Balai Ni Fruitas shares plunge 7% on market debut

By Luisa Maria Jacinta C. Jocson, Reporter

SHARES in Balai Ni Fruitas, Inc. ended lower by 7.14% or five centavos to P0.65 on market debut on Thursday, with analysts blaming inflation and rising commodity prices for the stock’s fate.

The firm listed 1.49 billion primary and secondary shares on the small, medium, and emerging (SME) board of the Philippine Stock Exchange (PSE). It trades under the ticker BALAI.

The company earlier announced that it would offer to the public up to 325 million primary common shares priced at up to 75 centavos each and up to 50 million secondary common shares held by selling shareholder Fruitas Holdings, Inc.

But on June 14, it cut the price of its initial public offering shares to P0.70 each. The offering has an overallotment option of up to 37.5 million common shares.

In its disclosure on Thursday, the company announced that a total of 37.5 million option shares at 70 centavos apiece were sold during the offer period.

Proceeds from the offer will be primarily used for store network expansions, with the remainder to be used to set up a commissary and for potential acquisitions.

The firm earlier announced that it was eyeing the addition of 120 new stores by 2024 in the National Capital Region and other areas across the country.

Balai Ni Fruitas is a food and beverage company that offers coconut-based beverages and desserts through brands such as Buko Ni Fruitas, Fruitas House of Desserts, and Balai Pandesal. It is a wholly-owned subsidiary of Fruitas Holdings.

“Balai’s listing is significant because it broadens the mix of companies listed on the SME Board. It will be the first food and beverage company to join the SME Board. Balai’s listing is also symbolic because it proves that the Exchange can be accessible to SMEs for their capital raising requirements,” PSE President and Chief Executive Officer Ramon S. Monzon said in a statement.

“After all, SMEs are the main drivers of the country’s economic growth. SMEs contribute 63% to total employment and 40% to our country’s GDP (gross domestic product). In fact, the recovery of the global economy and the Philippine economy from the debilitating effects of the pandemic depends to a great extent on the ability of the SMEs to reopen and get back to business as usual,” he added.

Analysts said that the lukewarm reception of the firm’s listing was due to inflation fears amid skyrocketing commodity prices.

“Balai’s investor sentiment is slightly unfavorable because the firm is engaged in baked goods, and baked goods businesses are vulnerable to inflationary pressures. The main ingredients in baked goods are wheat and sugar, which are either in short supply or at absurdly high prices,” Marc Kebinson L. Lood, Timson Securities, Inc. head of online trading, said in a Viber message.

Mr. Lood added that the central bank’s forecast of quickened inflation in June likely caused the stock to slump before market close.

“The rapid rise in inflation has impacted market sentiment, and investors are waiting for the Bangko Sentral ng Pilipinas’ next move to combat inflation,” he said.

“Foreign funds sold around P800 billion today, which pushed the index down. I think that investors are cashing out due to the looming recession possibly next year and increasing inflation,” Mercantile Securities Corp. Analyst Jeff Radley C. See added.