NEWLY listed SBS Philippines Corp. expects both revenue and net income to grow in double-digit terms this year on the back of better prospects for expansion after its debut on the Philippine Stock Exchange.
The food business will drive the growth as local consumption increases as the economy expands, Necisto Sytengco, SBS chairman and president, said in a press briefing after the firm’s listing ceremony on Monday.
The food and beverage business of the chemical importer and supplier accounts for 30 percent of total sales. It supplies the seasoning, preservatives and raw materials of fast food chain Jollibee Foods Corp. and manufacturers Universal Robina Corp., D&L Industries Inc., San Miguel Pure Foods Company, and Alaska Milk Corporation.
The company imports most of its materials from over 500 suppliers in the United States, Europe, China, Japan and Southeast Asia, and distributes 99 percent of its 3,000 product lines locally.
SBS Executive Vice President and Director Esmeralso A. Tepace said that the company is adding 100 more chemical products later this year to its existing 3,000 product lines in line with the expansion and diversification efforts post-IPO (initial public offering) and is focused largely on the food business.
Despite such bright prospects, Sytengco said other the “accumulated charges” from the Manila port congestion last year continues to weigh on manufacturers like SBS with additional costs and expenses putting a drag on financial performance.
“There are charges in shipping that is passed onto companies like us which should have been charged to importers. Before, every container of our imported supplies costs P25,000, but now it is priced at P60,000 to P70,000,” Sytengco said.
“We hope this can be addressed at the Customs, Congress and other agencies, as it indirectly hampers additional cost in imports,” he added.
With the additional import charges, Tepace noted that the firm incurred P60 million in accumulated charges last year, noting that the government should do something about the problem as it is “hurting the industries.”
The company’s P1.15-billion IPO listing on Monday was well-received by investors, reaching the ceiling price of P4.12 per share at the start of trading to reflect a 49.82-percent surge from its IPO price of P2.75 apiece.
The 420-million offer shares sold to the public from July 28 to August 3 were nine times oversubscribed. The IPO shares account for 35 percent of the firm’s issued and outstanding shares.
Given the strong investor demand, Sytengco said: “We looked at a 20 times PE [price-to-earnings] ratio in 2014. But that is still very much undervalued as other assets were not taken into consideration… We should be trading at least P10 to P15 per share.”