Universal Robina Sinks After Discounted Share Sale: Manila Mover
The shares sank 4.8 percent to 117.10 pesos at the trading break in Manila, poised for the steepest loss since June 13. JG Summit rose 3.2 percent to 42.10 pesos, bound for the highest close since July 30.
JG Summit raised about 12 billion pesos ($278 million) from the sale of 105 million Universal Robina shares at 115 pesos each, according to a stock exchange filing today. That’s a 6.5 percent discount to yesterday’s closing price. The sale cut JG Summit’s stake in Universal to 55.7 percent.
“This decline is an opportunity to buy,” said COL Financial Group analyst Jed Frederick Pilarca, who has a buy recommendation on Universal Robina and a target price of 140 pesos. “The market simply reacted to the discounted sale. Nothing has changed on Universal Robina’s fundamentals.”
Proceeds from the sale may help fund JG Summit’s purchase of a 27 percent stake in Manila Electric Co. (MER) for 72 billion pesos, Pilarca said. The holding company may also have to borrow to complete the fundraising, he said.
JG Summit’s dividends from units and investments will rise 38 percent to 11 billion pesos after buying the stake in Manila Electric, the nation’s largest power utility, from San Miguel Corp. (SMC), JG Summit President Lance Gokongwei said on Oct. 1.
JG Summit is also interested in buying stakes in other power projects, betting that growth in the nation’s $250 billion economy will boost power demand, Gokongwei said.
Universal Robina has six buy, two hold and two sell ratings in a Bloomberg survey of analysts, with an average 12-month price target of 139.03 pesos.