Cebu’s TopLine optimistic about IPO despite market conditions

Cebu-based Top Line Business Development Corp. (TopLine) is optimistic about its upcoming initial public offering (IPO) despite the prevailing market conditions, as it is banking on the projected growth in its market area.

According to TopLine president and chief executive officer Eugene Erik Lim, he was guided by an interview of Philippine Stock Exchange (PSE) president and chief executive officer Ramon Monzon, who said that anytime is the best time for a listing.

“For us, it’s either up or down since we’re already committed to our investors to our growth strategy for TopLine,” he told reporters in a briefing in Makati City on Thursday.

“I think it would really depend on what the company wants, but for us, even through market conditions, I think we’re still okay in pushing through for the listing,” he added.

The PSE index (PSEi) on Wednesday shed 1.4% or 95.78 points to close at 6,714.33, a fresh three-month low for the bellwether index since it closed at 6,692.91 on August 15. The broader All Shares index declined by 0.73% or 27.88 to 3,792.46.

The decline was also seen in other Asian markets, following the election results in the United States with Donald Trump as the President-elect. Wall Street indexes also closed lower on Tuesday, with investors pocketing gains from a post-election rally.

“I think for last month or two months ago, [the] market was going up and then just recently after the elections and everything, it went down, the US elections,” Lim said.

“I think what’s important to consider here is what’s our strategy for the listing, at the same time, what’s also the growth strategy and the direction for the company,” he added.

TopLine has already secured regulatory approval to offer 3,683,100,000 common shares, with a maximum price of P0.78 apiece, with net proceeds expected at P2.75 billion.

Proceeds from the offer will be channeled into depot construction (36%), new fuel tankers (11%), new tank trucks (6%), new retail fuel service stations (2%), reinforcement of working capital (34%), and general corporate purposes (11%).

The bookbuilding period started on November 4 and is scheduled to be completed on Friday, November 15, with the pricing expected on Monday, November 18.

Based on the latest timetable, the offer will start on November 27 and last until December 3, 2024, before being listed on the PSE on December 12, 2024.

Lim noted that the company is expecting sustained growth, citing a commissioned study by the University of Asia and the Pacific (UA&P), indicating a P1.38-trillion combined economy of Central Visayas where TopLine operates.

The study also found that diesel consumption in Cebu increased by 8.75% to 542.7 million liters in 2022 from 499 million liters in 2021. TopLine sold 35.4 million liters of diesel in 2022, and grew this to 56.2 million liters in 2023.

“In our meetings with our investors, we have emphasized our results-driven approach and our rapid growth trajectory. Our IPO will help us pursue our vertical integration strategies in Central Visayas,” Lim said.

The firm in July said it is looking to establish nine branches of its fuel business through its subsidiary Light Fuels Corp. (LFC) in 2024, after introducing its first in Mandaue City in 2023.

Topline, through its affiliates, is also involved in port operations and management (Pier Eighty-Eight Ventures Inc.), real estate development (Topline Properties and Development Corp.), clean and green technology (Topline Energy and Power Development Corp.), port and ferry terminal operations (Topline Marine Wharf Development Corp.), technology research and development (Topline Hi Tech and Synergy Corp.), and restaurant operations and manpower services (Topline Services and Development Corp.)

The company ended the first half with a P60.553-million net income, up from P20.788 million the previous year. Sales climbed to P1.430 billion from P1.263 billion, while the cost of sales rose to P1.430 billion from P1.263 billion. — BM, GMA Integrated News