By Denise A. Valdez, Reporter
SHARES in grocery operator MerryMart Consumer Corp. rose by 50% on Monday on its first day of trading at the Philippine Stock Exchange (PSE), as investors were optimistic over the country’s first initial public offering (IPO) for the year.
The company led by businessman Edgar “Injap” J. Sia II, which offered 1.59 billion shares to the public at P1 each, closed its maiden trading session at P1.50 per share.
MerryMart shares were listed on the small, medium and emerging board of the PSE.
MerryMart’s P1.6-billion IPO was two times oversubscribed and its market capitalization stood at P7.59 billion. PNB Capital and Investment Corp. was its lead underwriter, issue manager and bookrunner for the offering.
“MerryMart surprisingly hit its ceiling price of P1.50 on its debut, with almost none posting to sell shares. We think that traders were on its excitement phase since this is the first company to list this year,” Philstocks Research Associate Claire T. Alviar said in a text message.
Most companies have delayed their IPO plans this year as the market volatility remains high. The PSE index started the year at 7,742.53 on Jan. 2, hit a low of 4,623.42 on March 19, and has since started recovery. It closed at 6,163.82 yesterday.
During MerryMart’s listing ceremony streamed live on Monday morning, Mr. Sia said he believes doing an IPO in the middle of the coronavirus disease 2019 (COVID-19) pandemic shows the economy “is alive and ready to begin bouncing back.”
“(M)any of the most successful businesses around the world was either started during a crisis, or has deepened its market grip during the crisis period. Because actually, during a highly challenging period like where we are now, the large established players’ huge size and heaviness, suddenly becomes a disadvantage, and natural to a major crisis comes the repositioning of elements, such as, a major change of customer behavior, which suddenly, the pile of money alone, can not solve,” Mr. Sia said.
“This is the reason why we continued to conduct an IPO during this global pandemic. Because this is such a rare window for the company to compete well. A rare chance for a new player to quickly grow in a shorter span of time than during good times,” he added.
MerryMart has plans to put up 1,200 branches across the country by 2030, where the first hundred branches would be open as early as the fourth quarter of 2021. It believes it will be resilient despite the crisis as its business is in the non-discretionary basic essential retail category.
PSE President and CEO Ramon S. Monzon said he hopes MerryMart’s IPO encourages more entrepreneurs to do the same. He noted 7.78% of MerryMart’s IPO shares were availed by 3,473 local small investors, which is the biggest number of local small investors that subscribed to an IPO to date.
Finance Secretary Carlos G. Dominguez III, who attended the listing ceremony at the PSE Tower, said MerryMart’s IPO is a good sign for the Philippines’ economic recovery.
“This initial public offering signals trust in our good economic prospects. It shares in the optimism that, notwithstanding the global downturn engulfing us today, the Philippine economy has the fundamentals to rise quickly from the devastation wrought by the pandemic,” Mr. Dominguez said.
Aniceto K. Pangan, equity trader at Diversified Securities, Inc., said the performance of MerryMart on its debut also shows investor confidence in Mr. Sia and his team.
MerryMart is under Injap Investments, Inc., which is the founder of Mang Inasal Philippines, Inc. and a key shareholder of DoubleDragon Properties Corp.
“With their proven track record in franchising thru (Mang) Inasal and property leasing at DoubleDragon, investors see that they could carry on this business with success as they have synergies with their other businesses,” Mr. Pangan said in a text message.
But Philstocks’ Ms. Alviar warned MerryMart is at risk of profit taking after Monday’s surge in share price.
“[R]isk of profit taking has increased so traders must cautiously trade this stock. But as long as demand remains, there’s still a potential upside. And we still think that fundamental value would take over in the long run,” she said.