Century pegs IPO price at P13.75

MANILA, Philippines - Century Pacific Food Inc. of the Po family has pegged the selling price of its shares at P13.75, the upper end of the indicative price range.

The country’s largest canned goods producer stands to raise P3.16 billion in the second initial public offering (IPO) this year.

In a text message, Eduardo V. Francisco, president of underwriter BDO Capital & Investment Corp., said the final offer price is near at the high end of the P12.50 - P14.50 target.

Century Pacific will raise P3.157 billion in fresh capital from the sale of 229.654 million shares from April 23 to 29. The company’s shares will debut on the main board of the Philippine Stock Exchange on May 6.

Proceeds of the IPO will be used to pay short-term obligations, complete a tin can manufacturing factory and dairy mix plant facility in Taguig, and support general working capital given an intensified marketing and sales initiative or possible acquisition.

Nisha S. Alicer, research strategist at DA Market Securities, said Century Pacific is a value stock, with the P12.50 P14.50 price range representing a 18.6x-21.9x 2014 price-to-earnings ratio, lower than the industry average of 22.9x.

Century Pacific is banking on its market leadership in the consumer-based Philippine economy, and multi-category, multi-brand product portfolio with a strong record of product innovation and successful new product introduction.

The company also has a “multi-pronged growth strategy through cost improvement, expansion of distribution network and achieving economies of scale to grow local and international market share in existing segments and penetrate new ones,” Alicer said.

Growth points for Century Pacific include the strong economic growth, market leadership, diversified portfolio and facility improvement.

The Philippines’ gross domestic product is expected to post a compounded annual growth rate of 6.1 percent from 2012 to 2017, Alicer said, adding that as of 2012, consumption accounted for 72 percent of the economy.

The Philippines’ canned and preserved food industry is the largest market in Southeast Asia, with sales expected to grow seven percent annually to P43.6 billion in 2016 from P33 billion in 2012, Alicer said.

Century Pacific, the firm behind leading brands Century Tuna, Argentina and 555, is the Philippines’ largest producer of canned goods, cornering 84.1 percent of the domestic canned tuna market, 42.5 percent for corned beef and 25.6 percent for meat loaf.