Market Rider: Lesson from this year’s offerings

I can’t believe that we may have the most number of public offerings and listings this year. As of my last count, we already had seven up to last October. These were GT Capital Holdings Inc. (GTCAP), East West Banking Corp. (EW), Rockwell Land Corp. (ROCK), First Gen Corp. (FGEN), Calata Corp. (CAL), Yehey! Corp. (YEHEY) and Coal Asia Holdings Inc. (COAL).

This will increase to nine as two more public offerings are scheduled to take place between now and toward the end of the year. One is already creating a lot of stir in the market.

Review

The first was GTCAP, “the primary vehicle for the holding and management of the diversified business interests of the Ty family.”

GTCAP’s current business holdings involve interests in banking through Metropolitan Bank and Trust Co. (MBT), in real estate development through Federal Land Inc., in power through Global Business Power, car vehicle distributing through Toyota Motor Philippines and life insurance through Philippine AXA Life Insurance Corp.”

It was offered to the public at P455/share and listed on April 20, 2012, and involved a total issue of 41.22 million shares with the aggregate amount of P295.14 million. Since its listing seven months ago, GTCAP has hit a high of P565 and a low of P456.40 a share. As of last Friday, GTCAP closed for the week at P552, or P3 (about 0.55 percent) down from its offer price.

Next was EW, the business portfolio of the Gotianun family in banking. It is a medium-sized bank primarily focused on “providing banking services to retail customers and mid-sized corporate customers.” It involved 245.31 million shares with the total amount of P4.54 billion.

As of Nov. 20, 2010, the company obtained from the Bangko Sentral Ng Pilipinas a conditional approval as a universal bank. EW is a 100-percent-owned subsidiary of Filinvest Development Corp. which, in turn, is owned by ALG Holdings Corp.

In March 2009, EW held 100-percent ownership on the following companies: AIG Savings Bank, Philam Auto Finance and Leasing Inc. and PFL Holdings Inc., “collectively known as AIG Philam.” They were later merged into EW in September 2009. It proceeded to subsequently acquire Green Bank Inc. in August 2011. EW has a network of 144 branches, 92 of which are in Metro Manila providing 24-hour banking services.

EW was offered at P18.50 and listed on May 7. Since then, it has traded to as high as P24.85 and as low as P18.50. Last Friday, it closed near its 52-week high at P24.30.

Offered and listed also in May was ROCK at the price of P1.46. Its listing, however, was by way of introduction. It has hit a high of P7.71 and a low of P2.51. Last Friday, too, ROCK closed at P3.03, a premium over its first traded price upon listing.

CAL followed with its listing on May 23. It was the fourth stock issue in May but was the first sensational stock issue among investors owing to its unique class, a distributing agricultural company. It was offered at P7.50 with 36.01 million shares equivalent to P270.09 million. CAL immediately became the darling of the investing public that it hit a high and low of P24 and P6, respectively.

When the dust of trading settled, especially from the group known previously as the “White Ninjas,” CAL has been trading slightly higher at P6.09 a share.

YEHEY was listed on October 18 on the second board of the stock exchange. It first traded at the price of P1 a share with 278 million shares. Upon listing, YEHEY shares have hit a high of P4.50 and a low of P1.38. As of last Friday, YEHEY closed at P1.39.

On October 23, COAL was listed in the first board of the stock exchange as it was offered at P1 a share. The issue involved a total of 800 million shares for a total of P800 million. So far, it has hit the high of P1.68 and the low of P1.04. As of last Friday, it closed at P1.06.

Last two deals

The last two issues to be offered to the public will be Alcorn Gold Resources Corp. (APM) and D&L Industries Inc. With both being holding companies, they will be listed on the first board of the bourse. And to what has been disclosed, so far, APM may be offered in the next week or two.

An application with the Securities and Exchange Corporation and the Philippine Stock Exchange has been filed. The exact date for the public offering of APM will soon be known following the approval of its offer price. In the meantime, as the offer price of APM shares has yet to be determined and approved, the market seems to have been making a parallel analysis.

As of 30 days from last Friday, on September 26, APM shares traded at the average price of P0.0173 a share with the total volume of 14.5 million shares amounting to P250,000 only. By October 9, the total volume of trade has increased to 9.42 billion shares amounting to P642.44 million. The share price has dramatically risen as well to the average traded price of P0.0672 each.

On October 15, the share price of APM seemed to have reached a turning or breakout point. On that day, it closed at P0.096 with a total volume of 11.05 billion shares amounting to P1.05 billion. As a result, the share price of APM has traded between the prices of P0.10 and P0.16 a share. Within the same period, the high of P0.169 a share was established.

The anticipated public offering of APM shares has been the most interesting and engaging deal for the year, so far. It will be a good test case of the market’s latent strength and fundamentals and ability to absorb new public offerings.

Bottom-line spin

Ordinarily, the pressure on the market by the last seven deals—that involved the raising of new money amounting to a total of no less than P13.19 billion—would have already sent the benchmark index reeling to a deep plunge. But with the country’s improved economic fundamentals and bullish attitude by both local and foreign investors, the Philippine Stock Exchange index, or PSEi, has managed to advance further by as much as 1,096.83 points, or 25.1 percent, in the last 10 and one half months.

But for the last two issues to succeed and perform better than the first seven public offerings, it will depend on how much of their offer price is based on their estimated “intrinsic or true value.”

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.