Quick Take: ALTER's capex budget and 5 more market updates
Bank of Commerce [BNCOM 8.10 1.0%] [link] teases FY22 net income of P1.8 billion, up 49% from the P1.2 billion BNCOM posted in FY21. The company said that this was the largest annual profit posted since it was acquired by San Miguel [SMC 111.00 2.8%] back in 2009. BNCOM said that the performance was driven by higher interest income, higher fees, and forex gains, and profits from the sale of foreclosed assets.
MB Quick Take: BNCOM plowed a ton of capital from its IPO into expanding its loan book, and it did so at a pretty good time for banks. Rising rates are generally good for banks (sketchy Silicon Valley banks aside), so SMC embarked on this loan book expansion initiative at a fortuitous time. Between the IPO and the bonds, BNCOM raised P10.87 billion in 2022, between the P3.37 billion in proceeds from the IPO and the P7.5 billion in proceeds from its first bond sale.
Alternergy [ALTER 5.50 pre-IPO] [link] set its capex budget at P20 billion for 350 MW of project development over the next 3 - 5 years. ALTER said that it is using a “triple play” strategy of developing wind, solar, and run-of-river (ROR) hydro, and that it has lined up 220 megawatts (MW) of onshore wind, 33 MW of solar, and 50 MW of ROR hydro capacity in the “medium term”. ALTER plans to fund the projects using 30% equity (cash) and 70% project financing (debt), and said that it hopes to obtain funding partners to participate in the equity portions of these projects.
MB Quick Take: It feels like ALTER is trying to accelerate the development of its portfolio as quickly as possible. It could probably retain full ownership of all the projects it develops, but then it would develop fewer projects over the medium term, so it looks like the team is willing to give up a few points on ownership (while retaining control) to finance as many projects as it can reasonably build within the parameters of its non-financing constraints (like construction or project planning). The gold rush is on, and ALTER is wasting no time.
AyalaLand Logistics [ALLHC 0.25] [link] plans to double cold storage capacity through acquisitions and construction of new facilities in Pampanga and Batangas. ALLHC has 10,300 pallet positions in its portfolio. ALLHC is expanding its coverage map with an acquisition in the Visayas region.
MB Quick Take: As I predicted, the cold storage component of the valuable logistics market is turning out to be the real value nugget. The conglomerates may have known this all along, but it’s taken them a few years to figure out that it’s not as simple as “build it and they will come”. Dry warehousing is stupidly easy, and it’s dirt cheap to build. To this point, dry warehousing is what the logistics arms of the conglos have known, and there may have been an element of hubris in their belief that they could just jump on over to cold storage using the same operational complexity. It’s not possible. It’s interesting to see this story break after Metro Pacific [MPI 3.84 4.0%] basically cut to the chase and said that its focus would be on cold storage, not dry warehousing. These aren’t the only conglos stomping around, kicking the tires on private cold storage companies, but they’re the loudest. ALLHC's portfolio is tiny (10,300 pp is tiny; that's smaller than a single facility from a large private player), so they're going to need to get ambitious to compete.
Upson International [UPSON] [link] will price its IPO today. The preliminary prospectus said that the maximum price for the offer would be P5.50/share.
MB Quick Take: I’m interested to see if the demand for the stock has changed, considering the preliminary prospectus that was released on January 30 was put out at a time when the PSEi was at 6,970 and had just spent nearly two weeks above that “psychological” 7,000 mark. The market vibes certainly feel different, but as these things go, I don’t expect to hear from UPSON right away. We might have to wait until tomorrow to hear what they’ve decided.
Cemex PH [CHP 1.13 0.9%] [link] tender offer period ends today. CHP’s parent company, CEMEX Asian South East Corporation, is offering P1.30/share to “consolidate” its interest in CHP. The settlement of the tender offer is scheduled for March 30.
MB Quick Take: Tender offers are kind of weird. A shareholder submits their shares to the tender offer through their broker during the offer period (in this case, between February 16 and March 16), but doesn’t actually get their account credited for the sale until the money changes hands on the settlement date, which in this case is March 30. According to the Tender Offer Report, a shareholder that submitted their shares to the tender offer is able to withdraw their submission during the tender offer period, but once that period ends (today), they are no longer able to do that.
DigiPlus Interactive Corp [PLUS 2.75 1.8%] [link] has completed its PSE rebrand from Leisure & Resorts World Corporation [LR]. The company changed its name to “reflect the company’s growing ambitions beyond the traditional gaming market”.
MB Quick Take: The original name was bad for a variety of reasons. It will take a while to adjust my brain to treat PLUS just like LR, and not give it any new value that isn’t backed up by performance. Unlucky first day of trading as PLUS, down 1.8%. PLUS starts life as a minus.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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