Quick Take: Alternergy's stab fund and 2 more market updates
Monde Nissin [MONDE 9.00 8%; 575% avgVol] [link] announced that, in March, it bought US $2 million worth of preferred shares of a US-based alternative meat producer named Terramino. The investment gave MONDE a stake representing 1.89% of Terramino’s outstanding capital stock. Terramino is focused on finding ways of incorporating koji, which is a strain of fungus, into fake meat products that are intended to resemble turkey, ham, and other protein types.
MB Quick Take: Not great news for those hoping that MONDE had learned its painful lesson with alternative meats. Sure, this investment was made before MONDE announced the write-down of its own Quorn brand’s value, but it’s not like Quorn’s re-valuation would have come as a surprise to MONDE. They’d have been painfully aware of Quorn’s struggles and the alternative meat industry’s struggles when this investment was made. Still, it’s maybe just a little reassuring that Terramino is running with this “koji” branding of its protein, instead of “fungus strain”, but that seems like a really small victory.
Alternergy [ALTER 1.22 3%; 27% avgVol] [link] revealed that its stabilization fund is 41% depleted. ALTER’s stabilization agent purchased 10 million shares on ALTER’s IPO day, plus an additional 37 million shares on Tuesday and Wednesday of last week, to bring its total stabilization fund usage to just over 47 million shares, which is around 41% of its 115 million share quota.
MB Quick Take: I had predicted that ALTER would finish the week with around 20% of the fund depleted, so I was off by a considerable margin. The stock has been “heavy” since its debut, and is still resting below its IPO offer price. At this pace it’s looking like the fund could run out of powder before its time-limit death in late April.
RL Commercial REIT [RCR 5.75 1%; 35% avgVol] [link] reported sustaining a substantial paper loss in FY22 due to the impact of rising interest rates on the fair market value (FMV) of its investment properties. After recognizing a P5.5 billion increase in FMV of its properties in FY21, RCR said that it recognized a P10.0 billion decrease in FMV of those properties this year, dragging its comprehensive net income to a net loss of P5.6 billion. RCR said that, excluding the FMV adjustment, its net income was actually up 62% to P2.7 billion based on improved rental revenues, management dues, and the contributions of new assets to the income mix.
MB Quick Take: The FMV adjustment is, as far as I can tell, a downstream consequence of the unprecedented rise in interest rates through FY22 that were implemented to fight inflation. Commercial property values are particularly sensitive to interest rate increases. To put it bluntly, the higher the interest rate, the lower the income potential of the property, and the less buyers are willing to pay for an asset. Check out this article from about a month ago for a more detailed explanation. That said, I do not have a great gasp on how these valuation adjustments will impact RCR (and the rest of the REIT sector) going forward. Anyone with a good understanding of this accounting, please reach out I'd love to pick your brain!
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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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