Business Mirror
Published on Monday, 08 October 2012 11:40 Written by Miguel R. Camus / Reporter
THE offer period for Coal Asia Holdings Inc.’s P800-million initial public offering (IPO) starts today and will run through October 15. Analysts said IPO comes amid the generally positive environment for energy-related companies locally but cautioned that investors need to be patient with Coal Asia, which is still in the exploration phase, before realizing its full value.
The IPO, the country’s fourth this year, involves 800 million shares, or equivalent to a 20-percent stake, to be sold at P1 per share, the company’s prospectus showed. The shares will be listed on the Philippine Stock Exchange on October 23.
Coal Asia, which will have a market value of P4 billion upon listing, is raising funds to finance the development of its Davao Oriental and Zamboanga-Sibugay coal mines to bring these to commercial production by 2014 and 2015, respectively.
“This IPO is not for speculators,” Joseph Roxas, president of stock brokerage firm Eagle Equities Inc., said in a phone interview. “It’s for those who are willing to hold on until it starts [commercial] production.”
Its long-term prospects, however, have not softened demand for the company’s IPO. Stock traders noted that the relatively limited size of the offer could attract “short-term trading.”
Sole underwriter Abacus Capital and Investment Corp., which controls 60 percent of the offer shares, said its allotment was already two times overbooked ahead of the offer period. Roxas said Eagle’s allotment of just 1.8 million shares was also oversubscribed as of Monday.
The IPO comes amid favorable sentiments for the country’s energy sector, Bede Lovell Gomez, investment advisory deputy group head of First Metro Investment Corp., said. Coal is mainly used for the generation of electricity and cement manufacturing.
While declining to comment specifically on Coal Asia, he noted that the industry can accommodate more coal producers.
“Demand for power continues to be favorable,” Gomez said in a phone interview. “We are bullish about energy and we will continue to be bullish on this sector.”
Coal Asia presently produces high-grade coal with a volume of less than 100,000 metric tons (MT) a year. By 2014, the production will ramp up to 600,000 MT per year. Net income is projected to reach P500 million by 2014, Coal Asia said in a previous statement.
Its proven coal reserves and resources are estimated at a combined 123 million metric tons for both mine sites, which are held through wholly-owned subsidiary Titan Mining Energy Corp.
The figures place the company just behind Consunji-led Semirara Mining Corp., the country’s biggest coal producer, accounting for about 95 percent of production. Coal Asia, however, says it has higher-quality coal.
Coal Asia, through an affiliate, is also expanding into oil and gas after announcing the acquisition of a stake in VenturOil, which has interests in the Cadlao and Bonita oil fields in offshore Palawan. The Department of Energy still needs to approve the transaction. source
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