Disclaimer: The author is not an investment professional. The author does not guarantee the accuracy of the information, and is sourced from the official prospectus for Philippine residents only. This short summary is intended for fellow Filipino investors, and for the intended audience of the official prospectus (link below) only. It does not serve as a buy or sell recommendation, and investors are advised to conduct their due diligence or consult with an investment professional.
Official prospectus can be downloaded here:
(Click "CIC Final Domestic Offering Circular")
Note: You may skip to Bottom Line below, for the author's personal comments.
Summary (Important Points):
"Firm Shares": 74,965,000 common shares total that they will offer to the public
Price: P 26.00
(Par value P 1.00)...
Firm Shares:
"Firm Shares" broken down into 2 offers
(a.) Primary Offer : 11,244,000 shares - these are newly issued common shares.
Total proceeds that will be raised from sale of primary offer: P 292,344,000
(b.) Secondary Offer : 63,721,000 shares - existing common shares sold by subsidiaries / parent / holding companies (the company will not recieve any of the proceeds from the sale of secondary offer)
Total proceeds that will be raised from the sale of the secondary offer: P 1,656,746,000 (assuming no exercise of over-allorment option)
(b.2) Optional Shares / Over-allotment Option : 11,244,000 - additional shares that may be purchased by Maybank ATR Kim Eng Capital Partners, Inc. up to 30 days from the listing date ,with the same terms as the secondary offer shares, in its role as the "stabilizing agent"
***A total of 261,244,002 common shares, INCLUSIVE of the optional shares, will be outstanding after the offer.
The company has authorized capital stock of P 700,000,000 divided into 700,000,000 common shares inclusive of outstanding shares.
The Firm Shares (exclusive of optional shares) will make up 28.7% of the outstanding common shares after the offer.
Net proceeds from the Primary Offer will be used for:
[a] expansion - start-up costs for a potential joint venture with Midea to expand the company's products to other white goods or home appliances.
[b] payment of financial obligations
[c] working capital and general corporate expenses
[d] IPO related costs
Up to 70% of the firm shares are being offered and sold outside the Philippines
Dividends:
Upon completion of the offer, the Company shall adopt policy to declare dividends annually and at a minimum of 30% of the prior year's net income.
Summary of Financial Information
Revenues Net Income Outstanding Shares Post IPO Earnings Per Share
2010 P 6,122,900,000 P 794,900,000 261,244,002 shares P 3.04
2011 P 5,605,700,000 P 646,700,000 261,244,002 shares P 2.47
2012 P 6,939,800,000 P 684,400,000 261,244,002 shares P 2.62
2013 P 3,769,100,000* P 409,300,000 261,244,002 shares P 1.57
P/E Ratio
2010 8.55
2011 10.52
2012 9.92
2013* 16.56
Hypothetical dividend rates and dividend yields (based on earnings per share and 30% minimum dividend rate):
Dividend Rate Dividend Yield at Offer Price
2010 0.912 3.51%
2011 0.741 2.85%
2012 0.786 3.02%
2013 0.471* 1.81%
*for the 6 months ended June 2013
Capitalization (source: p.45 of official prospectus)
Dilution and book value of shares (source: p.46 of official prospectus)
BOTTOM LINE:
One of the things I like about the stock is its dividend policy that will give out a minimum of 30%, but the book value or value of tangible assets is only 31% of the purchase price. That is a premium or mark up of 69%.
Now let us look at the earnings. The earnings have brought me home. 2010 P/E is less than 10 times. That's a strong earnings figure. And converting these to dividend yields.. These earnings bring a good rate above inflation.
These strong earnings figures make the company look cheap, supporting a good argument for capital appreciation on listing day.
My recommendation, it's your call. I cannot say that this is a safe investment issue. This could well be speculative. But, perhaps, the strong earnings figure make it a good candidate for a good IPO stock. You can buy small amounts for speculation. But as for investment levels, I would recommend that you wait for it to become cheaper.. Perhaps in a recession or depression.
Another thing, regarding the nature of their business, with the current real estate boom, the condos springing up like mushrooms, new occupants will need airconditioners to keep air flowing in these enclosed spaces.... Because of this, I speculate that earnings might go up in the following years.
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