Can Xurpas surpass its past?

For technology firm Xurpas Inc., whose shares have dramatically declined in the local stock market in the last three years, its bottom line will still get worse before it gets better.

Following the sale of its 51-percent stake in IT solutions firm Yondu Inc., Xurpas was expecting its net loss to worsen by 26 percent, albeit it was confident its remaining businesses would eventually make up for the losses.

For the first half of 2019, Yondu accounted for 85 percent of Xurpas’ revenues and 65 percent of the company’s expenses. Xurpas incurred a net loss of P118.28 million in the first semester, lower than the net loss of P137 million in the same period last year.

In a disclosure to the Philippine Stock Exchange on Thursday, Xurpas said a substantial amount of the proceeds from the sale of Yondu would be used to retire existing debt obligations. The balance of the proceeds would be used for working capital and other corporate purposes.

“With this corporate restructuring, the company will be able to focus on its existing businesses,” Xurpas said.

“For its enterprise business, the company will focus on high-value, emerging, innovative and disruptive technologies and platforms that will affect both enterprise and consumer commerce. The company will likewise pursue strategic alliances for digital advertising and HR (human resource) related services,” it added.

The P501-million sale of 51 percent of Yondu to Globe Telecom would result in a one-time recognition of loss on investment, the disclosure said.

Xurpas said it could not reasonably determine as of date the extent of the loss as it still needed to get from Yondu the value of the net assets as of Sept. 11, 2019, or the date of the sale.

“There will be an improvement in the net cash position of the parent company, allowing it to have more flexibility as it explores strategic options,” the disclosure said.

Furthermore, Xurpas expected to improve its leverage considering it would settle its substantial maturing debt obligations. Total debt over total equity would improve from 68 percent to 34 percent, it said.

Since its public listing in 2014, Xurpas invested in a number of tech companies in the Philippines and across the region. Some businesses have not contributed to profitability, becoming instead a financial drag. Thus, Xurpas has lost P36 billion of its market capitalization after peaking in 2016.

From a high of P19.80 per share in April 14, 2016, Xurpas’ shares are now trading at around P1 per share.  It is valued by the stock market at close to P2 billion, a small fraction of the P38-billion market capitalization back in 2016.

The company vowed to actively evaluate its current businesses to maximize efficiency in its operations. —DORIS DUMLAO-ABADILLA