Quick Take: Citicore's parent eyeing IPO and 3 more market updates

Citicore Energy REIT [CREIT 2.46 1.2%] [link] confirmed that its parent company, Citicore Renewable Energy Corporation (CREC), is planning to develop 5 gigawatts of generational capacity over the next five years, and that these projects could cost approximately US $3.75 billion (P205 billion) to complete. CREIT said that CREC is still in the “early stages” of planning for an IPO to raise the funds needed for this development plan, but confirmed that CREIT and CREC’s owner, Edgar Saavedra, thinks the IPO could be worth P54 billion.

MB Quick Take: The rumors are that CREC is pushing to list in Q2 of this year, which is a big deal considering the mammoth size of the potential offering. The current record holder for the largest IPO in PSE history is Monde Nissin [MONDE 12.42 1.3%], which raised US $1 billion in June of 2021, which was worth P48.6 billion at that time. CREC is looking to raise the same amount in USD terms, but the current conversion would make CREC’s listing the largest in PSE history when valued in pesos.\

Metro Pacific [MPI 4.40 4.3%] [link] confirmed statements made by its agri unit CEO about revenue goals, but warned that the achievement of the goals is subject to “risks and uncertainties”. Metro Pacific Agro Ventures (MPAV) CEO Jovy Hernandez said that he is looking to hit P500 million in dairy revenues by 2025, and P1 billion in revenue by 2027. Mr. Hernandez mentioned achieving a P5 billion “topline”, but did not mention a timeline for that goal.

MB Quick Take: MPI is on the move, and they’re looking at their agri unit as a source of growth. The interesting thing here is that MPI seems to have developed a taste for organic growth (business development) rather than just inorganic growth (portfolio expansion) through acquisitions. Yes, Axelum [AXLM 3.27 1.8%] is an acquisition, but MPI’s plan is to use that as a platform for growth. It’s refreshing to see a conglomerate executing so hard on a strategy like this.\

Globe Telecom [GLO 2,000.00 0.8%] [link] closes P8.6 billion tower sale-leaseback deal with Phil-Tower Consortium (PTC), for 578 of the total 1,350 towers to be turned over to PTC. This is the largest tower sale-leaseback deal in Philippine history.

MB Quick Take: ... so far. I’m a huge fan of these sale-leaseback transactions as a way for the telecom companies to harvest some cash from mature, paid-in-full assets, and to transfer the burden/obligation of their upkeep to a third party. From GLO’s perspective, let PTC worry about all the street-level problems that might arise at any one of these 576 tower locations all across the country, and focus on deploying that P8.6 billion in fresh cash to improve the financials or grow the core business.\

Xurpas [X 0.345 11.3%] [link] surged 11% on news that it “will establish a presence in Australia''. X announced that it will push the X brand in Australia through a new subsidiary, offering a “range of IT services” to a market that X calls “10x larger than the Philippine market.” X said that the range of IT services it will provide includes, but is not limited to, “staff augmentation, managed services, and bespoke software development”.

MB Quick Take: Usually I’d say something like “if you can’t do it in the Philippines, you can’t do it abroad”, but IT services is a weird industry here. X didn’t provide any support for its assertion of the total addressable market in Australia for its services, nor did it very clearly identify what services it plans to sell there, but it’s certainly possible that there are 10 times more opportunities in Australia for whatever it’s planning to do. So many companies here view IT as a cost center. It’s an uphill challenge to get corporate clients to see the growth potential of digitization, let alone have them sign an 8-digit development and maintenance contract. But that’s the kind of “win” that a listed IT services company needs to bag in order to be profitable at this scale. Still, I’d like to see more info about how X predicts this Down Under whaling expedition will go.

https://www.philstar.com/business/stock-commentary/2023/02/14/2244873/quick-take-citicores-parent-eyeing-ipo-and-3-more-market-updates