Corporate News

Wilcon set IPO price range at P5 to P5.68

Posted on March 11, 2017

WILCON Depot, Inc. will price its initial public offering (IPO) not lower than P5 per share, to raise nearly P7 billion at the low end of its price range.

In a media briefing in Makati City on Friday, the home improvement and construction supplies retailer announced a price range of P5-P5.68 for the 1,393,906,200 common shares it will offer starting March 20.

At the minimum, Wilcon can raise P6.97 billion and secure a P20.50-billion valuation upon listing on the Main Board of the Philippine Stock Exchange (PSE) on March 31. The maximum price will translate to P7.92 billion in gross proceeds and P23.28 billion in market capitalization.

The company will determine the final offer price on March 17.

First Metro Investment Corp. serves as the issue manager and bookrunner. It agreed to underwrite the offer together with BDO Capital & Investment Corp. RCBC Capital Corp. and Penta Capital Investment Corp. act as co-lead underwriter and participating underwriter.

“We benchmarked it as a retailing company,” First Metro Vice-President Justino Juan R. Ocampo said when asked about the valuation of the offer shares.

“There is no direct comparable in the Philippines, but I think it’s closest to retailers in the Philippines. Regionally, however, there are more suitable comparables and therefore the pricing range that we disclosed is in consideration of those comparables.”

In the local market, Mr. Ocampo cited Puregold Price Club, Inc. and Robinsons Retail Holdings, Inc. (RRHI) among the peers of Wilcon.

“Despite their dominance and, even if you’re comparing it to RRHI or Puregold, even at this range, they are already giving an upside to investors,” BDO Capital President Eduardo V. Francisco said during the briefing.

“They really are a retail play; almost 97% of their sales are retail. How do you pay retail? It’s either through credit card or cash, so imagine how good their cash cycle is. Of course, they have institutional [customers] but they are more on retail and that’s why they are expanding.”

The company operated 37 stores mostly within Luzon at end-2016. It plans to open 28 more within the next five years in Cavite, Butuan, Zamboanga, Iloilo, Tacloban, Cabanatuan, Bicol, General Santos, Davao, Lucena, Isabela, Tagum, Tuguegarao and Surigao.

“We’re mostly in Luzon but we do want to expand all over Visayas and Mindanao,” Wilcon President and Chief Executive Officer Lorraine Y. Belo-Cincochan said, noting the company will expand and improve existing stores at the same time, to encourage customers to buy more.

Of the P7.58 billion it expects to net from the IPO should investors accept the maximum price, Wilcon intends to disburse P6.11 billion for store network expansion until 2021, P972.4 million to pay down debt until 2018 and P500 million for general corporate purposes until 2018.

Wilcon is banking on the continued expansion of its store network to sustain double-digit growth in sales and earnings. In the first nine months of 2016, it booked a 10% year-on-year increase in net sales to P11.73 billion and netted 50% more or P483 million.

The company stands to benefit from the strength of the construction sector, ongoing moves to clear the housing backlog in the county, growth of household budgets and sustained increase in the importation of goods, Chief Operating Officer Rosemarie G. Bosch-Ong said.

“It’s really about the purchasing power of Filipinos. So, we believe in the consumer play and they really are the flagship for the country. They represent that [and] as we aspire to improve our houses, you go to Wilcon and buy your stuff,” Mr. Francisco said.

Wilcon will be the first company to debut on the equities market this year. Mazda distributor Bermaz Auto Philippines, Inc. may follow with an IPO of about P1.24 billion, after receiving a go-signal from the Securities and Exchange Commission (SEC) on Thursday.

Last week, Eagle Cement Corp. also lodged its application with the SEC for a maiden sale of 575 million common shares for a maximum of P9.20 billion, following the registration of Cebu Landmasters, Inc. for 505 million common shares worth up to P3.8 billion.

Also pending before the SEC are applications from Pure Energy Holdings Corp., Xeleb Technologies, Inc. and Audiowav Media, Inc., which proposed to raise P1.58 billion, P751.8 million and P2.66 billion respectively. Beverage maker The Big Chill, Inc., meanwhile, announced last month its plan to launch a P600-million maiden share sale. -- Keith Richard D. Mariano