Gains 3.16 % on first day
THE highly anticipated initial public offering of Cemex Holdings Philippines Inc. kept most investors focused on the stock on its debut on Monday, dominating the market to post a moderate closing gain in heavy trade volume.
However, the benchmark Philippine Stock Exchange Index (PSEi) failed to build on last week’s gains and fell below the 8,000-point level.
“I think it [Cemex] did surprisingly well. For a while I thought it would go below its offer price, but it managed to maintain its gain. I think almost half of today’s [Monday] volume was generated by Cemex,” said Joseph Roxas, president of Eagle Equity Inc.
Cemex shares opened at P11.20, up 4.2 percent from its IPO price of P10.75. It reached a high of P11.36, or up 5.7 percent, before closing at P11.10, still up by 3.16 percent from its offer price.
Trade in the IPO stock was active, with 264.9 million shares changing hands, accounting for about 17 percent of the PSE’s total volume on Monday, and about 33.8 percent of turnover value.
“This gain is a very substantial movement considering that you are moving at least P25 billion here. That amount is so difficult to move under ordinary circumstances,” explained Eduardo Francisco, president of BDO Capital and Investment Corp., adding that Cemex was “significantly oversubscribed.”
BDO Capital served as the domestic lead underwriter for the Cemex issue.
As traders’ attention was focused on Cemex, the rest of PSEi retreated. The benchmark index closed down 0.55 percent or 43.81 points at 7,986.25. The broader All Shares index shed 0.39 percent or 18.86 points to close at 4,822.44.
Total market turnover stood at P8.7 billion, with advancers outnumbering decliners, 99 to 94, while 49 issues remained unchanged.
All sub-indices ended in negative territory, with the biggest loser being the property sector, shedding 1 percent.
Biggest IPO in 3 yrs
The cement maker raised P25.13 billion, or about $536.62 million, in the Philippines’ biggest IPO since 2013, with 70 percent of the traded shares bought by foreign investors.
Proceeds from the IPO will repay some $504 million of the company’s short-term and long-term loans from Sunward Holdings BV. The loans were secured with the acquisition of its operating units Apo Cement Corp. and Solid Cement Corp. as part of a revamp.
“I thought it would go below its offer price because whenever there’s an IPO, everybody would say ‘sell’ on the first day to earn, but its gains held up until the closing,” Eagle Equity’s Roxas said.
Roxas noted that because of Cemex’s debut in the PSE, investors’ attention was significantly divided in favor of Cemex, thus, neglecting other important stocks traded on the exchange.
“The main index actually got weak because of it; investors for today [Monday] were too focused on Cemex, thus the buying was really absorbed by Cemex, [with buyers]forgetting that there were also other stocks being traded on the local bourse,” he added.
Roxas said he expects the main index to resume its rally on Tuesday, “Tomorrow, I think the PSEi will be more active.”
Pedro Jose Palomino, country president and chief executive officer of Cemex Holdings Philippines, a subsidiary of Mexican cement maker Cemex SAB de CV, said in a briefing that given the new administration’s thrust to further boost the country’s infrastructure spending, the cement company is very optimistic about its future in the Philippines.
‘We are very, very happy. This is a great day for us. This is a very important history for Cemex. We went to Hong Kong, Singapore and the US prior to our listing, and they say the Philippines is a shelter for the money rather than risky,” Palomino said. He added that with the IPO, 45 percent of CHP’s equity is now being held by the public.
“Cemex is well-received, it is oversubscribed, anchored on foreign funds that came into the IPO. I think it will show a good performance. It is a very big IPO,” Victor Benavidez, nominee at Alakor Securities Inc., said in a phone interview.
Further, Palomino said that Cemex’s goal is to grow with the Philippines, considering that cement usage per capita in the country is among the lowest in the world at “only 240 kilograms per person a year.”
“Our goal is to rely on local capacity. In 2014 we spent $100 million for our plants, now we have allotted $300 million to double our capacity for Solid Cement in Luzon [Antipolo City] from 1.5 million tons to 3 million tons,” Palomino said.