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Stock Commentary

North Star Meat Merchants IPO approved by the SEC

Merkado Barkada
North Star Meat Merchants IPO approved by the SEC

The Securities and Exchange Commission (SEC) approved the application of North Star Meat Merchants [NSTAR 10.00 pre-PSE] [link] to raise P4.5 billion through an IPO which is tentatively scheduled for June 10, with an offer period between May 30 and June 3.

NSTAR will sell a blend of primary, secondary, and over-allotment shares at a maximum price of P10.00/share, and use the proceeds to expand its cold storage capacity through expansion and new construction.

NSTAR also plans to use the proceeds from the IPO to fund a cash-buying strategy for its busy period inventory to further amplify profits for the period.

NSTAR bills itself as the “company behind the Country's major supermarket chains and the largest pork and beef vendor in the modern trade channel”.

If you’ve ever purchased meat from inside an SM, you’ve likely purchased it from NSTAR.
 

MB BOTTOM-LINE

I’m happy to see this IPO making its way through the process; the next step, of course, is for NSTAR to receive PSE approval for its IPO, and with that approval, secure its spot on the PSE calendar for its pricing day, offer period, and actual listing day.

Until then, the tentative dates in NSTAR’s preliminary prospectus should only be viewed as a loose guideline.

The PSE seems to be (overly?) concerned with IPO overlap, so the fact that the tentative dates for the IPO offer period (May 30 through June 3) directly overlap the PSE-approved IPO offer period of VistaREIT [VREIT 2.50 pre-IPO] would suggest to me that we might see NSTAR’s dates slip a little.

PSE approval can take anywhere from a matter of a couple of weeks (as with VREIT), to multiple months (as we saw happen with Citicore Energy REIT [CREIT 2.45]).

Aside from combing over the guts of the deal, I’m just excited for the opportunity to invest in a different kind of company. NSTAR isn’t like anything else on the PSE, and the best part (for me) is that large components of its business plan involve logistics-related things like trucking, distribution, cold storage, and co-located processing.

Increased meat consumption is a traditional consequence of a growing middle-class, so if your investing thesis involves bets on the growth of the PH middle-class or the expansion of the grocery store delivery channel (away from sari-sari stores and wet markets), then NSTAR may be a stock that you’ll want to do your due diligence on.

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

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