PSE unlikely to meet targets for 2013 as IPOs get bottled up
The Philippine Stock Exchange (PSE) admits that it is now unlikely to hit its targets for 2013, especially for initial public offerings (IPOs), with the recent downturn in the equities market.
In an interview, PSE president Hans B. Sicat said “it’s probably going to be hard now (to hit IPO targets). The problem is, even if it starts by mid-September… you might have a cuing problem even if you have the large funds coming in.”
However, he noted that “there’s so many guys waiting in the wings, the typical positional type, everybody is looking around… who will be the first?”
Sicat added that “people are waiting for the advise of their bankers. It’s kind of like, just get ready and wait. In other words you wait to pull the trigger if its ready.”
But he also cautioned issuers who are waiting for the right time to launch their IPOs that “sometimes you get overly optimistic or greedy about your own valuation.”
A drop in the number of initial public offerings this year is seen to hit the PSE’s revenues and profit which relies heavily on listing fees paid by issuers.
The PSE was earlier hoping to post a net income of R600 million to R700 million this year or to at least match the R624 million it earned in 2012.
Last month, Sicat said revenues are on track while management has been disciplined with expenses. However, he noted that the occurrence of an unusual market event can derail earnings for 2013.
The PSE has been registering a smaller growth rate in revenues because of the slowdown in trading volume in July and August.
“Clearly right now volume got reduced partially because of the Bernanke situation in end May,” Sicat said adding that August being the “ghost month” in the Chinese calendar also contributed to depressed trading activity.
However, Sicat said that, “when you look at the fundamentals of listed companies, these remain strong.” Profit guidance for listed companies is for a double-digit growth.
While the recent weakness of the market has forced some companies to postpone their planned initial public offerings, Sicat said follow-on offerings by firms already listed will continue, he said.
“We’re expecting new issuances by companies this September trying to catch the window before the year-end,” Sicat said.
Sicat said “the test will come in September,” when everyone is waiting to see whether trading and listing activity will recover.