First IPO from Cebu since 2017
Top Line’s proposed IPO—the first from Cebu in seven years since the listing of Cebu Landmasters—comes as the BSP begins unwinding high interest rates, which typically bodes well for the stock market.
The company plans to focus on supplying fuel, which currently accounts for 97 percent of its revenues, to underserved areas in Central Visayas. These regions have limited access to fuel and are far less saturated compared to Luzon.
Top Line launched its seaport business, Pier88, in Liloan, Cebu, last year, with President Ferdinand Marcos Jr. among those who attended the inauguration.
November listing
The company aims to list on the Philippine Stock Exchange on Nov. 15, 2024, under the symbol “TOP.”
It is raising funds to build new fuel depots in Cebu and Bohol, purchase tankers and tank trucks, and build retail gas stations under the Light Fuels brand.
‘Top Line who?’
An emerging business presence in Cebu, Top Line was established in 2013 to focus on property development.
It eventually pivoted and decided to enter the fuel trading business in 2017. Thanks to faster delivery times within 24 hours, the business rapidly grew, and so did profits.
Young management team
The senior management team is composed of millennial siblings led by chair, president, and CEO Eugene Erik C. Lapasaran Lim, who studied at the University of San Carlos in Cebu and the National University of Singapore.
Asked about IPO plans during a media briefing last July 26, Lim said, "We would love to go in that direction. We're just always preparing".
He also disclosed having previously met Philippine Stock Exchange president Ramon Monzon.
Almost P10-B valuation
Top Line is selling up to 4 billion common shares at P0.78 each, targeting a 30 percent public float. This will value the company at about P9.5 billion.
The target IPO price-setting date is on Oct. 22 this year while the offer period is expected to run from Oct. 28-30, 2024.
Analysts will be closely monitoring developments to see how the company can justify this valuation.
Breaking down the IPO
The primary offer, whose proceeds will be used for expansion, involves 3.68 billion shares worth P2.87 billion. The controlling Lim family’s Top Line Equity Corp. will sell 368.31 million shares worth P287 million.
Investment & Capital Corp. of the Philippines was hired as issue manager, joint lead underwriter, and bookrunner. Other joint lead underwriters have yet to be identified in the company’s preliminary prospectus, dated Aug. 2.
Using the primary portion of the IPO, Top Line intends to increase fuel storage capacity by 500 percent by building depots in Mactan and Bohol with a combined storage capacity of 30 million liters.
Set to become operational from 2025-2026, the depots will have separate tanks for diesel, premium, and regular gasoline. It currently leases fuel depots in Mandaue, Cebu with a combined capacity of 5 million liters.
To maintain fast turnaround, it will acquire two fuel tankers with a 5 million-liter capacity and an additional 40 tank trucks with at least 20,000-liter capacity through next year. It has 18 tanker trucks at present.
Light Fuels expansion
Top Line operates two gas stations in Mandaue City and will build seven more to reach 10 stations by the end of 2024.
These plans include smaller stations catering mainly to motorbikes.
Earnings growth
Top Line booked revenues of P1.56 billion during the first six months of the year as fuel distribution earnings increased 16 percent.
Net income surged three times to P60.5 million due to better margins and rental income contributions from Pier88.
Dividend policy
Top Line’s board adopted a dividend policy of paying up to 30 percent of the past year’s net income to holders of common shares.
Banking partners
Top Line has about P1.5 billion in credit lines from major domestic banks Philippine National Bank, Land Bank of the Philippines, Security Bank, Philippine Veterans Bank, Bank of the Philippine Islands, Development Bank of the Philippines, and Robinsons Bank to support fuel purchases.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
