Leading local airconditioning and refrigeration appliance maker Concepcion Industrial Corp. has set a price range of P25.50 to P30.50 per share for its initial public offering (IPO), seen as the “next stage” in its growth evolution.
This price range translates to a price-to-earnings (P/E) ratio of about 10.6 to 12.5 times of its projected 2014 earnings, said CIC chief finance and information officer Ma. Victoria Betita.
This valuation puts it at par with comparative peers in the region.
CIC, which conducted its domestic investor roadshow Tuesday, said it intended to use the proceeds from the primary offering to support its next phase of growth after a 50-year track record in appliance manufacturing.
“We are at a point of what we believe will be a significant expansion of sales of our current product lines and development of what we think will be a highly successful offering of integrated, end-to-end business solutions, as well as plans to expand to other appliance goods sectors,” said CIC chief executive officer Raul Joseph Concepcion said.
CIC plans to offer up to 74.965 million shares or as much as P2.29 billion worth of shares based on the upper end of the IPO price guidance. About 85 percent of the offering will consist of secondary shares to be unloaded by the following shareholders: Concepcion Holdings Inc., Hy-Land Realty and Development Corp. and Horizons Realty. There will be an overallotment option of up to 11.24 million shares that can be added to the total IPO size.
The stock offering will bring about 33 percent of the company’s shares to public hands, including the overallotment option.
Concepcion said the primary portion of the offering was smaller than the secondary because CIC was not really in need of raising new money and that it had very little debt. However, he said, going public would boost governance, accountability and ensure compliance to good ethics.
In the last three years, the company has been growing its business at a compounded annual growth rate of 13 percent. Moving forward, CIC plans to set an annual dividend policy equivalent to 30 percent of prior year’s earnings.
CIC sees higher demand for cooler solutions with the expansion of the nation’s middle class, as well as the expansion of the housing and construction sectors.
” As the Philippines continues on its growth trajectory, we believe CIC is in a strategic position as a market leader to provide quality cooling appliances at the best value,” Concepcion said.
CIC’s offer price will be finalized on Nov. 11, ahead of the domestic offering which will run from Nov. 13 to 21. The company expects to list on the the PSE on Nov. 27.