The millennial entrepreneurs—part of the Lim family’s third generation—noticed the constant activity of oil tankers coming and going from their port business in Cebu.
This prompted them to establish Top Line Business Development Corp. in 2017.
Within seven years, the fuel trading and retail group turned profitable and is one of the fastest-growing energy players in the region.
Moreover, the company is gearing up for its debut on the Philippine Stock Exchange (PSE) next month, with plans to raise up to P3.2 billion, which would give it an estimated valuation of around P10 billion.
IPO dreams
“It’s quite fascinating because we were doing our business plan and talking about the mission and vision of the company in 2018 and one vision actually is to become a publicly listed company. But we didn’t know how to do it. We were still starting,” Eugene Erik Lim, now the company’s chair, president and CEO, told reporters in a media briefing last week.
“We attended the LEAP [Listing Engagement and Assistance Program], where we heard a lot of good speakers from the PSE, and we took on consultants and advisors along the way,” he added.
Challenging conditions
Top Line Business Development, which will list under the stock symbol “TOP,” marks the final listing for 2024 and the first IPO from Cebu in seven years.
When it filed last August, the Philippine Stock Exchange index was in the midst of a turnaround from a long-term downtrend, creating favorable conditions for the IPO.
Bearish conditions have emerged in the wake of President Trump’s historic win earlier this month, triggering a wave of selloffs at the PSE.
IPO still a go
Erik stated that the company remains unfazed by the recent market volatility.
“I think what is important here is our strategy for the listing, the growth strategy and direction of the company,” he said.
He also echoed PSE president Ramon Monzon’s belief that anytime is a good time to list if a business has a good growth story and is in need of capital to expand.
“Whether [the market] is up or down, we are committed to our investors, to our growth strategy for Top Line,” he said.
Key dates, details to remember
Top Line is set to price the IPO shares on Nov. 18.
The formal offer period will run from Nov. 27 through Dec. 3 this year, while the target PSE listing date is on Dec. 12, 2024.
Investment & Capital Corp. of the Philippines is the issue manager, while ICCP and PNB Capital and Investment Corp. will act as joint lead underwriters and joint bookrunners.
Earnings continue to grow
Top Line booked revenues of P1.56 billion during the first six months of the year as fuel distribution earnings increased by 16 percent.
Net income tripled to P60.5 million due to better margins and rental income contributions from Pier88.
“Our net income as of the first half of 2024 is actually already at about 80 percent compared to 2023 net. And our [key performance indicators] in terms of gross profit margin is stable, while our net income margins are improving due to Top Line’s effective operational management,” chief financial officer Constance Marie Lim said during the briefing.
Most IPO proceeds to support expansion
Top Line is selling 3.68 billion shares at up to P0.78 each to raise around P2.87 billion for expansion.
Another 368.31 million shares will be sold as secondary optional shares, whose proceeds will not go to the company but to the selling shareholders.
Huge capacity boost
Top Line plans to use the primary portion of its IPO to boost fuel storage capacity by 500 percent.
It will build depots in Mactan and Bohol with a combined storage capacity of 30 million liters, set to become operational between 2025 and 2026. These depots will have separate tanks for diesel, premium, and regular gasoline.
The company currently leases depots in Mandaue, Cebu, with a total capacity of 5 million liters.
To ensure quick fuel delivery, the company will add two fuel tankers with a 5 million-liter capacity and acquire 40 more tank trucks, each with at least 20,000-liter capacity, by next year.
At present, it operates 18 tanker trucks.
Top Line is also expanding its relatively small but fast-growing Light Fuels retail division.
It currently runs two gas stations in Mandaue City and aims to open seven more, reaching a total of 10 stations by the end of 2024.
The new locations will include smaller stations focused on serving motorbikes.
“Light Fuels Express aims to cater to that niche market and growing market [serving motorbikes],” said Top Line chief operating officer Brigitte Carmel Lim during the briefing.
Top Line eyes big opportunity
The Lims aim to tap into Central Visayas’ P1.38 trillion economy and Cebu Province’s 9.02 percent fuel consumption growth. Their expansion strategy is backed by a University of Asia and the Pacific study showing strong regional fuel demand.
The study noted Central Visayas’ economy grew 7.46 percent in 2023, outpacing the national rate of 5.5 percent. The region, which includes Cebu, Bohol, Negros Oriental, and Siquijor, is the largest market outside Luzon.
Diesel consumption in Cebu increased 8.75 percent in 2022, from 499 million to 542.7 million liters. Top Line’s diesel sales also rose, jumping 59 percent from 35.4 million liters in 2022 to 56.2 million liters in 2023.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
