Off to strong start, Axelum yields to mart’s weakness

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Present at the maiden listing of Axelum Resources Corp. shares were (from left): Axelum Director Ricardo C. Lopa, Jr.; Independent Director Rosemarie P. Rafael; Director Jason Rosenblatt; Independent Director Laurito E. Serrano; President and Chief Operating Officer Henry J. Raperoga; Chairman and Chief Executive Officer (CEO) Romeo I. Chan; Philippine Stock Exchange Chairman Jose T. Pardo; PSE President and CEO Ramon S. Monzon; Securities and Exchange Commission (SEC) Commissioner Ephyro Luis B. Amatong; SEC Commissioner Kelvin Lester K. Lee; PSE Director Roberto Cecilio O. Lim; PSE Chief Operating Officer Roel A. Refran; and PSE Corporate Secretary Aissa V. Encarnacion.

By Arra B. Francia
Senior Reporter

SHARES in coconut products manufacturer Axelum Resources Corp. fell by 6.2% on the company’s first day of trading, failing to hold on to early gains as it reflected the general weakness in the local bourse.

Axelum closed 31 centavos lower at P4.69 on Monday, despite opening 5.8% or 29 centavos higher than its P5 offer price at P5.29. It went down to as low as P4.19 apiece intraday, against its P5 offer price during the initial public offering (IPO).

“I don’t think we can expect more considering how turbulent the times are,” Axelum Chairman and Chief Executive Officer Romeo I. Chan said in a press briefing after the company’s listing ceremony at the PSE headquarters in Bonifacio Global City.

This compares to the 0.27% drop of the Philippine Stock Exchange (PSE) index to close at 7,683.22 yesterday, amid jitters due to signs of slowing global growth. The industrial sectoral index — under which Axelum shares are now listed — was one of the three of six counters that ended in the red, dropping 16.37 points or 0.15% to 10,460.89.

“But not to worry because Axelum is a long-term play, the fundamentals are very sound. We’ve been doing very well in the past 33 years and we expect it to continue doing well,” Mr. Chan said.

Axelum listed its shares on the main board of the PSE under the ticker “AXLM,” after raising P4 billion from the sale of 700 million primary common shares and 100 million shares held by Singaporean private equity firm CP Compass Singapore Pte. Ltd. Its market capitalization stood at P20 billion after listing.

“The PSE certainly welcomes the addition of Axelum to our roster of listed firms and takes particular pride in having a company that provides customized products to globally known food brands,” said PSE Chairman Jose T. Pardo said in his speech during the listing ceremony.

First Metro Investment Corp., which acted as the transaction’s sole issue manager, bookrunner, and joint lead underwriter, said the offer was “fully subscribed.”

“The company raised the amount that it wanted. So what the company needs for all its plans, it’s fully funded,” First Metro Executive Vice-President and Investment Banking Head Daniel D. Camacho said in the same briefing.

Sought for comment, Unicapital Securities, Inc. Technical Analyst Cristopher Adrian T. San Pedro said the company held its debut at a bad time. “The IPO was a bad timing in a volatile market environment which is on a downtrend bias. I believe most retail investors sold as their trail stops were hit after the shares of Axelum went below P5 per share IPO price,” Mr. San Pedro said in a mobile phone message.

Philstocks Financial, Inc. Research Associate Japhet Louis O. Tantiangco said enticing investors will remain a challenge for other companies that will conduct their IPOs this year. “Company fundamentals will play a crucial role. This will be their main tool in stimulating investors’ appetite amid the general market pessimism,” Mr. Tantiangco said in a separate text message.

Firms that have yet to secure approval for their respective IPOs include Metro Pacific Hospital Holdings, Inc. (P83.3 billion), Cal-Comp Technology (Philippines) Inc. (P10.7 billion) and Fruitas Holdings, Inc. (P1.2 billion).

Asked on future plans, Axelum President Henry J. Raperoga said the company recently signed a contract worth $1.3-1.5 million for the supply of 170 metric tons of coconut milk powder for an international skin care company.

Axelum will also set up a coconut water concentrate plant worth P150-200 million.

“That is one way of turning into revenue the coconut water we’re not actively processing right now,” Mr. Raperoga explained.

Bulk of the fresh capital raised from the IPO will be used to expand the company’s domestic and international distribution networks, build new manufacturing facilities for new products and improve existing manufacturing facilities.

The company will also acquire firms to expand production, with Mr. Chan saying that it is in advanced stages of talks for deals in the Philippines, and in early stages of negotiations for a firm in Vietnam.

Axelum’s main production facility is located in Medina, Misamis Oriental, with two distribution facilities in the United States and Australia. It is one of the major suppliers of coconut water brand Vita Coco, and also serves international brands such as The Hershey Co., Nestlé, Unilever, Ferrero, General Mills, Campbell’s, Quaker, and ConAgra Foods, among others.