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More IPOs Expected Throughout The Second Half Of 2019

Expect to see more Initial Public Offerings (IPO) in the second half of the year if the stock market maintains its current level at 8,000.

The benchmark Philippine stock exchange index (PSEi) ended near the 8,000 mark in the first half of 2019 at 7,999.71, up 7.15 percent from the 7,193.68 in the same period last year. On Friday, the PSEi closed at 8,117.94, a 0.66 percent rise or 53.02 points higher than the previous trading day.

Philstocks Financial Inc. research analyst and engagement officer Piper Tan told reporters that companies are still on a wait and see stance when it comes to launching their IPOs, taking the performance of the economy into consideration.

According to Tan, those with intentions to go into IPO are AirAsia, Big Chill and Cal-Comp.
The Big Chill Inc. said last month that it is just waiting for the right timing. They also added that they are just waiting for the infusion of Tullys Coffee Asia Pacific into the company before proceeding with the IPO.

In May this, AirAsia Group CEO Tony Fernandes said the company is targeting to launch the IPO of its Philippine unit this year, driven by the improving performance of the company. AirAsia planned to raise as much as $250 million through an IPO in 2018, proceeds of which would be used for the firm’s expansion. However, due to the impact of high fuel prices and weaker Philippines peso, their IPO plans last year was deferred.

Consumer electronics manufacturer Cal-Comp Technology (Philippines) also deferred its P6.77 billion IPO last year due to volatile market conditions. However, they have announced earlier this year that they plan to proceed with the IPO in the third quarter.

Philstocks said it projects the PSEi to reach the 8,500 mark by year-end, driven by slowing inflation and more accommodative government policies.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco told reporters that their assumption that the PSEi would reach 8,500 is first based upon the continuous decline of inflation. Since June, inflation eased to 2.7 percent the lowest since September 2017 according to the Philippine Statistics Authority.

The new inflation estimated by Philstocks this year is only 2.5 to 3 percent, way lower than their earlier 4.5 percent to 5.5 percent projection.

Titiangco added that the loose monetary and fiscal policy will drive or boost aggregate spending, which will boost corporate margins.  He also noted that corporate margins are projected to grow by10 to 15 percent this year.

Another factor that will propel the PSEi upward is the strengthening of the peso against the dollar, according to another analyst.

Despite the easing inflation, the economy is still facing challenges. Philstocks attributed those challenges to the uncertainties in oil prices in light of prevailing geopolitical tensions and a choppy global economy.



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