IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Del Monte Philippines / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/del-monte-philippines-inc" target="_blank" data-smartkarma-citation="entities:26988:1" rel="noopener">Del Monte Philippines (1575316D PM)</a>/DMPI is a leading producer, distributor and marketer of premium quality, healthy food and beverage products. It is a market leader in the packaged pineapple and mixed fruit, ready-to-drink juices (excluding stand-up-pouches), tomato sauce and spaghetti sauce categories in the Philippines. DMPI has the rights to the <em>Del Monte</em> trademark for the Philippines for processed products and also sells products under the brands of <em>S&amp;W, Contadina</em> and <em>Today’s</em>.</p>
<p>The parent company is <a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd-5951cd46-129c-41bb-8eb2-58654da08425" target="_blank" data-smartkarma-citation="entities:22651:1" rel="noopener">Del Monte Pacific (DELM PM)</a> which holds 87.0% of outstanding shares. Del Monte Pacific had previously tried to list DMPI on the PSE in 2018 by selling a 20% stake to raise up to $324 million at the maximum offer price of PHP29.88 per share but deferred the IPO due to market volatility.</p>
</div><div><p>Currently, DMPI is pre-marketing for an IPO to raise up to PHP44 billion ($0.9 billion) at the maximum offer price of PHP54.80. The IPO price range, which is generally lower than the maximum IPO price, will be set during the book building process. The pricing date is 12 August and the offer period runs from 16 to 20 August. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/del-monte-philippines-ipo-initiation-tempting-fruit" target="_blank" data-smartkarma-citation="insights:54769" rel="noopener">Del Monte Philippines IPO Initiation: Tempting Fruit</a>, we opined that DMPI is a play on the healthy packaged and convenient packaged food and beverage categories that benefit from long-term secular tailwinds in the Philippines. DMPI’s financial track record shows it has been able to leverage its market-leading position to combine solid top-line growth with improving margins and cash generation. We concluded that DMPI’s fundamentals are attractive. In this note, we present our forecasts and take the first look at DMPI's potential valuation. </p></div></div></div>


Del Monte Philippines (1575316D PM)/DMPI is a leading producer, distributor and marketer of premium quality, healthy food and beverage products. It is a market leader in the packaged pineapple and mixed fruit, ready-to-drink juices (excluding stand-up-pouches), tomato sauce and spaghetti sauce categories in the Philippines. DMPI has the rights to the Del Monte trademark for the Philippines for processed products and also sells products under the brands of S&amp;W, Contadina and Today’s.
The parent company is Del Monte Pacific (DELM PM) which holds 87.0% of outstanding shares. Del Monte Pacific had previously tried to list DMPI on the PSE in 2018 by selling a 20% stake to raise up to $324 million at the maximum offer price of PHP29.88 per share but deferred the IPO due to market volatility.
Currently, DMPI is pre-marketing for an IPO to raise up to PHP44 billion ($0.9 billion) at the maximum offer price of PHP54.80. The IPO price range, which is generally lower than the maximum IPO price, will be set during the book building process. The pricing date is 12 August and the offer period runs from 16 to 20 August. In Del Monte Philippines IPO Initiation: Tempting Fruit, we opined that DMPI is a play on the healthy packaged and convenient packaged food and beverage categories that benefit from long-term secular tailwinds in the Philippines. DMPI’s financial track record shows it has been able to leverage its market-leading position to combine solid top-line growth with improving margins and cash generation. We concluded that DMPI’s fundamentals are attractive. In this note, we present our forecasts and take the first look at DMPI's potential valuation. 

Del Monte Philippines IPO: Valuation First-Look

<p><a href="https://www.smartkarma.com/entities/allhome-corp" target="_blank" data-smartkarma-citation="entities:28227:1" rel="noopener">AllHome (AHM PM)</a> claims to have pioneered the “one-stop-shop” home improvement retailer in the Philippines. AllHome has announced its IPO price guidance of PHP11.50-14.00 per share, which is below the previously stated maximum offer price of PHP16.00 per share.</p><div class="content-highlight"><p>In our valuation piece based on the maximum offer price, we noted that AllHome's valuation was tailored for growth investors due to the material PEG discount. However, value investors would be put off due to the significant P/E premium to it's domestic and regional peers. Encouragingly, at the low-end of the IPO price range, we believe that the appeal will likely be broad-based and encompass value investors. </p></div><p><strong><em>For reference, our previous notes on AllHome</em></strong><br><em>Initiation note: </em><a href="https://www.smartkarma.com/insights/allhome-ipo-initiation-cash-guzzling-growth" target="_blank" data-smartkarma-citation="insights:31460" rel="noopener">AllHome IPO Initiation: Cash-Guzzling Growth</a>  <br><em>Benchmarking study: </em><a href="https://www.smartkarma.com/insights/allhome-ipo-benchmarking-points-to-a-trade-off-between-growth-margin-and-returns" target="_blank" data-smartkarma-citation="insights:32246" rel="noopener">AllHome IPO: Benchmarking Points to a Trade-Off Between Growth/Margin and Returns</a> <br><em>Valuation: </em><a href="https://www.smartkarma.com/insights/allhome-ipo-valuation-tailored-for-growth-investors" target="_blank" data-smartkarma-citation="insights:32356" rel="noopener">AllHome IPO: Valuation Tailored for Growth Investors</a> </p>

AllHome (AHM PM) claims to have pioneered the “one-stop-shop” home improvement retailer in the Philippines. AllHome has announced its IPO price guidance of PHP11.50-14.00 per share, which is below the previously stated maximum offer price of PHP16.00 per share.In our valuation piece based on the maximum offer price, we noted that AllHome's valuation was tailored for growth investors due to the material PEG discount. However, value investors would be put off due to the significant P/E premium to it's domestic and regional peers. Encouragingly, at the low-end of the IPO price range, we believe that the appeal will likely be broad-based and encompass value investors. For reference, our previous notes on AllHome Initiation note: AllHome IPO Initiation: Cash-Guzzling Growth   Benchmarking study: AllHome IPO: Benchmarking Points to a Trade-Off Between Growth/Margin and Returns  Valuation: AllHome IPO: Valuation Tailored for Growth Investors 

AllHome IPO: Broader Appeal at the Low-End

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<p>Right before Christmas 2017, <a href="https://www.smartkarma.com/entities/20178" target="_blank" data-smartkarma-citation="entities:20178:1">Sri Rejeki Isman Tbk Pt (SRIL IJ)</a> announced that they are purchasing Primayudha and Bitratex, both are manufacturers of yarn based in Indonesia with a heavy focus on exports. A conversation with the management last Friday confirmed that the deal is still in the midst of due diligence hence no sale and purchase agreement has been signed and no price has been agreed. </p><h2>A brief background on the deal</h2><p>Both target companies are yarn producer with operation in East and…</p>

Right before Christmas 2017, Sri Rejeki Isman Tbk Pt (SRIL IJ) announced that they are purchasing Primayudha and Bitratex, both are manufacturers of yarn based in Indonesia with a heavy focus on exports. A conversation with the management last Friday confirmed that the deal is still in the midst of due diligence hence no sale and purchase agreement has been signed and no price has been agreed. A brief background on the dealBoth target companies are yarn producer with operation in East and…

A Talk with Sritex on New Acquisition and More

<p>Export has reached a historical high of <strong>25%</strong> of total sales on a much-improved product mix that results in a higher gross margin. With some very sticky customers through their higher margin customized product, <a href="https://www.smartkarma.com/entities/19563" target="_blank" data-smartkarma-citation="entities:19563:1">D&amp;L Industries Inc (DNL PM)</a> presents a stable business for the investors while it is also actively pursuing alternative opportunities to grow their top line semi inorganically; with Ventura Foods (supplier to A&amp;W) and Bungee. <br>The drop in share price of <strong>15%</strong> in August 2017 presents a buying opportunity to own DNL especially when the share price has steadily climbed up as a sign that investors are buying into the weakened share price. </p><p>As more revenues will come from customized and specialty products, margins are expected to expand while CapEx and cost are expected to remain under control - thanks to the founding family that provides the transport and storage facility that enables the listed company to keep an asset-light policy. </p>

Export has reached a historical high of 25% of total sales on a much-improved product mix that results in a higher gross margin. With some very sticky customers through their higher margin customized product, D&amp;L Industries Inc (DNL PM) presents a stable business for the investors while it is also actively pursuing alternative opportunities to grow their top line semi inorganically; with Ventura Foods (supplier to A&amp;W) and Bungee.  The drop in share price of 15% in August 2017 presents a buying opportunity to own DNL especially when the share price has steadily climbed up as a sign that investors are buying into the weakened share price. As more revenues will come from customized and specialty products, margins are expected to expand while CapEx and cost are expected to remain under control - thanks to the founding family that provides the transport and storage facility that enables the listed company to keep an asset-light policy. 

DNL: Sticky Customers, Improved Product Mix, Growing Top Line with Increasing Margin

Thematic (Sector/Industry)

<p>Despite the economic slowdown and low oil price, remittance continues to be an important component of Philippine's GDP. The OFWs are infamous for having the right working culture and always try to send money back to improve the living condition back home. </p><p><a href="https://www.smartkarma.com/entities/329" target="_blank" data-smartkarma-citation="entities:329:1">BDO Unibank Inc (BDO PM)</a> holds the largest share of the remittance from OFW and is controlled by <a href="https://www.smartkarma.com/entities/20015" target="_blank" data-smartkarma-citation="entities:20015:1">Sm Investments Corp (SM PM)</a>. This relationship also benefits BDO when SM develops malls, BDO will automatically be the preferred bank of these malls.</p>

Despite the economic slowdown and low oil price, remittance continues to be an important component of Philippine's GDP. The OFWs are infamous for having the right working culture and always try to send money back to improve the living condition back home. BDO Unibank Inc (BDO PM) holds the largest share of the remittance from OFW and is controlled by Sm Investments Corp (SM PM). This relationship also benefits BDO when SM develops malls, BDO will automatically be the preferred bank of these malls.

Philippines

D&L Industries Inc is a Philippine company that customizes raw materials for the food, plastics, chemicals, and aerosol industries. The Company's major end-market is food and beverage, including snacks and QSRs. D&L Industries also manufactures and sells materials to the automotive, oil and gas, as well as personal care and home care industries.

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D&L Industries (DNL PM)

Del Monte Philippines IPO: Valuation First-Look

DMPI is pre-marketing for an IPO to raise up to $0.9 billion at the maximum offer price of PHP54.80. In this note, we present our forecasts and...

Arun George

AllHome IPO: Broader Appeal at the Low-End

AllHome (AHM PM) claims to have pioneered the “one-stop-shop” home improvement retailer in the Philippines. AllHome has announced its IPO price...

Arun George

A Talk with Sritex on New Acquisition and More

Right before Christmas 2017, Sri Rejeki Isman Tbk Pt (SRIL IJ) announced that they are purchasing Primayudha and Bitratex, both are manufacturers...

Henry Soediarko

DNL: Sticky Customers, Improved Product Mix, Growing Top Line with Increasing Margin

Export has reached a historical high of 25% of total sales on a much-improved product mix that results in a higher gross margin. With some very...

Henry Soediarko

Overseas Filipino Workers: Beneficiaries

Despite the economic slowdown and low oil price, remittance continues to be an important component of Philippine's GDP. The OFWs are infamous for...

Henry Soediarko

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