First IPO for 2015

The market just had its first initial public offering this year. The company is Crown Asia Chemicals Corp., offered on April 10 to 17 and was listed yesterday, carrying the trading symbol of “CROWN” at the main board of the bourse.

It was incorporated in 1989 as Crown Asia Compounders Corp., engaged in the “trading of imported polyethylene compounds and paraffin waxes.”

On Sept. 29, 2014, the Securities and Exchange Commission approved the change of the company’s name to Crown Asia Chemicals Corp., as its business have grown to include “the production of plastic compounds, pipes and related products for the construction and telecommunication industries, particularly the manufacture of plastic compounds, polyvinyl chloride (PVC) pellets and plastic pipes.”

Crown Asia is controlled by the Villanueva and Perez families, under whom the “CROWN” label was developed and transformed into a premium brand.

Over the past three years, 58.06 percent of the company’s plastic compounds output was sold in the local market while the rest was sold in the export market. Its pipe products were all sold locally.

Crown Asia’s annual net income has been increasing. In 2014, its year-on-year net income rose by 31.31 percent to P65.38 million on annual revenue of P850.74 million. Total assets stood at P829.05 million with total equity of P562.90 million.

It reportedly has an operating capacity of 15,000 million tons per annum (MTPA) for its compounds business and 8,500 MTPA for its pipes business.

As of March 30, 2015, Crown Asia has 138 regular employees, 36 probationary employees, and 73 contractual employees or a total of 247.

Offering

Offered at P1.41 per share, the offering consisted of 158 million of primary common shares, issued out of the existing authorized capital stock of the company.

Of this total issue, 110.6 million shares or 70 percent was allocated for the general investing public through the company’s underwriter and participating underwriters, while 31.6 million shares or 20 percent was allocated for the Philippine Stock Exchange’s (PSE) trading participants. The balance of 15.8 million shares or 10 percent of the total issue was allocated for local small investors or LSI.

The gross proceeds from the offering amounted to P222.78 million. The net proceeds that will accrue to the company after deducting related taxes and marketing expenses will amount to P204 million.

Immediately after the offering, Crown Asia will use P69 million of the net proceeds as working capital. The rest is earmarked for use in the second quarter as follows: P66.2 million for the construction of the PP-P and HDPE manufacturing plant and warehouse, P43.8 million for debt retirement, and P25 million for the modernization of existing pipes plants.

After the public offering, the Villanueva and Perez families will collectively own 74.95 percent of Crown Asia. About 264.6 million shares of which will be locked-up for 180 days and another 120 million shares will be locked-up for 365 days.

Bottom line spin

Last year, the market had about seven public offerings and listings. Four of which were held via the regular initial public offering process, one through “follow-on offering” (FOO) and the other through what is called “listing by way of introduction” (LBI).

The first to debut last year at the offering price of P2 per share was “DoubleDragon Properties Corp. (DD), a property firm controlled by Jollibee chair Tony Tan Caktiong and Mang Inasal founder Edgar “Injap” Sia II.

Since its listing, the price of DD has gone up to as high as P10.90 and down to as low as P4.23 per share. At its last traded price of P8.95 a piece, DD is up 347.50 percent from offer price.

Century Pacific Foods Inc. (CNPF) followed in May. Controlled by the Po family, CNPF is the wholly-owned subsidiary of Century Canning Corp. which is “engaged in the buying and selling, processing, canning and packaging and manufacturing all kinds of food and food products.”

At its last traded price of P19.02 per share, CNPF’s stock is just a striking distance from its 52-week high of P20.50 and way above its 52-week low of P14.60. At the said price, CNPF shares are up by 38.33 percent from offer price.

One of the five companies allowed to list via the special process of “listing by way of introduction (LBI)” was Trans-Asia Petroleum Corp. or Tapet.

The shares of Tapet were distributed by way of property dividend by publicly listed parent company Trans-Asia Oil and Energy Development Corp. (TA) declared for its stockholders. The shares were then filed for listing with the PSE. Upon its approval, the shares of Tapet were listed directly and had been trading automatically at the opening price of P4 a piece.

Tapet’s shares had hit a high of P9 and a low of P3.67 per share since its listing on Aug. 28 last year. With last week’s last traded price of P4.64 a share, Tapet shares are up 16 percent from its listing price.

Next to list was SSI Group Inc. or SSI, the specialty store of the Rustan’s Group of companies. It was offered at P7.50 per share.

Since it was listed on Nov. 7, it has traded at a high of P11.60 and a low of P7.59 per share. Based on last Friday’s traded price of P10.70 per share, it was up by 42.67 percent from offer price.

After consolidating its assets under the Pancake House in a share swap and changed its name to Max’s Group Inc.—and also changed its stock code from PCKH to MAXS—the company embarked on a fund-raising exercise to fund its operations through the “follow-on offering (FOO)” process at the offer price of P17.75 per share.

After the FOO, MAXS shares traded at a high of P90 and a low of P17.30 a piece. At its price of P26.10 per share last Friday, MAXS stocks are still up by 47.04 percent from FOO offer price

Listed one after the other in early December were Phoenix Semiconductor Philippines Corp. (PSPC) and Xurpas Inc. (X) at the offer prices of P3.76 and P3.97 a piece, respectively.

PSPC was not that lucky: Its shares were able to hit a high of only P3.40 since listing and a low of P2.22 a piece. PSPC continues to languish at P2.42 per share last Friday.

Xurpas had done well. Since listing, its shares hit a high of P12.88 and a low of P5.95. At the close of trading last Friday, it was up 135 percent at P9.15 a piece.

Prices of stocks then were regarded relatively overbought (over priced) as they are now. Yet, because of their fundamentals, they continue to outperform—like how Crown Asia should outperform on this basis.

(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)