Philippine Business Magazine: Volume 9 No. 4 - Capital Markets
Brave Five
Two banks, two property firms and a power company have enlisted
at the bourse since January
By Tina Arceo-Dumlao

There was a time in the early 1990s when buying shares of a company having an Initial Public Offering was a sure way to get easy money. Filinvest Land, Petron, Manila Electric Co., Empire East Land Holdings were just some of the companies that made stellar debuts on the main board of the Philippine Stock Exchange. Some of these companies’ shares doubled in value on the listing day itself, and appreciated even more as days passed. Earning money was never so easy or so quick.

Those heady days, however, have long gone. Fast forward to 2002 and the IPO market has dried up. It would seem that the market has never really recovered from the Asian currency crisis that brought it down to its knees and dragged down trading volume to today’s low averages of between P200 million and P400 million a day.

Citystate Savings Bank
This year does not seem to be any different as shares of the five companies that braved the bleak IPO market this year are trading either below or a little just above the offer price.

First to test the waters was Citystate Savings Bank controlled by businessman Antonio Cabangon Chua. It debuted on the PSE on 3 January at P11.25 per share. Share prices have increased marginally to P14.25 as of end-August. The thrift bank raised approximately P112 million from the offering, of which P94 million was invested in bonds and lending operations; P8 million for branch network expansion, and P5 million for IT expenditures and investments in allied and non-allied undertakings. In 2001, Citystate posted a net profit of P1.76 million, a turnaround from 1999’s net loss of P6.9 million.

Salcon Power
Cebu -based power firm Salcon Power Corporation came next, selling 313.9 million shares at P1.80 each. Its shares closed at only P1.78 at end-August.

Salcon raised P565 million that was used for expansion and funding investments such as the P1.4-billion Eight Islands Diesel Project to be implemented by wholly-owned subsidiary Salcon Island Power Corporation.

Salcon Power is majority owned by Salcon Philippines Inc., a 60%- subsidiary of Singapore’s Salcon Ltd. Salcon Power’s flagship project in the Philippines is the 203.8-megawatt Naga Power Plant Complex in Cebu. Its other interests in the power sector include its 40%-share in Mactan Electric Co., a power distribution franchise in Lapu-lapu City, a 5-megawatt generating facility in Samal Island, Davao and the 29-megawatt Timbayan and 32-megawatt Villasiga hydroelectric power plants in Panay Island.

Highlands Prime Leisure Properties
Following Salcon was Highlands Prime Leisure Properties, a spin-off property unit of leisure estate firm Belle Corporation, now majority owned by retail taipan Henry Sy. Highlands Prime’s IPO was equivalent to 20% of the company’s total equity. It listed on the second board of the PSE which caters to companies with an authorized capital of P100 million-P399 million.

The company raised P193 million from the venture that would be used for capital expenditures.

It offered shares at P2.13 per share, but shares are now trading at P2.00 due mainly to the general weakness of the property sector and the economy in general.

Banco de Oro Universal Bank
With smaller companies braving the storm, the market looked at the listing of Banco de Oro Universal Bank — also controlled by Henry Sy — to perk up the listless market. Trading disruptions caused by technical problems and the Luzon-wide power failure, however, marred what would have been a stellar debut. Its shares closed at P20.75 per share, slightly lower than the offering price of P20.80. Shares as of end-August closed even lower at P9.00 per share.

BDO offered 89.04 million shares, which brought in P1.85 billion in proceeds for the company, the biggest offering in the PSE in the last two years. Proceeds were used to increase trading accounts and support lending and expansion activities. BDO started operating as a universal bank in 1996. It offered its shares to the public as mandated by the Bangko Sentral ng Pilipinas.

Jolliville Holdings
The latest firm to test the waters so far is property firm Jolliville Holdings Corporation owned by the family of Jolly Ting, owner of high-end men’s clubs Pegasus, Lexus, and Genie. Jolliville offered 94.3 million or 33.5% of its 281 million shares. It offered its shares at P1.08 per share, which appreciated to P1.20 per share as of end-August.

The P30.46 million proceeds were used to fund the immediate rehabilitation of Calapan Waterworks System and Development Corp. in Oriental Mindoro. It plans to reevaluate the project’s engineering designs, replace defective pipelines, and service connections, upgrade and construct new wells, and pump facilities and install water treatment chlorinators.

In the Pipeline
The Philippine Stock Exchange and the Securities and Exchange Commission are still hopeful that other big ticket firms would make good their promise to offer their shares to the public.

The Energy Department, for instance, has been prodding multinational firms Pilipinas Shell Petroleum and Caltex (Philippines) to offer at least 10% of their shares to the public. The Board of Investments is also dangling fiscal incentives in exchange for listing on the exchange while the Bangko Sentral ng Pilipinas has penalties against banks that have not yet proceeded with their IPO.

If all these initiatives will push through, loyal investors can finally expect the stock market to regain some of its lost glory.