Keepers’ re-IPO priced at P1.50 per share

Lucio Co —FILE PHOTO

Retail magnate Lucio Co-led liquor distributor The Keepers Holdings Inc. has priced its re-initial public offering (re-IPO) at P1.50 per share, finalizing the follow-on offering size of the stock market’s newest liquor “pure play” at P4.5 billion.

Leading online stock brokerage COL Financial sees the offering as a good entry point for investors since this would mean paying only 13 times Keepers’ likely earnings per share this 2021, much cheaper than the valuation of about 27 times the prospective earnings of comparable peers across the region.

The offer price was pegged at the low end of Keepers’ revised price range of P1.50 to P2 per share from P2 to P2.50 per share previously.

The offer is also lower than the P2 price per share of the swap deal that allowed Co to consolidate into Keepers three liquor retailing companies previously under Cosco Capital Inc., which means that Co is willing to be diluted at a discount to market prices to leave some money on the table for new investors.

This backdoor listing unlocks the strategic values of Co’s liquor companies through a pure liquor and wine distribution listed company. Keepers is now envisioned to be Cosco’s platform to further grow and expand this business.

After the re-IPO, Keepers will have a public float of 20.94 percent and a market capitalization of about P21.76 billion.

The company is set to offer three billion primary shares from Nov. 4 to 10. Tentative listing on the main board of the Philippine Stock Exchange under the trading symbol “KEEPR” is on Nov. 19, based on a circular issued by the local bourse.

China Bank Capital Corp., PNB Capital and SB Capital Investment Corp. are the joint issue managers, joint lead underwriters and joint bookrunners.

Largest distributor

Keepers is the largest distributor of imported spirits in the Philippines holding a 74-percent market share in terms of volume. Its portfolio includes brands such as Alfonso, Johnnie Walker, Jose Cuervo, Jim Beam and Jinro.

Proceeds from this offering will be used for strategic acquisitions, expansion of product portfolio and distribution channels, investments in distribution and logistics network, working capital and for general corporate purposes.

“In 2020, KEEPR saw revenues contract by 24 percent largely due to the COVID-19 pandemic and the resulting quarantine restrictions imposed throughout the country. However, cost-saving initiatives helped profits decline by only 2.6 percent. Furthermore, in the first half of 2021, KEEPR’s revenues rebounded significantly, up 35 percent year-on-year, such that revenues for the period were only 5 percent lower compared to prepandemic levels,” said COL analyst Justin Cheng in a research note.

“Given the strong growth opportunities in the imported spirits industry, KEEPR’s earnings in 2022 could grow in line with its comparables at 20 percent (vis-à-vis a 15 percent industry growth),” Cheng said, noting that the company could generate higher margins from improved operating leverage.

—Doris Dumlao-Abadilla