Cemex shares surge after P2.1-B tender offer plan

INVESTORS loaded up on shares in Cemex Holdings, Philippines, Inc. after its parent company announced an offer to acquire more shares in the local unit to solidify its stake.

Data from the Philippine Stock Exchange (PSE) show trading of the cement manufacturer’s shares reached 421.70 million worth P473.93 million from Jan. 23 to 27.

The company’s stock price closed at P1.18 on Friday, 42.2% up from the closing price of P0.83 the week before. Its share price has nearly doubled from its 61-centavo finish on Dec. 29, 2022.

Globalinks Securities and Stocks, Inc. Head of Electronic Trading Mark Crismon V. Santarina attributed the stock’s steep price increase to news of its parent company’s tender offer.

In a disclosure on the stock exchange, Cemex said that its parent company, CEMEX Asian South East Corp. (CASEC), plans to put up a voluntary tender offer of 1.614 billion outstanding common shares at P1.30 apiece. This means CASEC intends to hike its stake in Cemex to 89.86% through a P2.1-billion tender offer of up to 11.97% of the unit’s issued and outstanding common shares.

“The tender offer is proposed to be conducted for the purpose of increasing and consolidating the bidder’s (CASEC) interests in [Cemex],” the disclosure said. It also emphasized that it does not intend to delist Cemex in the local bourse.

CASEC also plans to continue strengthening Cemex’s asset portfolio in the region, which could mean “an evaluation of strategic investments or divestments.”

Meanwhile, Philstocks Financial, Inc. Research Analyst Claire T. Alviar said traders took advantage of a chance for short-term gains.

“Following the tender offer report disclosure, [Cemex] surged immediately by almost 15% since Cemex’s parent is willing to buy shares at a premium. Many traders took this opportunity to have a short-term gain of around 15% to 28%, depending on their entry price. However, this is only a good opportunity if you bought Cemex below the tender offer price of P1.30,” Ms. Alviar said in an e-mail.

The offer of P1.30 per share by CASEC translates to about a 51.2% premium over the Jan. 23 trading price of P0.86 apiece. The disclosure added that the offer is a 68.5% premium over the one-month volume weighted average price (VWAP) of P0.772 and a 64.5% premium over the one-year VWAP of P0.791.

The tender offer is scheduled on Feb. 16 and will run until March 16. Meanwhile, the cross date for tendered shares will be on March 29 and will be settled the following day.

Mr. Santarina foresees Cemex to post a P940-million net income for 2022 and P1.002 billion for 2023.

“The high demand for construction materials, driven by government infrastructure projects and the reopening of the economy, may lead to improved earnings for the company,” Mr. Santarina said in a Viber message.

Cemex posted a net loss of P552.07 million in the third quarter last year, a reversal of the P93.55 million net profit in the same quarter in 2021. This brought its nine-month net loss to P818.77 million, reversing the P897.22 million net income in the same period in 2021.

Meanwhile, Ms. Alviar expects Cemex to stay at its current price level until the end of the tender offer period.

“After that, we may expect Cemex to decline or return around P1.00 since investors can no longer sell their shares to Cemex’s parent at P1.30 per share. Moreover, we do not expect this transaction to impact Cemex’s business operations significantly,” she added.

Ms. Alviar placed Cemex’s support and immediate resistance levels this week at P1.00 and P1.20, respectively.

For Mr. Santarina, Cemex “will keep moving in the range of P1.10 to P1.25, and we could expect to see some support at P0.90 and resistance at P1.20.” — A.O.A.Tirona