D&L Industries gains 1.39% on listing day

MANILA, Philippines—Food and plastic input manufacturer D&L Industries debuted on Wednesday in the Philippine Stock Exchange on a positive note, riding on its proposition as an indirect play into the robust local consumer segment.

On its first day of trading, D&L shares rose by 1.39 percent to close at P4.36 each, giving it a market capitalization of P15.4 billion. The stock price hit a high of P4.51 in intraday trade.

In the company’s 50-year history, D&L doubled its sales every four or five years, outpacing the Philippine economy, with growth coming from existing and new products.

“Now that things are looking much better, we’re hoping that we’ll continue a much faster growth,” D&L executive vice president and chief finance officer Albert Lao said in a press briefing after the listing ceremonies.

Of the P4.4 billion in primary proceeds from the IPO, 70 percent was from institutional investors, of which local investors accounted for 58 percent and foreign investors, 42 percent. The IPO was more than two times oversubscribed, said Roberto Benares, managing director at IPO underwriter Maybank ATR Kim Eng Capital.

Since the share price rose on listing date, the chances of the over-allotment option being exercised “will be very high,” Banares said.

About 34 percent of D&L’s outstanding stock will be held by the public after the offering if and when the over-allotment option is exercised within 30 days after the listing date.

At the IPO price of P4.30 each, stockbrokerage DA Market Securities estimated that the offer price translated to a price-to-earnings ratio of 13x to 14x prospective earnings for 2012, and if the company’s January-July financial statement were annualized, this valuation was a “fair figure.”

On the use of the proceeds from the offering, about P1.5 billion will be used to repay obligations and P700 million for working capital. About P2.2 billion will be used for acquisitions and investments.