Double Dragon (DD) reaches price ceiling on 1st trading day

James Ryan Jonas

Investors who participated in the Initial Public Offering (IPO) of Double Dragon Properties enjoyed a 50% paper gain in just one day, after the stock closed at P3.00 during its first trading day in the Philippine Stock Exchange.

50% paper gain in 1 day

The property development firm of Mang Inasal owner Edgar Injap Sia II and Jollibee founder Tony Tan Caktiong issued 579.73 million shares to the public priced at P2.00 per share during its offer period. This translates to a market capitalization of P4.46 billion for the company.

Double Dragon Properties, using stock code “DD”, opened at P2.40 — already a 20% increase from its offer price. The stock hit P3.00 later in the afternoon and also closed at that price.

At P3.00, the stock already reached its price ceiling and cannot be traded up anymore that day.

Price Ceiling and Price Limit Policy

The Philippine Stock Exchange (PSE) has a Trading Band policy that limits the maximum price increase and decrease of a stock per day. The price ceiling is 50%, which means stocks cannot be traded up further if the stock price has reached this point, similar to the case of DD yesterday.

The price limit, meanwhile, is 40% which means a stock cannot decline by more than 40% per day.

The price ceiling and price limit policy is instituted by the PSE to protect investors from wild fluctuations in stock prices.

Double Dragon IPO Details

DD is the first company to conduct an IPO this year. The offer was said to be 14 times oversubscribed, a sign of healthy demand for the stock.

(See also: DoubleDragon IPO offer 14 times oversubscribed)

The issuance of shares would lead to a 26% public float, but majority control is still owned by Sia and Caktiong.

Double Dragon envisions to be one of the largest commercial and residential property developers in the Philippines by 2020. It owns 66% of CityMall Commercial Centers, Inc. (CMCI), while the remaining 34% is owned by SM Investments Corp. (SM).

DD raised as much as P1.16 billion from the offer, bulk of which will be used to develop CityMalls, branded community mall chain, nationwide initially focusing in the Visayas and Mindanao.

The company plans to roll out the first 5 CityMalls within 2014 and the next 20 by 2015.

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James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.