IPO update: PBB stock rises 15.4% on first trading day

James Ryan Jonas

The first initial public offering (IPO) the year yielded a one-day gain of 15.40% for those who bought the Philippine Business Bank (PBB) stock during its offer period.

Yesterday, February 19, marked the first day of listing and trading on the Philippine Stock Exchange of Philippine Business Bank, a thrift bank owned by the family of former Ambassador Alfredo M. Yao, also the owners of budget airline Zest Air and fruit juice drink Zest-O.

The PBB stock closed yesterday at P36.35, a 15.40% upside compared to its P31.50 IPO offer price.

It opened at P34.75 — already a 10.3% premium over its offer price. In intra-day trading, the stock reached a high of P37.00.

The Yao-owned bank raised more than P3.19 billion by issuing to the public 101.44 million shares, representing 30% public ownership.

In its prospectus submitted to the PSE prior to the IPO, the bank said proceeds raised will be used for branch expansion, acquisition of new branch licenses, improvement of information technology infrastructure system, and expansion of its loan and investment portfolios.

At present, the company has 72 branches nationwide. In 2011, it generated a net income of P746.97 million. During the first nine months of 2012 (as of September 2012), PBB’s net income was P624.10 million, up 13.6% compared to the same period the year before.

The bank benefited from a generally positive stock market outlook in recent weeks. Philippine stocks yesterday closed at another all-time high, breaching the 6,600 barrier for the first time to close at 6,620.72.

Historically, however, in the Philippines, IPO stocks usually rise during the first few days or weeks, then succumb to profit-taking and price dips afterward. Some stocks, for example, had severe price declines in the past to the extent that they still have not reached their IPO price at present or have taken them years to recover. We will talk about IPO stock performance in the Philippines in a succeeding article.

We, therefore, tell our readers to learn stock market investing first before blindly jumping into such opportunity. Returns in stocks, although potentially lucrative, are not guaranteed and loss of capital is a possibility.

If you want to learn more about stocks and stock trading, here are some articles to start with:

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.