April 21, 2014

Century Pacific IPO priced at P13.75/sh

In a disclosure to the PSE, food canner Century Pacific Food Inc pegged the price of its upcoming IPO at P13.75/sh. This would be in in the higher end of the P12.50-P14.50 pricing range that it earlier indicated. The company intends to sell 229.65mprimary shares, corresponding to 10.3% of post-offer shares outstanding. Offer period runs from April 23 - 29, with listing scheduled for May 6.

Our take: At P13.75, the shares will be valued at a trailing P/E of 41.2x 2013 earnings of P743.9m. We reckon that its earnings would have to grow 53% to be at par with the consumption industry multiple of ~27x. Of the P3.16b in expected proceeds, P2.72b will be used fordebt retirement which we estimate will save it P51m in annual interest expenses.

Another P720m of the proceeds will be earmarked for the construction of anew canning facility which is slated for completion in 4Q14 and should enable the company to save on packaging costs – WealthSec