Aboitiz Power shares close flat in PSE debut
Shares of Aboitiz Power Corp. ended flat in their market debut yesterday amid a bearish stock market and a flurry of new stock offerings this month that revived worries that new shares could flood the market.
Aboitiz Power opened moderately higher at P6.20, its highest for the day, before closing at its initial public offering (IPO) price of P5.80 per share despite the fact that the company has enjoyed considerable attention from investors, particularly foreign institutional buyers.
The IPO was nearly four times oversubscribed with 70 percent of the issue (representing 1.217 billion shares) taken up by foreign investors.
Analysts said investors have become more selective given a growing pipeline of new issues which include GMA Network Inc. and Vista Land & Lifescapes Inc.
Another reason cited by analysts for the disappointing market debut of Aboitiz Power is its pricing, which they found expensive.
Aboitiz Power’s IPO price of P5.80 was at the midpoint of an indicated range, or 18 times the company’s projected earnings this year.
It was the first IPO this year that failed to close higher than its offer price on listing day. Three previous IPOs this year grew by an average of more than 30 percent on their first trading day.
Analysts, however, maintain that Aboitiz Power is still a stock to watch out for especially over the long term given the number of projects on its plate and specially if it acquires more power assets from the government.
“I think Aboitiz Power will be a force to reckon with in the power industry. It supplies about six percent of total kilowatt hours sold in the country,” said an analyst who requested not to be named,
Aboitiz Power, the biggest IPO so far this year, has raised $220 million (P10.1 billion) in proceeds which will be used to bid for state-owned power plants, for
Erramon Aboitiz, president and chief executive officer of Aboitiz Power, said over 23,000 local small investors have participated in the (IPO) buying a total of 173.913 million common shares. “This is something to be happy about...small investors wanting to invest in us.”
Aboitiz said the company’s strategy would be to continue growing its distribution business organically and through acquisitions. “What we have raised is sizeable enough and should carry us through a number of acquisitions. We’re considering bidding for assets of the National Power Corp. particularly the hydro power and geothermal power plants,” he said.
“Our current power mix is 60 percent hydropower and the rest is thermal power, but we have to have some diversity since we can’t be reliant on just one fuel source. We will still want to look for hydropower projects over the long term and to build renewable sources like geothermal power to shield us from volatile oil prices,” said Aboitiz.
He added that the company is doing a study on the viability of putting up a 600-megawatt (MW) hydropower plant at the Subic Bay Freeport Zone, which will be in joint venture with Taiwan Co-Generation Co.
The first phase, expected to be undertaken in a period of two to three years, will involve 150 megawatts to 300 megawatts and is expected to cost between $220 million and $440 million.
In addition, Aboitiz Power will begin construction of the 42-MW Sibulan hydropower project and the 30-MW Tamugan hydropower project in the Visayas and
Aboitiz Power is the holding firm for all power generation and distribution assets of listed holding firm Aboitiz Equity Ventures Inc. Among the companies under it include Davao Light & Power Co. Inc., Visayan Electric Co., Inc., Hijos de F. Escaño, Inc., Cotabato Light & Power Co., Subic Enerzone Corp., San Fernando Electric Light and Power Co., Pampanga Energy Ventures Inc., and Aboitiz Energy Solutions Inc.
VECO and DLPC are the second and third-largest privately-owned distribution utilities in the country in terms of both customers and annual electricity sales.
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