Stock Commentary

Citicore Renewables used 17% of its stab fund last week

Merkado Barkada
Citicore Renewables used 17% of its stab fund last week
Image by Merkado Barkada

Citicore Renewable Energy [CREC 2.70, up 0.4%; 7% avgVol] [link] disclosed its first stabilization fund report, showing that its stabilization agent (UBS AG) purchased 29,784,000 shares of CREC at an average price of P2.69/share from June 7 (the date of CREC’s IPO) through June 14. CREC’s stabilization fund has the ability to purchase up to 178,572,000 shares. The fund has used 16.6% of its quota through the first 27% of its permitted existence.

MB bottom-line: The CREC IPO has felt heavy, but the overall volume has been relatively light. The price has never gone lower than P2.69/share, which means that the stabilization fund has done a good job of limiting the downside for IPO buyers, and/or there hasn’t been a great deal of selling pressure. Only about 1% of the public float traded in CREC’s first day of trading, and only an amount equivalent to about 3.5% of the float was traded in the first week. The overall impression I get is that this was a very institutional listing. That would explain (to me at least) why there has been so little turnover of the shares in the first week of trading, and why it’s been so relatively easy for the stabilization agent to soak up whatever selling pressure there has been with such a modest amount of its fund’s resources. The feel of the IPO so far is giving off Repower [REDC 5.40 unch; 99% avgVol] and Alternergy [ALTER 0.78, up 4.0%; 224% avgVol] vibes in terms of how closely those stocks stayed to their respective offer prices through the stabilization fund period. The stock’s behavior actually reminds me a lot of how AllHome [HOME 0.88, up 1.1%; 36% avgVol] behaved, which I think speaks to the institutional-heavy buyer profile. I don’t make any of these references to suggest that CREC could have a post-stab pop like REDC (+8%), a drop like ALTER (-39%), or an absolute Titanic-after-it-hit-the-iceberg disaster like what happened to HOME (-92%). Perhaps it’s too early to tell.  



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