Topline shares surge on expansion push

SHARES of Top Line Business Development Corp. (Topline) spiked week on week as the company acquired assets to support its expansion in Western Visayas, analysts said.

Data from the Philippine Stock Exchange (PSE) showed that Topline was the 11th most actively traded stock last week, with 330.9 million shares worth a total of P552.69 million changing hands as of Friday.

At the end of the trading week, Topline closed at P1.54 per share, up 31.62% from the previous Friday’s close of P1.17. This increase significantly outpaced the weekly gains of the PSE index at 1.7% and the industrial sector at 0.7%.

Since its initial public offering on April 8, the stock’s price per share has surged by 496.8% from its listing price of P0.31.

Unicapital Securities, Inc. Equity Research Analyst Peter Louise D.L. Garnace said the company’s recent acquisitions drove a rally in Topline’s stock price.

“Investors bet on a faster growth trajectory following the aggressive expansion into the fuel retail segment,” he added in an e-mail message.

Jeff Radley C. See, head trader at Mercantile Securities Corp., said in an e-mail that Topline’s recent acquisitions contributed to its emergence as the “darling” of the PSE for the week, with its stock trading at a record high.

On July 22, Topline disclosed the acquisition of a gasoline station in Consolacion, Cebu from Phoenix Petroleum Philippines, Inc. for P8.5 million.

The company said this was in line with its ongoing expansion in the Visayas following its P180-million acquisition on July 8 of a gasoline station network comprising 38 gasoline stations and 15 fuel tanker trucks in Central Visayas and the Negros Island Region.

“This expansion has boosted optimism for the company’s earnings momentum as it cements Topline’s position in the Visayas region,” Mr. Garnace said.

Topline recently raised its year-end target to 50 operational stations from its previous goal of 30.

It aims to grow its presence in the regional fuel market through further acquisitions and capacity expansion.

Mr. Garnace said the rise in Topline’s share price may also be partly due to strong interest from retail investors driven by the stock’s consistent upward trend.

For the coming trading periods, Mr. Garnace cautioned that a potential pullback in Topline’s stock price could occur due to overvaluation, as its high price-to-earnings ratio may signal an approaching correction.

“[Topline is] currently trading at a triple-digit price-to-earnings ratio, which is at a significant premium to its peer’s single-digit price-to-earnings ratio,” he said.

Mr. Garnace said investors should monitor the company’s first-half earnings to assess whether its recent expansion in the Visayas has delivered improved financial performance.

For the first quarter, Topline posted strong year-on-year growth in both gross revenue and net income, rising 36% (to P1 billion from P738.7 million last year) and 38% (to P37.9 million from P27.5 million), respectively.

Mr. Garnace pegged immediate support and resistance levels at P1.50 and P1.85, respectively.

On the other hand, Mr. See placed support at P1.43 and resistance at P1.96. — Matthew Miguel L. Castillo