Retail Investors Crowd into Philippine’s Hottest IPO MerryMart
Retail Investors Crowd into Philippine’s Hottest IPO MerryMart
(Bloomberg) -- Shares of Philippine grocer MerryMart Consumer Corp. saw a spike in trading as they cooled off after three days of rising by the daily limit in their market debut this week.
Retail investors who had missed out on the first Philippine initial public offering of 2020 saw their chance to buy as the stock dropped 18% to close at 2.75 pesos on Thursday. Volume surged to over 500 million shares, more than the combined total of the first three days of trading.
The coronavirus has been a tailwind for shares of companies selling daily necessities. MerryMart rival Puregold Price Club Inc. has seen its stock climb 60% from its March low. The extra demand has coincided with a surge in local retail trading as lockdowns have forced people to stay at home.
Following a 237% gain in first three days of trading, which resulted in a market capitalization of about $500 million, MerryMart opened Thursday 34% higher then plunged to a loss of more than 19% in the first 16 minutes of trading. The stock is the best IPO debut going by the performance in the first three days of trading, based on data compiled by Bloomberg.
While the stock’s most volatile day so far moved some investors to take profit, it was a window for those who had missed out.
Mike, a retail investor who declined to give his last name, had to wait for four days to finally get his hands on the stock because his orders didn’t get through earlier this week amid the excessive demand.
“It’s a stock good to keep over the long term,” said Mike, who said he has been monitoring and reading up on MerryMart since it began trading. “Given the pandemic, it’s businesses like MerryMart that will thrive and do well.”
MerryMart, which raised 1.6 billion pesos ($32 million) in its initial public offering, seeks to build 1,200 outlets by 2030 and be among the five biggest Philippine retailers, with 120 billion pesos in annual sales. Its IPO was twice oversubscribed as investors bet that CEO Edgar ‘Injap’ Sia could repeat the stellar performance he achieved with DoubleDragon Properties Corp., whose shares have grown eightfold since he took the firm public in 2014.
“While many investors headed for the exit because the stock has gained a lot, new investors came in, convinced it could be another DoubleDragon,” said Rachelle Cruz, an analyst at AP Securities. “While there is still demand, there could be some consolidation as Injap’s plan is still too far in the future and investors can be impatient.”
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