Italpinas to weather sluggish mart on strong investor base

Property developer Italpinas Development Corp., the fifth company to go public this year, is expected to trek higher when it debuts on the Small, Medium and Emerging Board of the Philippine Stock Exchange (PSE) today, as a strong local investor base supports the stock amid sluggish market conditions.

“I think Italpinas is too small to affect the stock market. There is interest in the shares given the lack of supply that may drive its share price higher on listing day,” Alexander Adrian O. Tiu, senior equity analyst at AB Capital Securities, Inc., said in a phone interview.

“It is a small issue so it may be pulled up by locals. I don’t think it will attract the interest of big funds,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said in a separate interview.

Italpinas is raising P207.44 million from its initial public offering (IPO) — the smallest maiden share sale for the year.

At the close of the offer period last month, the allocation was 2.6 times oversubscribed for local small investors, 3.5 times oversubscribed for trading participants and three times oversubscribed for quality institutional buyers, Unicapital, Inc. Managing Director Leonardo R. Arguelles, Jr. said in a mobile phone message last week.

Unicapital is the issue manager and underwriter of the transaction.

Italpinas’ listing comes at a time when the stock market is expected to encounter volatility on mounting bets that the Federal Reserve is poised to start raising interest rates later this month.

“IPOs are sometimes in a bubble. They don’t follow what’s going on in major markets,” Mr. Tiu said.

Italpinas priced the IPO at P3.60 per share, 14.29% lower than the P4.20 maximum price the company initially announced, bringing down the gross proceeds from the original P242 million the company had intended to raise from the stock market.

“Assuming a net profit of P21 million for 2015, the stock is valued at 16 time price-to-earnings ratio for 2015, that’s relatively cheap for a real estate company,” Regina Capital’s Mr. Limlingan said.

PE ratio is a measure of how expensive a stock is.

Italpinas is selling 57.622 million common shares, comprising 26% of the company’s outstanding capital stock.

Italpinas is the company behind Primavera City, a mixed-use project consisting of seven residential and commercial buildings in Cagayan de Oro City. Primavera integrates into its design eco-friendly features such as rooftop solar panels to generate part of the buildings’ electricity supply and reducing power use by maximizing natural light and wind ventilation.

The company is acquiring a property in Sto. Tomas, Batangas where the it plans to undertake a mid- to high-rise residential project.

Italpinas — which is scouting for land in second- and third-tier cities where demand has been growing but has been underserved — today becomes the fourth company to join the stock market this year in the wake of Crown Asia Chemicals Corp. (P222.78 million), SBS Philippines Corp. (P1.16 billion) and Metro Retail Stores Group, Inc. (P3.97 billion). (Krista A. M, Montealegre, Business World)

By Krista A. M. Montealegre | Business World – December 6, 2015