SBS shares surge 49.8% on day of listing on PSE
Shares of chemical trading and distribution firm SBS Philippines Corp. sizzled on Monday’s stock listing debut, on the back of some “undervalued” property asset play.
Shares of SBS—a one-stop-shop resource for chemical requirements—surged by 49.8 percent at the Philippine Stock Exchange to close at P4.12 per share from the initial public offering price (IPO) of P2.75 per share.
The sharp increase was attributed by stock traders to the anticipation that the company will benefit from rich property assets which are, for now, sharply discounted in its books.
In a briefing after his company’s listing ceremony at the local stock exchange, SBS chair and president Necisto Sytengco said the IPO price of P2.75 per share had valued the company at around 20 times its 2014 earnings.
“But it’s very much undervalued,” Sytengco said, noting that the IPO price had not factored in the company’s prime pieces of property along Ayala Avenue in Makati, in Fort Bonifacio, Las Piñas and along Edsa.
“At present value, that’s easily within the range of P8 billion to P10 billion,” Sytengco said.
Adding to the property assets were the inventory and the receivables, but noted that the company’s “goodwill” was never factored in the pricing.
In corporate jargon, “goodwill” is an asset that factors in intangible factors like brand name, customer base, customer relations employee relations and any patents or proprietary technology represent goodwill.
The company raised P1.15 billion in fresh funds for expansion from this public offering.
As of Monday’s closing, SBS was valued by the market at P3.3 billion or only about a third of the estimated value of property assets that the company chair said had not been factored in the IPO pricing.
SBS intends to use proceeds from this offering to expand its product offering, boost capital to promote operational efficiencies, retire a term loan and fund working capital.
In a statement, SBS said it expects to achieve a double-digit growth in revenues and earnings this 2015.
