A lot of newbie stock traders were surprised yesterday, March 16, when one stock breached the 50% price ceiling rule and even closed with a one-day gain of 940%.
Pryce Corporation (PPC) yesterday closed at P2.60 — a 940% price increase from its last traded price of P0.25 per share.
How did it happen?
Price Ceiling and Price Floor
Most of us are familiar with the rule on price trading bands, that is, a stock can only increase in price by 50% and can decrease by 40% in one day. (Revisit this post: Stock Price Ceiling and Price Floor Limit in the PSE)
However, the PSE also has a rule, effective 2009, that the trading band may be lifted in either of these scenarios:
- When trading resumes for securities that have been suspended for a period of one year or more; or
- When the Exchange determines that: (a) there has been an event or occurrence that may cause the price of the security to change drastically; or (b) the application of the trading band on the price may render impractical the trading of the security upon prior notice by the Exchange as may be warranted under the circumstances.
Do note that prior to yesterday’s trading, PPC was last traded on February 24, 2006 when it closed then at P0.25. It’s been 9 years since the stock’s last trading day and it qualifies under Scenario #1 above when it resumed trading yesterday.
Pryce Corporation (PPC) is formerly known as Pryce Properties Corporation, a property development company operating primarily in Mindanao. It was involved in the development of memorial parks, but has also ventured into residential and commercial property development.
The company owns and operates memorial parks in Cagayan de Oro, Iligan, Ozamiz, Dipolog, Zamboanga and Davao. It also has convention hotel called Pryce Plaza in Cagayan de Oro City.
PPC has a subsidiary called Pryce Gases, Inc., which produces and sells industrial gases, and engages in the importation and distribution of liquefied petroleum gas under the PryceGas brand name.
On July 9, 2004, the company filed a petition for rehabilitation with the Regional Trial Court (RTC) of Makati after experiencing a series of downturns in the company’s operations resulting in its inability to service maturing bank debts.
On December 1, 2004, an appointed receiver submitted to the court its recommended rehabilitation plan, which was approved by the RTC of Makati on January 17, 2005.
In 2006, the Court of Appeals issued an order setting aside the Makati RTC’s order to approve the rehabilitation plans. This prompted the PSE to suspend anew the trading of PPC’s stocks.
In February 2014, the Supreme Court reinstated the Makti RTC’s order approving the amended rehabilitation plan. The SC resolution became final and executory on March 27, 2014.
As of December 31, 2013 the company had gross revenues of P3.9 billion and net income after tax of P98.9 million.
It had total assets amounting to P5.16 billion, total liabilities of P2.8 billion, and a deficit of P1.07 billion.
As of the 9-month period ended September 30, 2014, PPC booked net income after tax of P202 million on gross revenues of P4.91 billion.
Its total assets in the same period reached P4.8 billion while liabilities reached P2.25 billion. The company’s deficit (that is, negative retained earnings) was P870 million in the same period.
In a recent disclosure submitted to the PSE on March 11, the company announced that a decision in a criminal case against PPC President Nilo S. Ezequiel has been promulgated.
Mr. Ezequiel was charged as officer of the company in violation of Presidential Decree (PD) 957. The complaint alleged that Pryce Corporation failed to deliver the title of a certain property to a buyer, in violation of the law.