DM Wenceslao slumps in market debut

By Arra B. Francia, Reporter
PROPERTY developer and construction firm D.M. Wenceslao & Associates, Inc. raised P8.15 billion in the country’s first initial public offering (IPO) this year, but its shares closed below its offering price on its first day of trading.
Shares in DMW opened 20 centavos lower than its P12 IPO price to P11.80 each — its highest for the day — before hitting a low of P9.66 intraday.
The company managed to taper off losses by closing bell, but still ended 14.5% or P1.74 lower to P10.26 apiece. In contrast, the benchmark Philippine Stock Exchange (PSE) index jumped 1.8% or 127.11 points to 7,193.68.
DMW’s market capitalization stood at P40.75 billion after the fundraising activity.
Maybank Kim Eng Securities Pte. Ltd., which acted as one of the offer’s joint global coordinators and bookrunners, said 70% of the buyers were institutional investors, while the remaining 30% were retail.
“Transaction was anchored by institutional investors, and also including some corporate investors as well… It’s clear to say there was a very strong domestic institutional focus, there was traction from international investors, but majority of the demand was from domestic,” Maybank Rajiv Vijendran said during a briefing after DMW’s listing ceremony on Friday.
The company launched its IPO amid current volatility in the market, which entered bear territory after the benchmark PSE index fell more than 20% from its high of 9,078 in January.
“One of the reasons why we proceeded with the IPO is that we are confident about the growth trajectory of the company… When we decided to greenlight the project, the market was at 9,000. The growth prospects did not change, just market sentiment,” DMW Chief Executive Officer Delfin Angelo C. Wenceslao said in the same briefing.
Analysts noted that the property company, which is developing Aseana City in Pasay City, was affected by the overall bearish sentiment in the market.
“The negative and bearish market sentiment prevailed upon its listing thus the price was downed from its IPO, plus the tightening of global monetary policy,” Diversified Securities, Inc. Trader Aniceto K. Pangan said in a mobile text message.
Summit Securities, Inc. President Harry G. Liu noted the same, saying the market’s reception to the stock was lukewarm given the general slowdown in the market.
“It’s just acting according to the market sentiment, which is soft. I suppose that’s how DMW reacted… The company’s fundamentals will support itself at a certain price level,” Mr. Liu said in a phone interview.
Net proceeds of the offer reached P7.6 billion, 49% of which will be used to finance the nine projects DMW has lined up for its flagship development Aseana City over the next five years.
Around P2.9 billion has been allotted for the acquisition of land assets, while the remaining P1 billion will be used for infrastructure development.
Four of the projects are office and retail developments, intended to boost DMW’s recurring income in the future.
“Moving forward, you would probably see us maintain our recurring income at 50-60%,” Mr. Wenceslao said.
DMW currently has yet to develop 58 hectares of land within the 204-hectare Aseana City. Aside from Aseana, the company also has land in Cavite, Quezon City, and Makati City. Outside Metro Manila, the firm is conducting due diligence for a land reclamation project in Mandaue, Cebu.
Mr. Wenceslao noted the company’s current land bank will be enough for the next 15 years.
“Considering its positive fundamentals with a recurring revenue of 50%, I believe it’s a good growing company. It has an advantage in location as this (Aseana City) is considered the next central business district after BGC (Bonifacio Global City) with leasing as predominant in this place due to strong presence of outsourcing business,” Diversified Securities’ Mr. Pangan said.