Market Event

Del Monte Philippines, Inc. (DMPI) on Wednesday revived its initial public offering (IPO) plan, which aims to raise as much as P44 Billion.

Opinion

The DMPI IPO will consist of up to 699 Million secondary common shares and an overallotment (OA) option of up to 105 Million shares at a maximum offer price of P54.80. The secondary offer will comprise of shares from Central American Resources, Inc. (CARI), a subsidiary of the publicly listed holdings company DELM, as well as shares from SEA Diner Holdings (S) Pte. Ltd. DELM and SEA Diner have 87% and 13% ownership stake on DMPI, respectively.

Net proceeds from the secondary offering will be used for partial debt repayment of DMPL and redemption of DMPL’S Series A-1 preferred shares, while net proceeds from the OA option, if any, will be used for redemption of its Series A-2 preferred shares. Based on the maximum offer price of P54.80, trailing P/E of DMPI is at 44.1x, which is higher than MONDE at 42.5x if we exclude the P914 Million one-time forex gain.

While we think that MONDE’s P17.50 offer price is also at a premium, we think that MONDE’s higher P/E is more justifiable given its growth segment (Quorn) and considerably higher margins compared to its industry peers. In the meantime, we will wait for further news and will provide additional insights once DMPI provides a firmer price range.

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