Quick takes from around the market

Quick market takes...

1. Securities and Exchange Commission (SEC) [link] approved a ?65-billion preferred share sale for San Miguel [SMC 102.70 ?1.3%; 38% avgVol], and approved a ?35-billion bond sale program for Vista Land & Lifescapes [VLL 1.65 unch; 71% avgVol]. Both of the applications were for shelf offerings, which would allow SMC and VLL to sell the preferred shares and bonds in tranches over a three-year period.
   
   MB Quick Take: Both companies are fundraising to refinance existing debt, so this is more like good corporate hygiene than a sign of anything big or interesting.
    
2. Cebu Pacific [CEB 33.10 ?0.1%; 125% avgVol] [link] confirmed reports that it was looking to purchase up to $12-billion worth of planes from either Boeing or Airbus, which would add between 100 and 150 planes at current market prices. CEB clarified, however, that it would only make a “firm commitment” to purchase from either manufacturer after a thorough process that will start with CEB issuing a “Request for Proposal” to Boeing and Airbus.
   
   MB Quick Take: The secondary market for used planes and spare parts is “insane” right now, so, naturally, an airline’s thoughts will shift to buying new. But it’s important to remember that this is a very long-term process. United Airlines just announced a 110-plane purchase, and deliveries on that order won’t start until sometime in 2028. That’s a 5-year lag between order and delivery, and CEB isn’t even at the “placing an order” stage yet. What will the economics of the industry look like in 2029-30? How will CEB navigate its growth under these constraints?
    
3. MRC Allied [MRC 0.20 ?3.6%; 386% avgVol] [link] had its reverse stock split approved by the SEC. MRC applied to amend its articles of incorporation to split its ?1.5 billion in capital stock into 1.5 billion shares with a par value of ?1.00/share, in order to make its outstanding shares “to a level more appropriate to the industry” and to “encourage the participation of institutional investors”.
   
   MB Quick Take: This move really just merges 10 shares into one. It doesn’t change anything about the ownership or profitability of the company, it just makes a cosmetic adjustment to share’s price. Instead of being worth ?0.199/share, MRC will be worth ?1.99/share. It’s not a windfall for MRC bagholders since their holdings will be automatically adjusted by the same factor of 10 to accommodate the par value change.

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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.