Century Pacific makes strong market debut

MANILA, Philippines - Century Pacific Food Inc., the Philippines’ largest canned goods producer, debuted strongly in the local bourse yesterday, as company executives committed to improve gross profit margins and revenues this year.

Following its P3.2-billion initial public offering (IPO), shares of Century Pacific ascended to P15.50 at the opening bell, up 12.72 percent from the offer price of P13.75 apiece. It hit an intraday high of P16.04 before closing at P15.20 each, more than a 10th higher than the IPO price.

“We intentionally priced at a discount to some of our comparable companies and other consumer counters,” Century Pacific president and CEO Christopher T. Po said in a briefing.

Eduardo V. Francisco, president of issue underwriter BDO Capital and Investment Corp., said the second IPO in the local stock exchange this year was 3.5 times oversubscribed, with nearly 70 percent of the shares taken up by institutional investors.

“We saw very strong domestic demand and follow-on trading in this purely domestic issue,” added Stephen CuUnjieng, chairman for Asia of financial adviser Evercore.

Nisha S. Alicer, research strategist at DA Market Securities, said “the confidence in the company, management and growth prospects translated into the stock price performance in its debut.”

Century Pacific raised P3.157 billion in fresh capital from the sale of 229.654 million shares. Proceeds from the IPO will be used to pay short-term obligations, complete a tin can manufacturing factory and dairy mix plant facility in Taguig, and support general working capital given an intensified marketing and sales initiative or possible acquisition.

For this year, Century Pacific will more than double its earnings on the back of improving gross profit margins and increasing sales.

Net income is forecast to hit close to P1.5 billion while revenues will grow in the mid-teens level, Po said. Last year, profits of Century Pacific hit P690.29 million as net sales reached P19.06 billion.

Century Pacific is a beneficiary of lower cost of raw materials like meat and tuna, Po said. “We managed to lock in the price of these key commodities. We see benefits now because the profit margins in 2014 better than in 2013,” he said.

The Po family’s canned goods producer will also expand its presence in other market segments like coconut water and premium meat products.

Century Pacific, the company behind leading brands Century Tuna, Argentina and 555, is the Philippines’ largest producer of canned goods cornering 84.1 percent of the domestic canned tuna market, 42.5 percent for corned beef and 25.6 percent for meat loaf.

It started operations in 1978 when businessman Ricardo S. Po Sr. set up Century Canning. Other brands of Century Pacific include BlueBay, Wow, Birch Tree, Angel, Fresca, Lucky 7 and Shanghai.