Discovery World stocks slide in market debut

MANILA, Philippines - Stocks of Discovery World Corp. plunged in its first trading day in the local bourse, dragged by across-the-board investor pessimism and the supertyphoon’s effect on the tourism sector.

Discovery World’s shares plummeted 11.59 percent to close at P2.90 apiece, which is also the intraday low. Its shares never hit past the initial public offering (IPO) price of P3.28 per share.

“Even assuming there is a good catalyst, if market sentiments are bad, you will be dragged,” said Miguel A. Agarao, analyst at Wealth Securities Inc.

Agarao said the tourism sector specifically was hit by SuperTyphoon Yolanda.

Even as its properties were damaged by Yolanda, slightly weighing down profits, Discovery World is gearing up for expansion as it remains bullish on the tourism sector, its top official said.

“The shares were fully taken up,” Discovery World president John Y. Tiu told reporters following the company’s listing at the Philippine Stock Exchange (PSE) yesterday.

The upscale resort owner and operator raised P551 million from the sale of 168 million common shares, making it the eighth firm to list on the local bourse.

Proceeds of the fundraising will allow the company to expand its operations. Specifically, it will spend P120 million for the acquisition of Discovery Fleet and Palawan Cove early next year, P325 million to pay existing debts and P71.45 million for working capital.

“We believe strongly in the growth of the Philippine tourism industry. While the country is currently experiencing some slowness in growth because of the typhoon, we believe moving forward, the prospects for the tourism industry is extremely bright,” Tiu said.

“The country’s tourism industry is expected to remain a bright spot in our economy. As such, Discovery World is well-positioned to benefit from the sector’s bullish prospects especially as its resorts are located in two of the top favorite island destinations in the country,” said PSE chairman Jose T. Pardo.