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Headwinds greet debut of Chelsea

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Chelsea Logistics
Chelsea Logistics Holdings Corp., (CLC) conducted its initial public offering (IPO) listing ceremony at the Philippine Stock Exchange (PSE) on Tuesday. -- Handout photo by Philippine Stock Exchange, Inc.

By Arra B. Francia

GENERAL OPTIMISM over the country’s logistics sector failed to sustain Chelsea Logistics Holdings Corp.’s (CLC) early gains during its debut on the main board of the Philippine Stock Exchange (PSE) on Tuesday, as it closed lower than its offer price.

Chelsea Logistics
Chelsea Logistics Holdings Corp., (CLC) conducted its initial public offering (IPO) listing ceremony at the Philippine Stock Exchange (PSE) on Tuesday. — Handout photo by Philippine Stock Exchange, Inc.

Shares of CLC opened 3.37% higher than a P10.68 offer price at P11.04 each, rising 5.06% to an intraday high of P11.22 before shedding 12 centavos or 1.12% at the closing bell to P10.56 apiece — the day’s lowest.

“Well, it was much anticipated but, so far, it has failed to get the kind of lift investors or rather traders may have wanted,” Philstocks.ph Senior Analyst Justino B. Calaycay, Jr. said in a mobile phone message.

“For traders, it should be a bit of a disappointment with maximum gains so far at only 5.0%.”

The logistics arm of Davao-based businessman Dennis A. Uy’s Udenna Corp. raised P5.84 billion in its initial public offering (IPO) of 546.593 million common shares. This gives the company a public float of 30%. Market capitalization stood at P19.459 billion.

“It was oversubscribed naman even before the domestic offer…three times oversubscribed,” BDO Capital and Investment Corp. President Eduardo V. Francisco said in a press briefing after the listing ceremony in Makati on Tuesday.

BDO Capital served as issue manager, lead underwriter, and sole book runner of the maiden share sale.

Retail investors accounted for 30-40% of IPO sales, with Mr. Francisco noting that the shares were well-distributed.

The company had initially priced the offer at P14.63 to raise up to P8 billion, but lowered it to give room for an upside in the market.

“We’re more than happy with the IPO. Kapag masyado namang mataas ang presyo namin, baka wala na sa investors (A higher price risked turning off investors),” CLC President and Chief Executive Officer Chryss Alfonsus V. Damuy said in an interview after the briefing.

Net proceeds of the offer amounted to P5.5 billion, which CLC will use to finance its nationwide expansion. Bulk or P3.2 billion of the proceeds has been allocated for the acquisition of other firms, while P1.78 billion will be for the acquisition of vessels and equipment, including a tanker that can carry 45-55 million liters of bunker fuel across international waters. About P245 million will be used to acquire port facilities, containers and terminal equipment.

“Chelsea needs ports. If there’s opportunity in expanding ports, domestic ports, we might take a look at it…nationwide,” Mr. Uy said.

Asked if the company will be closing a deal for the acquisition of shipping firms by yearend, Mr. Uy replied that it is currently talking to a couple of companies.

“Hopefully, we can close at least one this year,” he added.

CLC is also looking to expand within Southeast Asia, particularly in terms of petroleum shipping as well as the operation of roll on-roll off services.

“We were also asked by DoTr to enhance the Davao-Indonesia route…not only by supplying vessels, but also [providing] trade opportunities,” Mr. Uy said, referring to the Department of Transportation.

CLC now counts 59 vessels in its fleet, with a capacity of 39,272 gross registered tonnage — the largest in the industry. The company has claimed it has a 32% market share in the country’s shipping industry.

The shipping firm holds a 28.15% indirect interest in integrated transport solutions provider 2GO Group, Inc. Mr. Uy’s holding firm, Udenna Corp. acquired a 32% stake in Netherlands-based KGL Investment B.V. in 2016. KGL Investment holds 60% beneficial ownership in KGLI-NM Holdings, Inc., which controls Negros Navigation Co. Inc. (Nenaco). In turn, Nenaco owns 88.31% of 2GO Group.

Mr. Uy also cited the company’s plans to further increase its stake in 2GO to 39.85%, but did not disclose the timetable for the transaction.

“CLC’s maiden voyage was met with many headwinds,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said, noting that “[p]erhaps some of this was also because of the index falling on a weak note.”

The benchmark PSE index slipped by a nearly flat 0.07% as many investors decided to cash in in the face of mixed second-quarter corporate earnings, although the services sectoral index to which CLC shares belong managed to edge up 0.45%.

Mr. Limlingan added, “even though it closed below its IPO price, the stock averaged above the P10.68 set earlier.”

“For the first day it traded with a VWAP (volume weighted average price) of 10.9632 with 136(.394) million shares traded, meaning most sellers still on average made a profit from the listing.”

Philstocks.ph’s Mr. Calaycay said investors “must be able to distinguish between the trading prospects of the company and its fundamental operational prospects.”

“As a going-concern, Chelsea will depend greatly on a sustained economic growth — particularly the roll-out of the government’s infra[structure] push, among others,” Mr. Calaycay said.

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