Forthcoming IPOs

The market was already weak with its still overbought position at the start of the week when a liquidity play further broke out midweek as investors sold off to prepare for initial public offerings (IPOs) scheduled for the rest of the month.

Approved by the Philippine Stock Exchange (PSE) last Wednesday were the applications for an IPO by cement manufacturer Eagle Cement Corp. (ECC) and property developer Cebu Landmasters Inc. (CLI). ECC and CLI will be the second and third companies to go public this year after building and construction materials distributor Wilcon Depot Inc.’s successful P7.03-billion IPO last March.

Because of these factors, the benchmark Philippine Stock Exchange index (PSEi) ended last Friday with a weekly loss of 26.46 points or 0.34 percent at 7,815.53. They also brought down the wider All-Shares index to also close with a weekly loss of 25.15 points or 0.54 percent at 4,673.40.

Cement play

Eagle Cement is offering a total of 575 million common shares consisting of 500 million primary shares to be issued by the company and 75 million secondary shares owned by shareholder Far East Cement Corp. (FECC). The offered shares are priced at P15 a piece, equivalent to about 16x estimated earnings for 2017. It’s P1 below its earlier indicated maximum offer price of P16 and will raise P7.5 billion from the primary issue and an additional P1.12 billion from its over-allotment option, or a total of P8.62 billion in sales proceeds.

ECC plans to use the proceeds to partially finance two expansion plans of its Cebu cement plant that will raise its annual capacity to a total of 9.1 million MT as well as the construction of a distribution center and marine terminals in the Southern Luzon, Visayas and Mindanao.

The company, which operates the country’s largest cement factory on a 200-hectare complex in San Ildefonso, Bulacan, is led by tycoon Ramon S. Ang. It posted net sales of P13.28 billion and net income of P4.11 billion in 2016.

Upon listing, ECC will have a public float of 11.5 percent out of its total 5,000,000,005 outstanding common shares, of which 29.29 percent is owned by Ang and the rest by FECC.

The offer period is scheduled from May 16 to 22, and listing date is set on May 29.

Cebu property play

Cebu Landmasters, on the other hand, will be offering 505 million shares with an over-allotment option of 75 million secondary shares at the offer price of P5 apiece (lower than its indicated offer price of is P6.56 per share in its preliminary prospectus) and raise total sales proceeds of P2.9 billion. This will also bring the company’s public ownership to 33.84 percent.

CLI was founded in 2003 and is controlled by Jose R. Soberano III, a veteran housing developer in Metro Cebu and founder of the company.

The IPO’s sales proceeds will be primarily used to fund land acquisition and development costs in the next three years within the fast-growing areas of Visayas and Mindanao such as Iloilo, Bacolod, Cagayan de Oro and Davao.

The company has currently 13 projects under various stages of development and construction. It has six additional projects it plans to develop soon after the IPO.

The offering period is set to run from May 19 to 26, while listing is set on June 2.

Bottom line spin

About six more companies are in the IPO pipeline. Two of which are already awaiting approval from the PSE. These are Bermaz Auto and Pure Energy Holdings. The other four have yet to be approved by the SEC. These are the applications of Chelsea Logistics for P8 billion, Expresspay Inc. for P528 million, Xeleb Technologies for P751.8 million and Audiowav Media Inc. for P2.66 billion.