Phinma on expansion mode, readies P1-B stock rights offering


Ramon R. del Rosario, Jr.
Phinma Corp. Chair & CEO 

The Del Rosario family conglomerate Phinma Corp. (PHN) approved a ₱1 billion stock rights offering (SRO) to support subsidiary expansions, fund new ventures, and for general corporate purposes.

The executive committee was delegated to finalize terms, file documents with the Securities and Exchange Commission, and list shares with the Philippine Stock Exchange, a disclosure on Wednesday showed.

Big picture

Phinma, which is into schools, property development, and construction, is in expansion mode.

Tapping the equity market is a way to raise capital for new investments, including a partnership with the Floirendo family to build a 2 million metric ton per year cement plant in Mindanao.

Analyst view

“It makes sense that PHN would choose to tap the equity market rather than the debt market to fund their P4.5-billion capital spending requirement this year,” said Alfred Benjamin R. Garcia, head of research at AP Securities.

“Unfortunately, PHN is still an overlooked company so we cannot say that there will be enough demand for a follow-on offer. A [stock rights offering] would be a safer bet, as PHN’s parent has the option to take up any shares that are not taken up by the market,” he added.

Alfred Benjamin R. Garcia
AP Securities Research Head 

Stock price impact

“As for the pricing, PHN is already deeply discounted, so we don’t see them pricing the [offer] too far from the current market price,” Garcia said, noting that PHN is currently trading at about 3.6 times projected earnings for the year.

Garcia, who earlier issued a “Buy” rating on Phinma with a price target of P31.88 per share, said this was already deeply discounted.

“One scenario we’re looking at is a 10 percent discount from its 100-day volume-weight average price of P20.7475. This would translate to an offer price of maybe around P18.67 per share,” he said.

First half performance

During the first half of 2024, Phinma’s revenues grew 17 percent to ₱10.37 billion in the first half of 2024, driven by strong performance in education, construction materials, and newly consolidated property and hospitality groups.

However, net income fell to ₱170.93 million from ₱456.74 million last year, with a net loss of ₱22.1 million attributable to shareholders.

“The company focused on growing its businesses and expanding institutional partnerships in anticipation of market recovery given the challenging macroeconomic environment in construction materials and property development,” Phinma said.

About the author
Miguel R. Camus
Miguel R. Camus

Miguel R. Camus has been a reporter covering various domestic business topics since 2009.

Featured News
Explore the latest news from InsiderPH
Tuesday, 5 November 2024
Insight to the one percent
© 2024 InsiderPH, All Rights Reserved.