FRUITAS Holdings, Inc. made its market debut only last Friday, but it still ended up as the tenth most actively traded stock last week.
The stock’s debut saw a total of P1.45 billion worth of 675.66 million shares exchange hands on the trading floor on Nov. 29, data from the Philippine Stock Exchange (PSE) showed.
Fruitas shares closed at P1.71 apiece on Friday, up 1.79% from its initial public offering price (IPO) at P1.68 per share.
“Fruitas has been one of the most actively traded [last] week due to its IPO listing, which is no surprise. Sentiment has been quite positive and strong, considering it will be the last IPO for the year…,” said Mandarin Securities Corp. Research Analyst Zoren Philip A. Musngi in an e-mail.
“[I]t was oversubscribed, and it is a relatively small issue, with a market cap of only P3.6 billion, making it easier to trade,” he added.
A&A Securities, Inc. trader Jeng T. Calma, who also expected the stock’s high turnout, said in a phone interview: “Fruitas shares are limited while its price is cheap.” She noted there were investors that bought the stock even at an intraday high of P2.45 per share.
For Regina Capital Development Corp. Head of Sales Luis A. Limlingan: “Sentiment seems to be positive [given] it was three times oversubscribed, the stock climbed almost 50% intraday and shareholders are optimistic about the company’s prospects,” he said in an e-mail.
Timson Securities, Inc. Head of Online Trading and Trader Darren Blaine T. Pangan noted in a mobile message that some retail investors who were not able to buy during the offer period decided to take positions on the stock.
Analysts pointed to the local food and beverage kiosk operator’s good fundamentals as it would benefit from the Philippines’ consumption-driven economy.
“[I]t looks solid for a consumer company, although net margins are a bit slim at six percent and its valuation looks a bit expensive compared to other consumer companies of its size or capitalization like PIP (Pepsi-Cola Products Philippines, Inc.), MRSGI (Metro Retail Stores Group, Inc.), and SSI (SSI Group, Inc.),” Mandarin Securities’ Mr. Musngi said.
Mr. Musngi expects Fruitas to have a “stable” net income growth “considering the strength and market leadership of their brands” and its plans to expand outside Metro Manila.
Fruitas booked a consolidated revenue of P1.58 billion in 2018, 37% up from a year ago. However, its full-year 2018 net income of P100.3 million was 42% lower compared to the P172.89-million net income in 2017.
Mr. Musngi estimated the company’s 2019 full-year net income to reach P103.95 million, about twice its first-half profits of P51.974 million.
“Their success will largely depend on the state of the economy, if consumer spending remains robust and if the inflation environment remains benign,” he added.
Regina Capital’s Mr. Limlingan noted Fruitas is a “market leader in many food categories, maintains healthy margins and derives dependable income stream from franchising.”
In its Nov. 29 disclosure, Fruitas mentioned that it will use the proceeds of its public funding primarily to expand and improve its store network, acquire value-adding food service businesses, introduce new concepts, and pay its debts.
The same disclosure noted that in early 2019, the company partnered with Andok’s Corp. to sell Fruitas coconut and calamansi juice across over 50 stores, as well as tapped Grab Philippines’ food delivery services for its brands.
Fruitas targets to set up 150 to 250 stores every year up to 2022. Currently, it has more than 1,000 stores across 24 active brands nationwide.
Despite the positive sentiment on the stock, analysts remain uncertain if it will be sustained and drive its price higher this week.
“Due to the heavy sell-off especially in the afternoon session [last Friday], and given the sell orders posted at P1.71 [per share], we may have to see whether Fruitas’ IPO price of P1.68 [per share] will hold or not [this] week,” Timson Securities’ Mr. Pangan said.
A&A Securities’ Ms. Calma is on a wait-and-see stance due to the volatility and investors’ profit-taking observed last Friday.
“However, with the stock’s price closing above its IPO price, this is a plus factor for the company,” she noted.
For Mandarin Securities’ Mr. Musngi, outlook is “still positive considering the sideways market and lack of any compelling stocks to buy or play.”
Mr. Musngi pegged the stock’s support at P1.68 and resistance levels at P2.00, P2.20, and P2.40. — Carmina Angelica V. Olano