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Oh F*ck!

That title will be the expression you will have after reading this blog.

IPO price ng CHP was revised from Php17/share to Php10.75. In 2016, Cemex Holdings went IPO for Php 10.75 per share.CHP’s IPO aimed to pay debt. According to the prospectus, no part of the proceeds will be used for expansion, whether to acquire other businesses or buy assets. If you want to know about the dirty secrets ng IPO read this. 

If di kayo familiar sa CHP sila yung may established cement brands such as “APO”, “Island” and “Rizal”.

The lead underwriter for CHP was BDO Capital & Investment Corp. The proceeds from the IPO (P22 billion) was used to pay debt owed to a subsidiary of parent CEMEX and BDO Unibank Inc. This alone if nagbabasa ka ng prospectus ay matatawa ka. In short nag IPO si CHP not for growth or expansion but para lang talaga magbayad utang. Owners are cashing out to pay their debts. If e summarize mo saan mapupunta ang proceeds from IPO mula sa prospectus it will go like this.

To fully repay the BDO Loan of 6.1 Bil Php ($132.3 Mil)
To repay amounts outstanding under the Short-Term Loan from New Sunward Holding B.V. (“NSH”), a subsidiary of CEMEX. The Short-Term Loan is valued at 17.2 Bil Php ($374 Mil).
To partially repay the Long-Term Loan from NSH. 16.3 Bil Php ($353 Mil).

The deal is that the bank would help the company to list in PSE but the company should pay its debt. IPO ni CHP is para eh save ang bank at mga owners nito.

I remember back noong 2016 me and my mom were laughing at this. If I was active in social media siguro I could have saved a few traders/investors na can’t see the big picture. Parang daylight robbery in the making kasi ito noon. I will tell you why. 

The offering was oversubscribed daw pero no definite number given. Oversubscribed by how much? 10x? 20x? 2x? Oversubscribed pero madaling nakakuha shares ang public. Isang malaking red flag sa IPO kapag madali ka makakuha shares. Ang ibig sabihin niyan ay walang totoong demand. The mere fact that the proceeds will be used to pay for its debt means that its operation is not profitable enough to service its debts. Either their gross income is not that big or too much expenses or both. 

Yung underwriter is BDO. Yung pinagkautangan niya is BDO din. Conflict of interest. Usually, ang IPO para sa growth, expansion or gawa ng bagong negosyo ng isang company. Si CHP nag IPO para sagipin ng mga investors sa pagkakautang niya. Icipin ninyo ha na kapag marami utang ang isang company ay pwede itong mag IPO pambayad utang niya. Yung investor/trader sasalo sa losses ng isang company.

According sa listing rules ng PSE may lock-up period. The lock-up rule states that groups or individuals who own at least 10% of the newly-listed company’s outstanding shares are not allowed to sell their shares within a specified period.If the company is listed on the PSE’s First Board, the owner’s shares are locked-up for 180 days. If the company is listed on the PSE’s Second Board, the lock-up period is 1 year. Finally, if the company is listed on the SME Board, majority owners are prevented from transferring their shares within 2 years after the initial listing date.

So mga major shareholders ni CHP hindi pwede magbenta shares. Rules say at least 10% ng outstanding shares. Read this article and focus your eyes on the “corner stone” investors.  .Tatlo lang na mention sa article but they are more than 5. About thirty percent ng shares ni CHP nakuha nila. May lock-up period ang mga major holders ng CHP. Major holders are those who have at least 10% ng outstanding shares. Those corner investors are not subjected sa lock-up rule kasi walang 10% ng outstanding shares hawak nila individually. So ano nangyare sa unang buwan ng pag open sa merkado? Foreign selling. Local traders/investors are so in love sa idea ng build build build.It was clear as day na ang daming red flags ng CHP. Sinasalo ng local while foreign keep unloading shares. It was not sudden but you could see the decline. Continuous ang pagbaba kahit pa may mga few days na nagbobounce. What would you expect from a company na nag IPO to pay off utang? Eh di labasan news about losses.

While all of these is happening CHP was still a recommended buy sa mga TRC members.

The problem with TRC is that wala silang alam sa cutting losses. They are like sheep na sinasabihan na rejoice kapag red ang market kasi it means its a good time to buy. It’s crazy! A lot of those who bought CHP above 12 pesos hawak hawak pa rin ang CHP and now CHP is at 1.45 pesos.

That was the IPO crazy story about CHP. Di pa sapat na nag IPO sila sa 10.75 pesos at hinayaang bumagsak ang stock price nila without even doing a “buy-back ” ngayon nag issue na naman ng panibagong shares ang CHP through stock rights offering or SRO. Kahit nga ako nagulat sa move na yun. “The new shares will come from an increase in Cemex Philippines’ authorised capital stock from PHP5.195bn to PHP18.31bn, consisting of 18.31bn common shares with a par value of PHP1 per share.” 

What is an authorised capital stock? Authorized capital stock is the maximum number of shares that a corporation is legally allowed to issue. This restriction applies to both common stock and preferred stock. The number of authorized shares is initially set in a company’s articles of incorporation, and can be increased thereafter if a majority of the shareholders approve of the change. 

Ano effect nito sa shareholders? An increase in the total capital stock showing on a company’s balance sheet is usually bad news for stockholders because it represents the issuance of additional stock shares, which dilute the value of investors’ existing shares. 

Ano ang dilution? Sample may isang kumpanya na nag IPO. Nag issue ng 10,000 shares. Sampo kayo bumili tig 1000 shares. Ang net income ng kumpanya na yun for that year kunyare ay 10,000 pesos. Ang earnings per share or EPS ( EPS ay ang sukatan ng company’s profitability or kita, mas mataas ang EPS meaning mas kumikita ang isang kumpanya) ay piso. 10,000 pesos divided by 10,000 shares ay piso. Meaning every share na hawak mo ay may kita or may kakayahang kumita ng piso. Ngayon paglipas ng isang linggo naglabas ulit ng panibagong shares sa sampung tao ang kumpanya. Naglabas ulit ito ng 10,000 shares sa sampung tao. Kung yung kita ng kumpanya ay 10,000 pesos instead na e divide ito sa 10,000 shares ay e didivide na ito sa 20,000 shares kasi naglabas ulit ng panibagong shares ang kumpanya meaning ang EPS dati na 1 peso ay naging 50 cents na lang. 

Hindi ko alam if nagegets ninyo but thats the simplest I can describe dillution. It’s bad para sa shareholders. The worse part is mula sa IPO na 10.75 pesos nag offer ng new shares sa 1.54 pesos. “The new shares will come from an increase in Cemex Philippines’ authorised capital stock from PHP5.195bn to PHP18.31bn, consisting of 18.31bn common shares with a par value of PHP1 per share.” Grabe na dillution. Saan mapupunta ang pera mula sa SRO? Eh di sa utang na naman. “The proceeds from the offering are expected to fund the expansion of its Solid Cement plant, pay debt and cover other general corporate purposes.”

Call me crazy but yung mga kumpanya na nakikita na bumababa ang stock price nila kadalasan binibili nila ito through buy-back kasi nga cheap na ang price compared sa fair value na nasa mind nila. Si CHP baliktad.“Bahala kayo sa buhay ninyo basta kailangan ko pambayad ng utang” Mula 10.75 pesos to 1.54 pesos. Let that sink in for moment!

I feel sorry for the holders na naiwan pa rin sa taas. With that being said, have I traded yung bounce ni CHP? Of course! It don’t matter what stock code it is to me. I have sympathy sa mga naipit but I don’t mix my trades and my emotions. Kapag pasok sa FISHBALL set up I’m gonna trade it.

I had two stocks na hawak kahapon. My sell signal was hit sa isang hawak ko bago mag 11 AM so i disposed it.

Na hit din sell signal ko sa remainng one stock na hawak ko bago mag 12 noon so I also disposed it.

I currently have no stock position. Lets see what the market brings bukas or next week.

If you want to learn more about stock trading join our Facebook Group called Trader’s Lounge

Our advocacy is sharing ideas, experiences and knowledge to traders for FREE. We offer free Technical Analysis, Fundamental Analysis and Market Psychology learning materials for free. 

We also have weekly lessons over there. We created different trading strategies like MAMA which made a lot of traders profitable. Other trading strategies include FISHBALL, PAPA, CALMA and more. We want to offer OFW’s, Employees and all Filipino people a chance to learn without paying a cent. 

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Come join us. Let us push free learning. 

14 Comments

  • LAGALAG HABAGAT

    Bounce! Bounce! Bounce!
    Sarap kumain ng FISHBALL after mag gain sa bounce play hahaha

    Ms. G, thank you sa mga strats!
    Isa kang Alamat! hahaha

  • maaness

    hmmmm dami pala hidden agenda if IPO. we thought it’s always a good buy if IPO. salamat sa info! great learning here.

  • Beebootrader

    Wala po bang laws to protect the poor ordinary investors? Bakit hinahayaan na ganito ng PSE? And bakit di pa inaalis ang companies na obvious kasama sa nagscam?

  • TRISTAN JAMES SARIO

    This one will open there mind sa mga holder before or may hawak pa today ng CHP. I was not the part of CHP IPO days nung nag start sya nung July 2016. But now, its cleared kung anu talaga nangyari in this blog especially the article on the “corner stone” investors. Worth Reading.

    • Barry Toms

      Parang CAL Story din, mag invest daw sila ng 6 or 7-star hotel sa Cebu with casino, yon pala disapproved na pala ang kayang application sa PAGCOR while at the same time…panay tinda ni JCal and team ng kanilang mga shares. Bigla pa dini-delist ng SEC without tender offer, soma total…kawawa ang mga shareholders!

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