Biofuels measure likely to boost shares of Chemrez

The imminent enactment of the Biofuel bill is expected to boost Chemrez Technologies Inc. (ChemTech) when it resumes trading its shares today simultaneous with the listing of additional shares worth P1.5 billion.

Stock market analysts said the public offer involving 340.91 million shares was at least four times oversubscribed due to strong demand from foreign and domestic investors. ChemTech used to be Corro-Coat Inc.

The shares were sold at P4.40 each, equivalent to 11.5 times the company’s earnings per share for 2007 and translates to a 12.58 discount to the weighted average price of ChemTech shares for the last 10 trading days.

PCCI Securities president Francisco Liboro said P5.20 is an easy target for the firm on listing day since that was the last closing price when trading was suspended prior to the public offer.

Unicapital Inc. equities research head Ron Rodrigo noted ChemTech’s "first mover" advantage that will ensure it strong revenue and income growth once the Biofuels Bill is signed into law and implemented.

Immediately upon effectivity of the Biofuels law, a minimum of one percent biodiesel by volume shall be blended into all diesel engine fuels sold in the country, and up to a two percent blend two years after the law’s implementation."

ChemTech exports its premium coco-biodiesel BioActiv to rapidly expanding export markets, such as Europe and Japan, which are seeking alternatives to petro-diesel but have limited capacity to produce crops for the manufacture of biodiesel.

The domestic demand for coco-biodiesel is estimated at 70 million liters a year based on the seven billion liters of petrodiesel consumed by the country last year. The figure is seen to more than double to 160 million liters if the Biofuel bill is enacted into law.

Aside from biofuel, ChemTech also produces Acrylite binders, the main ingredient used to make water-based house paints and which holds a substantial 40-percent share of the local market.

ChemTech also controls 70 percent of the domestic market for polystyrene resins which is a major raw material for the manufacture of plastic food packaging and appliances. Its brand Hi-Flo and Hi-Flex are highly regarded for quality and reliability in the plastics industry.

In oleo-chemicals, or vegetable oil-derived chemicals, its brand Fil-Amide holds a 60-percent market share for coco-based amides. This is the lathering or foaming agent used by consumer products companies to make shampoo and detergents. The company also exports most of its output.