Happy Monday, Barkada --
The PSE lost 153 points (!!) to 6379 ▼2.3%
That Friday the 13th was a real horror show. Ugly results on the exchange, ugly results in crypto, ugly results in pretty much every financial bit of news that we've had for the past while. Of course, your Twitter feed and all the forums you visit will still be filled with port snaps of gains during these downturns because, naturally, that's always possible. It's not not what the vast majority of us are experiencing right now. Some strategies are made to shine in these moments, and others just can't. It's important to recognize the limits of your strategy, and not try to create a hybrid. There will always be some down days. Just remember that if your positions are in the red right now, you're probably not alone.
I'll dig into some of the recent earnings reports tomorrow (today is the deadline for Q1 reports), so hopefully we'll get some good news stories out of that.
Shout-outs to Gary Manalo, Just’n, John Lee, meloi, Versailles, suerte|muerte, Bread-St@lk, Eddie V. Tangonan, Stephen Chiong, C'Yaman.Revie, Carl Ambráy, Palaboy Trader, Eric Kiunisala, psestocktipsdaily, Lance Nazal, Chip Sillesa, Dividend Pinoy | PGG, Evolves Capital, Inc., StockBytesPH, Rolex Jodieres, and Jing for the retweets, and to Evolves.co, Froilan Ramos, and Mike Ting for the FB shares!
- UnionBank SRO shares will list today
- Raslag gets PSE approval for its June 6 IPO
- PLUS: Quick takes on CTS, MEDIC, and MA / MAB
▌Top 3 MB indices:
Code:
#COVID-19 ▲3.88%
POGO Gaming ▲2.75%
Cement ▲1.26%
▌Bottom 3 MB indices:
Code:
D30 Targets ▼4.72%
Logistics ▼3.49%
Power Gen. ▼3.19%
▌Main stories covered:
- [UPDATE] UnionBank’s SRO shares will list today... UnionBank [UBP 75.00 ▼2.72%] [link] will list the 617 million common shares that it sold to the public as part of the stock rights offering (SRO) that it conducted to fund its Citigroup PH purchase. UBP’s Friday disclosure summarized the results of the offer; 98% of the SRO shares were purchased in the 1st round of the SRO, with the final 2% purchased in the 2nd round. The take-up guarantee provided by UBP’s joint underwriters, CLSA and ING, was not needed to sell-out the offer. Price at ₱65.81/share, the SRO shares were sold at a 13.5% discount relative to UBP’s Friday close of ₱75/share, and at a 26.0% discount from UBP’s closing price of ₱87.61on the day the announcement of the SRO was made back on March 31.
- MB: The listing of the 0.62 billion new SRO shares, when blended with the existing 1.54 billion common shares, should result in an opening price of around ₱72/share. That’s just the math of it, though, and as a few recent transactions like this have shown, the “math” of a transaction doesn’t necessarily track with the changes in demand for the stock. Are investors optimistic about the Aboitiz Family’s huge move to expand its banking business? The take-up of the 1st round of the SRO certainly shows that there were not many investors that ignored the opportunity to defend their positions in this stock and double-down on UBP’s aggressive expansion of its retail banking business. This isn’t to say that UBP has an easy road ahead of it, and perhaps that whiff of danger is what has led UBP’s stock price to dip marginally underperform the rest of the banking sector since the time over the past few months. The Aboitiz Family is a savvy group, and I’m sure they’ve done the due diligence to know where the high-friction parts of this integration process might be, and already have a plan to handle those challenges and potential delays. Taking off my analyst hat for a second, I just love this kind of “hold my beer” corporate acquisition, but will the market feel the same way?
- [UPDATE] Raslag gets PSE approval for its June 6 IPO... Raslag Corp [ASLAG 2.00 pre-IPO] [link] submitted its preliminary prospectus to the PSE’s EDGE disclosure server on Friday, after it received the PSE’s conditional approval for its June 6 IPO on May 12. ASLAG is owned by the Nepomuceno Family of Angeles City, and is conducting the IPO to remain in compliance with the Electric Power Industry Reform Act (EPIRA) of 2001. The IPO is expected to raise ₱700 million through the sale of 350 million primary common shares at ₱2.00/share, plus an over-allotment option of 52.5 million common shares. While ASLAG’s listing date didn’t change, it did provide an update for its pricing and offer dates, which are now May 18 for Pricing, with an offer period running from May 23 through May 27. China Bank Capital is the underwriter. The IPO will have a stabilization fund which will be managed by China Bank Securities.
- MB: My quick glance at the prospectus didn’t reveal any obvious changes to the nuts and bolts of this IPO, aside from the slight adjustments to the offer period that we just talked about. I’ve had a few Barkadans message me about the odd name, but as ASLAG explains in its prospectus, “aslag” is the Kapampangan word for “light”, and “r” stands for... “renewables''. I’m interested to see the public’s interest in this IPO, which will be the third solar power-related IPO on the PSE in the past 5 months (Solar Philippines NEC [SPNEC 1.60 ▲0.63%] in December, Citicore Energy REIT [CREIT 2.49 ▲0.40%] in February), given that ASLAG’s offering isn’t taking SPNEC’s joint-venture layer approach, and isn’t taking CREIT’s fixed-income REIT approach. Even though the IPO is technically compelled by EPIRA, ASLAG is selling more primary shares than is required, and has a robust plan for the use of proceeds that will help fund current and future projects for the company. In the world of compelled IPOs, this is no Synergy Grid [SGP 11.88 ▲0.68%] stew of confusion.
- [NOTES] Quick takes from around the market...
- CTS Global [CTS 0.86 unch] [link] is still significantly below its offer price of ₱1.00/share, despite some attempts earlier in the trading day to push the price into the ₱0.90s. Volume has really eased off since the stock began trading below its offer price about a week ago. Is this a case of investors dumping out of a trading firm because the medium and long-term equities case is so muddled, or is this the market’s process of price discovery for CTS’s best case scenario? On the one hand, CTS’s best year of the past three was during the pandemic when markets were anything but orderly. On the other, though, there’s simply no data yet to validate CTS’s business plan. Perhaps traders are just less willing to hold this bag now that the contextual environment around it has degraded in the interim.
- Medlines Distributors [MEDIC 0.73 ▼3.95%] [link] continues its slow-motion implosion that started back at its IPO at ₱2.30/share. The stock is down 68% in just 5 months, and while the stock has not really stopped dropping, the rate of the drop has started to chill out a bit. Now MEDIC’s asked for an extension to file its Q1 earnings report (auditors having finished confirming its FY21 earnings). This is truly a stock that has been dying since the day it was born.
- Manila Mining [MA 0.01 ▼1.00%] [link] stock rights offer period begins today, and runs through to the end of the week. Shareholders can buy 1 SRO share for ₱1.00/share for every 5 MA/MAB shares already owned. MA hopes to list the shares in June, but the date isn’t set in stone as it will use the proceeds from this raise to fund the increase in authorized capital that needs to happen before the rights shares can be listed.
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