Blown out by DD

“DD” is the trading symbol of newly listed Double Dragon Properties Corp.

When it debuted on April 7, its share price practically defied gravity that it simply blew me out of the water, so to speak.

It was up 50 percent on the first day, up another 28.67 percent on the second day.

Upon resumption of trading on April 10, following a one-day break in observance of the “Araw Ng Kagitingan” on April 9, it rose by another 2.33 percent, chalking a total gain of 97.5 percent in the first three days of listing.

On its fourth day of listing last April 11, DD’s share price dropped slightly. Nevertheless, at the closing price of P3.86 a share, DD continued to remain ahead by 91.5 percent from its offer price.

Offering

The initial public offering (IPO) involved the issuance of 579.73 million common shares at the offer price of P2.00 a share.

As a result, the IPO will increase the company’s total issued and outstanding number of shares to 2.23 billion shares. Also, the new ownership structure of the company will be divided mainly into 74 percent for the original owners and 26 percent for the general investing public.

DD was established on Dec. 9, 2009 as Injap Land Corp. (ILI) with the primary purpose of engaging “in the business of real estate development and other … related business ventures.” It started commercial operations in November 2010.

ILI operated as a 100 percent-owned subsidiary of the holding company of the Sia Family, Injap Investments Inc. (IJI).

In June 2012, however, Honeystar Holdings Corp. (HHC), the holding company of the Tan and Ang families, entered into a joint-venture agreement with IJI. HHC acquired 50 percent interest as a result, along with the change in ILI’s corporate name to DD.

Following the formal approval by the Securities and Exchange Commission (SEC) on July 10, 2012, DD effectively became a 100-percent-owned subsidiary of HHC and IJI.

But on Feb. 17, 2014, DD and SM Investments Corp. (SM) entered into a shareholders’ agreement where the latter “subscribed to shares in CityMall Commercial Centers Inc.,” a subsidiary of the former. This gave SM a resulting ownership in the subsidiary of 34 percent, and 66 percent for DD, on an agreed increase in capital structure for the subsidiary.

P24-billion investment

The IPO raised a total of about P1.16 billion. The money will be part of DD’s announced P24-billion investment for general commercial, residential, and public-private partnership projects, as the company plans to build community malls in prime locations in the Visayas and Mindanao, under the “CityMall” brand.

By 2020, the company hopes to have built some 100 community malls all over the Philippines.

As a strategy to ensure occupancy and success, the company will house related firms within its corporate ambit, namely the “Jollibee fast food brands, such as Jollibee, Mang Inasal, Chowking, Greenwich, Red Ribbon and Highlands Coffee, and SM Group retail stores, such as Savemore, Ace Hardware, Watson’s, Toy Kingdom, SM Appliance,” to be reinforced by the location of a BDO Unibank Inc. (BDO) branch in each as anchor tenant.

At the moment, the company just completed the construction of two residential projects—the “People’s Condominium, a six-story residential condominium; and First Homes, a 111-unit townhouse project.”

Within the year, the company is scheduled to turn over three more. These are “Injap Tower, a 21-storey condotel; Uptown Place Condominium, a five-story premium condominium; and W. H. Taft Residences, a 30-storey condominium.”

The projects are mostly located in Iloilo City, except for W.H. Taft Residences which is the only project located in Manila, right beside De La Salle University.

DD also entered into a joint venture agreement with the city government of Iloilo to establish a ferry terminal intended to link Iloilo to the island of Guimaras.

Also, DD continues to hold interests in the following real estate property companies: “Double Dragon Sales Corp. (DDSC), 100 percent; One Eleven Property Management Corp. (OEPMC), 100 percent; and Piccadilly Circus Landing Inc. (PCLI), 50 percent” as of Dec. 31, 2013.

The company’s present board of directors and management officers are:  Edgar J. Sia II, CEO and chair; Tony Tan Caktiong, co-chair; Ferdinand J. Sia, president and COO; Rizza Marie Joy J. Sia, director, CFO and treasurer; Joseph Tanbuntiong, director; William Tan Untiong, director and corporate secretary; Gary P. Cheng, independent director, and Vicente S. Perez Jr., independent director.

Bottom line spin

DD is the first company to hold an initial public offering for 2014.  It is also the most recent company to be listed on the “Small, Medium and Emerging Board.” (This may explain why you won’t see the daily price quotation report on DD at the main stocks list, but at the SME list).

Attracting mixed reaction from analysts during the offering period, DD proved to be not only the best gainer but the most actively traded stock upon listing, beating all other stocks on the main board, notwithstanding it being one merely listed on the SME board, reminding me of how the shares of Calata Corp. (CAL) performed when it made its public debut in 2012.

CAL was similarly touted to be a vaunted (agri-related) growth-cum-value stock owing to its great plans and apparent experience and organizational ability to make them happen.  Listed at P7.50 a piece, CAL shares sizzled to P24 or up 220 percent within days of trading from listing.

In less than one month, it fell to P9 a share. From then on it gradually fell below its original offer price. As of last Friday, it had a closing price of P3.34 a share.

Surely, DD is not CAL or the other way around. In fact, DD has a better advantage. It is composed of a bigger group of people of mixed and business interests that, at present, can theoretically and practically provide synergy to each other. Its current price is no problem either as long as it fulfills what it promises to be as an investment alternative.

But as advised, give it a little time to perform, like in the case of CAL, for it won’t be long before it show’s its true potential.

(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach Market Rider at [email protected], [email protected], or at www.kapitaltek.com)