• Pepsi-Cola ‘tastes’ better with cash or stock dividend

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    Emeterio Sd. Perez

    Emeterio Sd. Perez

    RETAINED earnings. San Miguel PureFoods Co. Inc. (SMPFC) had retained earnings of P15.9 billion as of December 31, 2012, of which it has appropriated P750 million for projects, according to the company’s audited financial report.

    However, SMPFC’s surplus, minus the appropriated amount, is not all available for declaration as dividend. Of P15.9 billion, P8.3 billion represented the combined net profits of various units or subsidiaries as of December 31, 2012, but has not been declared yet as dividend. The amount was included in SMPFC’s financial report only for “consolidation” purposes.

    Time for dividend. Last week, the board of SMPFC approved a dividend of P1.20 per share to stockholders as of August 27, payable to them on September 3.

    The P1.20 per share dividend, the third this year, amounting to P200 million, will come from the company’s retained earnings of P16.8 billion as of March 31, 2013, based on an unaudited quarterly financial filing.

    As owner of 141.526 million SMPFC common shares, or 77.9 percent, San Miguel Corp. would be entitled to receive P169.8 million, the same amount it got in February and June this year.

    GSIS goes for Pepsi-Cola. Pepsi-Cola Products Philippines Inc. is one of the choice stocks of the Government Service Insurance System (GSIS).

    Filings posted on the website of the Philippine Stock Exchange indicate GSIS’ strong faith in Pepsi-Cola or PIP, the cola bottler’s market symbol.

    As of September 30, 2011, GSIS owned 67.8 million Pepsi-Cola shares. It held on to them until June 2012 when it increased its holdings to 74.1 million shares.

    Computed at P2.80 per share, the price at which Platinum Investment Ltd. of Australia sold 2.2 million shares on June 7, 2012, GSIS’s 74.1 million shares had paper value of P207.5 million.

    Selling some. By December 31, 2012, GSIS retained 55.5 million after selling 18.6 million shares, which it could have acquired at P2.80 each, or total of P52 million. How much GSIS made from the sale was not disclosed.

    Owning only the equivalent of 2 percent of outstanding before the sale, GSIS was not covered by a market rule that requires the proper filing by stockholders owning at least 5 percent of outstanding of a listed company.

    Pepsi-Cola started climbing in the last quarter of 2012. Nobody of course would know if this would be sustained that when one sells at a profit, he or she should not regret—or worse, cry—over bigger gains had he or she sold later.

    Taking profit. With the profitable performance of Pepsi-Cola, GSIS, so it seems, is lucky in including it in its portfolio. Here is the reason:

    Two months after it sold 500,000 Pepsi-Cola shares at P2.82 each and one million shares at P2.84 each, Platinum Investment Management sold four million Pepsi-Cola shares on September 9, 2012 in three trades—500,000 at P2.82 each; and one million at P2.84 each. Then the price went up that it was able to unload 2.5 million shares at P3.96 each on September 9, 2012.

    Like Platinum, GSIS could also have hit the jackpot if it had disposed of 18.6 million shares at P3.96 each. At this price, it could have grossed P73.7 million.

    Back to buying. GSIS increased from 55.5 million its Pepsi-Cola holdings to 62.3 million shares on March 31, 2013, and to 67.7 million shares on June 28, 2013.

    If GSIS had bought additional Pepsi-Cola shares at a high of P6.14 per share, it would still be ahead. At P6.14 each, its 67.7 million Pepsi-Cola shares had market value of P416 million against the P219.5-million acquisition cost two years ago for potential gain of P196.5 million.

    (Note: The computations are based on an assumption that GSIS still owns 67.7 million Pepsi-Cola shares until today.)

    If the numbers here are correct, then Robert Vergara, GSIS president and general manager, more than deserved his ranking as the highest paid government executive with gross compensation of P16.4 million of which P9.6 million was his basic pay, in 2012 and the rest his other pays and perks.

    Too much surplus. Pepsi-Cola is one listed company that maintains too much “money” in its books that would not look good to the market watchers of the Securities and Exchange Commission (SEC).

    As of March 31, 2013, the cola bottler had retained earnings of P5.3 billion, which is 9.5 times or, to exaggerate, 826.8 percent of its paid-up capital of P554 million.

    Pepsi-Cola’s lawyers should know if this is a violation of the rule. If they don’t, then it’s time for them to seek SEC’s legal opinion to guide them on what to do with the “excess.”

    esdperez@gmail.com

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