishnoi and Lee Miller.

©2024 Bloomberg L.P.