JGS slates new share offer for RLC
An article published in
Manila Bulletin, February 15, 2006
By: Ruby Ana Marie Macuja
Following the successful shares flotation by
its sister firm Universal Robina Corporation, JG Summit Holdings unit
Robinsons Land Corp. will soon follow suit to increase its free float to 40
percent from the current seven percent within the year in a bid to enhance
trading liquidity in its shares, RLC president Lance Gokongwei said
yesterday.
"We are planning to increase the free float of Robinsons Land to reflect the
real value of the company," Gokongwei told reporters in an interview.
He said proceeds from the offering will be used for the expansion of its
malls, hotels and other property development projects.
"We believe that the current share prices of our subsidiaries are
undervalued and do not reflect the real prospects of our companies,"
Gokongwei added.
JG Summit Holdings, Inc. will use the proceeds from the sale of some of its
shares in Universal Robina Corporation to strengthen its balance sheet and
pay down debts, company president and chief executive officer Lance
Gokongwei said.
URC has just concluded its follow-on offering of 730 million common shares
raising some P10.8 billion in fresh capital and increasing its public float
to 40.8 percent. Of the total shares offered, 282.4 million were secondary
shares held by JG Summit, Express Holdings, Inc., Robinsons Supermarket
Corp. and Arisaig Asean Limited Fund.
The shares, priced at P17 each, were offered to both international and
domestic investors and were listed at the Philippine Stock Exchange(PSE)
yesterday. URC shares yesterday closed at P18 per share, higher than the
offer price of the 730 million common shares but lower by 2.7 percent from
its previous close of P18.50 per share.
Trading in Universal Robina Corp.'s shares has resumed after a one-week
suspension, opening at above its stock offer price of P17 per share, but
lower than its previous closing price of P18.50, dealers said.
Universal Robina, the food and beverage unit of conglomerate JG Summit
Holdings Inc., has just sold 282.4 million new shares and 352.4 million
secondary shares, including some 80.86 million common shares held by its
parent.
Mark Canizares, an analyst at Citiseconline, said he is keeping his target
price of P24 for Universal Robina.
"Universal Robina was lower than its previous closing price because of the
change in the capital structure. But it's trading above P17, which indicates
that the increase in its free float is attracting investors," he said.
Proceeds of the sale of URC's primary shares will directly accrue to the
company and will be used to finance the company's expansion plans. These
plans include the expansion of URC's branded consumer foods operations
particularly in the multi-product beverage line in the country as well as in
China, Vietnam and other countries in Asia.
JG Summit holds a 74 percent stake in RLC. Some 19 percent on the other
hand, is held by URC.
Meanwhile, AB Capital Securities Inc said it has set a target price of P7.30
per share for Robinsons Land Corp, which intends to increase its free float.
In a research note, AB Capital said Robinsons Land is currently trading at a
hefty discount because of the fact that its free float has been limited to
10 percent of outstanding shares.
"We believe, however, that a real estate recovery, complemented by the
company's plans to improve free float [to around 40 percent], and the
declaration of an increased pay-out will allow Robinsons Land's value to
break out from this trading discount," AB Capital said.
Robinsons, the property arm of conglomerate JG Summit Holdings Inc,
announced in October a new policy of an annual cash dividend of 60 percent
of the preceding fiscal year's net profit.
The company's net profit for the year to last September was P1.2 billion, up
34 percent from P920.7 million a year before, because of higher revenue for
its commercial centers division.