More public offerings
Less than a month since the IPO of the specialty store arm of the Rustan’s Group of companies or SSI Group Inc. (SSI), two new issues were again offered to the investing public, all of which ended last week. These were Phoenix Semiconductor Philippines Corp. and Xurpas, Inc. The former will be listed under the trading symbol ‘PSPC’ while the latter will trade under the ticker ‘X’. They will be listed—one after the other—on Dec. 1 and 2.
PSPC’s application has been approved as early as last May while that of Xurpas was only last Nov. 12. As of today, they stand as the sixth and seventh companies to go public this year.
Particulars
Xurpas specializes in the creation and development of digital products and services for mobile phone end-users. It creates, develops and manages proprietary platforms for mobile operators. It also offers a portfolio of products, including online casual games, messaging and other social discovery applications, as well as various forms of mobile commerce.
The company’s current clients include telecommunications companies like Smart Communications and Globe Telecom.
Xurpas offered a total of some 344 million shares at P3.97 per share for the equivalent amount of P1.37 billion, all to be issued out of the company’s authorized and unissued capital stock. The public offer is also equivalent to 20 percent of the company’s outstanding and issued common shares after the offering.
Of the approximately P1.24 billion net sales proceeds the company will raise from the public offering, no less than 60 percent will be used to finance domestic and regional expansion and acquisitions. Some P392.73 million is earmarked for Indonesia, P117.2 million for Bangladesh and P157.09 million for Thailand.
The sum of P250.0 million will be used for the development and expansion of existing content while P261.83 million is set aside for general corporate purposes such as working capital requirements and other operating expenses.
PSPC is another technology-oriented company. It “provides turnkey solutions to a wide range of products with SD cards and also offers a full range of memory modules for PCs and notebooks.”
The company was established on January 27, 2010 by STS Semiconductor & Telecommunications Co. Ltd. or STS, a Korean company and provider of semiconductor packaging in partnership with Samsung Korea.
PSPC started commercial operations in February 2011. Since then, it had been awarded as one of the top exporters within the Clark Freeport Zone.
PSPC offered a total of about 572.2 million shares at P3.76 per share or for the total amount of P2.15 billion.
Some 286.1 million or 50 percent of the offer will come from the company’s unissued shares and an equal number of shares (the other 50 percent) will be from those owned by STS. The total offered shares represent 25 percent of PSPC’s issued and outstanding capital stock.
This means the public equity issue is composed of a combination of a primary and secondary offerings. As such, only the money raised from the newly issued shares will go to the company and the rest will go to the selling stockholder, STS.
As disclosed, the company will use the money in the next two years for the following expenses: A total of P321.69 million for machinery and production equipment; P543.24 million for building and structure; P34.08 million for IT equipment and software and P0.98 million for other equipment, representing a total two-year capital expense of P900 million.
Bottom line spin
The combined value of both public offerings was barely over 50 percent of the total amount raised from the previous public offering of SSI.
Small as they are (like their public equity issues) you will find their daily trading results, when listed, on the small and medium enterprises or SME board.
Xurpas reported that its 75-percent revenue and 42-percent average earnings growth in 2011 and 2013 was due to their success in mobile content and services, particularly in online games. Online games is expected to be the company’s largest line of business for 2014.
Xurpas’ offer price is said to be 18 times its projected earnings for 2015. Technology companies like Google are observed to be trading currently at the price to earnings multiples of 30 to 33 times.
PSPC is the Philippine unit of South Korea’s STS. It currently employs up to 3,000 Filipino workers for the production of SD cards and memory modules for personal computer and notebooks.
At its offer price, it has received strong “buy” recommendation. According to some estimates, this represents an earnings multiple to less than 10 times 2015 projections.
If the long snaking queue of people at the bourse’s small investors subscription desk is any indicator, both public issues are certainly hot.
The writer is a licensed stockbroker of Eagle Equities, Inc.. You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com
