Corporate News

JG Summit slides after share sale

Posted on May 27, 2016

JG SUMMIT Holdings, Inc. pulled down the bellwether Philippine Stock Exchange index (PSEi) on Thursday after its founder dumped shares worth P11.7 billion at a discounted price.

The conglomerate told the stock exchange on Thursday its Director and Chairman John L. Gokongwei, Jr. sold 142,500,000 shares -- about 1.99% of outstanding shares.

The shares were sold for P82.10 each, about 10% below the P91.20 close on Wednesday. After the block sale, JG Summit dropped P8.80 or 9.65% to P82.40 on Thursday.

“Sale was for estate planning purposes,” JG Summit Chief Strategist Bach Johann M. Sebastian said in a statement forwarded to BusinessWorld.

Mr. Gokongwei initially offered to sell 120,000,000 shares in JG Summit at an indicative price ranging from P82.10 to P85.75 apiece.

The Gokongwei patriarch has 58,007,718 shares left in JG Summit, equivalent to 0.8% of the company’s outstanding capital stock, after the transaction.

“JG Summit accounted for 54 points of the (PSEi) drop,” Lexter A. Azurin, head of research at Unicapital Securities, Inc., said in a telephone interview.

The PSEi shed 87.57 points or 1.17% to 7,376.38 when trading ended on Thursday. SM Investments Corp. also pulled the benchmark index by 13 points, Mr. Azurin noted.

“JG Summit, at these levels, is fairly valued. Looking at its prospects, it is still poised to grow for the next few years especially (since) it is also engaged in industries expected to outperform moving forward,” Mr. Azurin said.

The conglomerate engages in the airline, petrochemicals, food, real estate and banking businesses.

In the first quarter, the company posted a consolidated net income of P9.63 billion. This marks a 60.9% increase from the P5.98 billion recorded a year earlier.

JG Summit attributed its improved financial performance to the double-digit income growth in its airline business that benefited from lower fuel prices and petrochemical business. -- Keith Richard D. Mariano