A subsidiary of a Korean semiconductor firm is scheduled to be the next company to conduct an Initial Public Offering (IPO) in the Philippine Stock Exchange, following the debut of Double Dragon Properties (DD) and Century Pacific Food Inc. (CNPF) earlier this year.
Phoenix Semiconductor Philippines Corp. (PSPC) plans to raise as much as P2.15 billion by issuing 286.093 million primary shares and 286.093 million secondary issues owned by the company’s major shareholder.
The shares will be priced at no more than P3.76 each.
The final offer price will be announced on June 11, while the offer period — or the time the shares are initially made available for sale — will run from June 16 to June 20.
The shares will be listed and will trade in the PSE starting June 27.
[ UPDATE: PSPC to IPO in September to avoid Ghost Month? ]
PSPC is a wholly-owned subsidiary of STS Semiconductor & Telecommunications Co. Ltd., a semiconductor company under the Bokwang Group of South Korea. It is engaged in the manufacture, assembly, test and warehousing of semiconductor and memory devices and applications and related products. In particular, the company assembles and tests memory chips and devices for computers, laptops and servers, as well as micro SD cards for mobile phones.
It started commercial operations in the Philippines on February 2011, locating within the Clark Freeport Zone.
Phoenix Semiconductor has a midterm contract with Samsung Electronics of South Korea which ensures PSPC’s production capacity is guaranteed per month, translating to average monthly sales of US$17.4 million.
PSPC IPO Details
Majority of the proceeds from the IPO will be used for PSPC’s expansion plans, with 60% allotted for the construction of a new plant, while 36% will be used for machinery and production equipment. The remaining funds will be used to finance the company’s IT equipment and software.
PSPC will issue a combined total of 572.19 million primary and secondary shares. The company will have a public float of 25% after the IPO.
BDO Capital has been appointed as the issue manager and lead underwriter of the offering.
Is it profitable to invest in an IPO?
There is no certainty if an IPO can make you money. In the past, several companies conducted an IPO and had their stock prices shot up immediately, giving instant profits to investors.
In the case of Double Dragon Properties (DD), the first IPO of 2014, its stock price rose 50% during its first trading day and reached a high of P9.50, a 375% gain from its P2.00 offer price, in just one month.
But not all IPOs produce instant gains. Cebu Air Inc. (CEB), owner of low-cost carrier Cebu Pacific, debuted on the PSE on September 2010 but until today, four years later, CEB’s stock price is yet to return to its IPO price of P125.00. (See Cebu Pacific IPO in September 2010)
Should you invest in the PSPC IPO?
No one can be 100% sure about the performance of an IPO. But it helps to have guidance from the country’s top stock brokerage firms. One useful source of information is PinoyInvestor, a premium stocks resource that consolidates stock picks, company analyses, and broker reports from seven (7) of the Philippines’ top stock brokers.
This week, PinoyInvestor’s Stocks Report offers a comprehensive but concise 7-page analysis of the upcoming IPO of Phoenix Semiconductor Phils. Corp., prepared by Unicapital Securities.
Here are excerpts from the PSPC IPO analysis Special Report:
PSPC’s Financial and Valuation Analysis
In the first two months of 2014, PSPC recorded a Net Income of US$ 3 million, with total Revenues of US$ 33.63 million. This is composed primarily of product sales amounting to US$ 33.45 million.
At a price of PHP 3.76 per share, PSPC will be trading at 2013 PER of 14.57x.
If you want to get the complete and comprehensive analysis of this IPO, sign up to PinoyInvestor.
Registration is free and Free Version members receive weekly Stock Reports with top picks, stock recommendations, and Target Prices, plus access to the PinoyInvestor Academy, a collection of investor education resources available for free.
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