• SBS Philippines’ IPO of 420M shares

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    Emeterio Sd. Perez

    Emeterio Sd. Perez

    THE Sytengcos individually own shares in chemical distributor SBS Philippines Corp. They control the company thru the family-owned Anesy Holdings Corp.

    SBS is only the second company to go public this year after Crown Asia Chemicals Corp. listed its shares on the Philippine Stock Exchange on April 27.

    By sharing the ownership of their company with the public through an initial public offering (IPO) of 420 million primary shares, the Sytengcos would know how much their individual holdings are worth. They should be happily computing their wealth because when SBS listed its shares, their holdings made them richer still.

    Incidentally, neither the Sytengcos nor their holding company took advantage of the public investors by selling some of the SBS shares each of them own as a secondary offering.

    Anesy, which held—and still holds after SBS’ IPO—753 million SBS shares, is owned by the Sytengcos. Computed at P6.18 per share, which is SBS’s highest price on Aug. 11, its holdings had a paper value of P4.65 billion. At its low at P4.12, Anesy-held SBS shares were worth P3.1 billion.

    Market debut
    Founded by Necisto Sytengco, 62 years old, as a public company, trading in SBS shares began this week. On its debut last Aug. 10, the stock traded at P4.12 throughout the session. This was a good start for a market newcomer, which gave the buyers of its IPO of 420 million shares a huge premium of P1.38 per share, which translates to a gross return of 50.2 percent.

    SBS even did better the following day—Aug. 11—when it opened at P5.00 and hit a high at P6.18. Despite its fall to a session low of P4.55, the stock did better than the previous day. SBS closed at P5.60 on Tuesday.

    On Wednesday, SBS opened at P5.71. It failed to maintain its momentum following a delayed inquiry by the market watchers of the Securities and Exchange Commission on the stock’s threshold-beating performance on Tuesday, when SBS peaked at P6.18.

    Not hiding anything
    In responding to the SEC, SBS said every piece of information regarding the company and its IPO had been posted on the PSE website. “ . . . There has been no material development in the business affairs of the Corporation which has not been properly disclosed, or to its knowledge, any reason to account for the unusual market reaction.”

    As a result of the SEC’s interruption, trading on SBS shares was subdued on Wednesday, hitting a high of P6.04 and a low of P5.30 before closing at P5.36 against the previous day’s P5.60.

    SBS would be worth watching as a market newcomer for its future disclosures. Its financial filings would be monitored by public investors curious to see whether SBS would continue its profitability that would enable it to start piling up retained earnings.

    Retained earnings as used in this piece refers to the amount of accumulated net profits available for distribution as dividend.

    Public monitoring
    The public investors would also be monitoring SBS for its financials, particularly the entries under equity. From the company’s 2015 financial statement audited by Punongbayan & Araullo, the external auditor, they would be interested to know the difference between the company’s performance before and after its market debut.

    More importantly, SBS’ postings on the PSE website would also be cautiously scrutinized for the executive compensation of the members of the Sytengco family as the company’s top executives.

    SBS’ IPO filing disclosed only the pay and perks of the top five executives for 2015, estimated at P15 million as salary and P1.25 million as bonus. It listed the compensation of “all other officers and directors as a group unnamed” at a total to P8.32 million divided into salary of P7.68 million and bonus of P640,000.

    Ironically, SBS failed to provide the amounts for the previous years, which could have told public investors if the Sytengcos would be paid more after the IPO.

    Finally, the public stockholders of SBS Philippines would also want to know if the 20-percent dividend as a company policy would be bigger than what the Sytengcos declared for themselves prior to their company’s going public.

    esdperez@gmail.com.

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    1 Comment

    1. Felimon A. Soria on

      Mr. Perez: When you discuss IPOs in your column, for us readers, please give us an inkling whether it is a good deal or not basing on your research. I am a small investor and I have great respect of your opinion