Monzon: PSE still bullish on IPO goals this year despite CREC’s delay

By Ashley Erika O. Jose, Reporter

THE PHILIPPINE STOCK Exchange (PSE) remains optimistic about achieving its target of six initial public offerings (IPOs) this year despite one company set to go public in the first quarter delaying its listing, its top official said.

“I think we can reach; I remain optimistic [about the IPO target],” PSE President and Chief Executive Officer Ramon S. Monzon told ����ý on the sidelines of PSE’s forum on Wednesday. 

“Although CREC (Citicore Renewable Energy Corp.) has deferred, I think as the market is improving, a lot of companies will accelerate their plans,” he added.

Last week, CREC announced the deferment of its IPO to the second quarter from March as the company was still weighing offers from various institutions.

“We think that successful listings are typically supported by buoyant market conditions as investors would be more willing to deploy their capital,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail on Thursday.

The PSE is targeting at least six IPOs and expects about P175 billion worth of capital to be raised in 2024, of which P40 billion will come from IPOs.

“What I fear the most is the timing if they simultaneously list, as there should be an interval. Because, of course, for capital, you do not want too many companies fighting for one,” Mr. Monzon said.

The probability of IPOs regaining momentum this year will likely depend on several market conditions, said April Lynn Lee-Tan, Chief Equity Strategist at COL Financial Group, Inc.

“It depends on market conditions. If prices continue to go up, and volumes pick up, then they can achieve the target. Otherwise, it might be difficult,” Ms. Tan said in a Viber message.

In 2023, the benchmark Philippine Stock Exchange index ended at 6,450.04, down by 1.8% from its 6,566.39 close in 2022.

The PSE has said that the stock market is expected to rebound this year once the central bank begins cutting rates and if inflation continues to ease.

For China Bank Capital Corp. Managing Director Juan Paolo E. Colet, the planned IPOs of CREC and OceanaGold Corp. will likely set the benchmark for companies to proceed with their IPOs.

“It would be good to have at least six IPOs this year, but some potential issuers are still on the fence about listing. There are companies who want to see how the announced IPOs of OceanaGold and Citicore Renewable will perform before deciding whether to push through with their listing plans,” Mr. Colet said in a Viber message. 

Mining company OceanaGold said it aims to publicly list by May in compliance with the company’s mining contract.

“Other potential IPO candidates, especially the larger ones, are waiting for much better market conditions and equity valuations. We need a combination of strong economic growth and lower policy rates to get a more active IPO market,” he said.

Earlier this week, Metro Pacific Investments Corp. said it hopes to publicly list its planned joint venture company with San Miguel Corp. within the year.

“So far this year, we’ve been seeing a pretty strong market, as underpinned by resurgence of foreign fund flows and expectations of policy rate cuts from the US Fed and the BSP (Bangko Sentral ng Pilipinas). As such, we think that the success of prospective IPO listings will closely track how those stories pan out,” Mr. Mercado said. 

The BSP earlier said that the monetary board may consider cutting borrowing costs in the second half of this year amid easing inflation, but the central bank still intends to keep rates tight in the first half amid risks to inflation.

Inflation averaged 6% in 2023, marking the second straight year that it breached the BSP’s 2-4% target range.

In January, inflation slowed to 2.8%, well within the BSP’s 2-4% target, and slower than the 3.9% in December and 8.7% in the same month in 2023.

“We also think that a successful first IPO for the year could lead to a snowball effect as this could mean that investors are now ready to participate in new IPOs. It also remains important for companies who are planning for an IPO to outline their growth strategy to enhance shareholder value,” Mr. Mercado said.