AS we move to the end of 2023, I would much rather be writing about the unease I feel that something is just not right. Governments will now do whatever they can to crush dissent and oppress the truth even as the collapse in confidence of governments around the world is unfolding. Then again, you are probably tired of my moaning and raving about the state of the world.
I could of course follow the lead of other local columnists and give you my brilliant ideas—after first detailing to you all of the problems —on how to “Fix The Philippines.” Not going to happen. I guess I do not feel as brilliant as they do. However, I take some comfort from not having to put my sons on an airplane to a foreign country as soon as they finished their schooling. My sons will participate, maybe become leaders, in the struggle to have the Philippines reach a higher potential.
I read this recently: “If you’re still arguing over Covid you are a nitwit. Get over it. Yes, it was a giant lie and evil people hurt good people. Now it’s time to stop whining and presenting your ‘evidence’ and start making sure it can’t happen again.”
Novice stock market investors should put their money in companies that they know, understand, and have a favorable view towards. Common sense. Who of the potential retail investors that the PSE wants to attract does not know—and probably is a client of—Jollibee, BPI, San Miguel, Puregold, Emperador, or Century (Tuna) Pacific Food Inc.?
But the companies that should be a part of the Philippine Stock Exchange are not doing IPOs. For example. This corporation has been in business since 1946 and is now—in my opinion—the best snack food company, along with the best doughnut brand, in the Philippines.
Another non-listed company makes food products that I guarantee you have at least one of in your kitchen cabinet. When Uniwide went bankrupt, this non-PSE corporation was owed multi-millions in unpaid receivables for their products and also makes the generic brands of their products for every major supermarket chain.
Conglomerates are big on the PSE. This conglomerate has business interests in hospitality, automobiles, media, and property development. But you probably have never heard of the mother company behind them all. And yet another un-IPO’d made a veritable fortune selling their products during the pandemic.
When I consult with companies, I tell the owners that doing an IPO is like becoming a father. You have to think and act like a “Dad” long before “The Birth.” And that is one reason why many family-owned corporations are not interested in an IPO no matter how much money they can raise by selling a portion of their equity.
It is no secret that at some point, a company starts keeping two sets of books; one that is accurate and truthful and another for the taxing authorities. Going public requires several past years of accurate, honest, complete tax returns, and therefore fully paid tax obligations. You think that might have something to do with family corporations having an aversion to going public?
An IPO prospectus must show a money-making company that is growing revenues and profits. What if for the last five years, the BIR thinks your money-making has been flat? A company cannot have it both ways and it is a dilemma that most family owners do not want to face.
Family corporations have enough headaches dealing with greedy second and third generation members. Shareholders justifiably believe a listed company has an obligation to help provide liquidity and help share price reflect corporate value. Last Monday, out of 282 listed stocks, 207 traded less than P100,000. Eighty-seven issues traded zero shares. Companies with little or no trading included Filinvest, Golden MV Holdings, LBC Express, PAL Holdings, and Cosco Capital, among others.
The PSE must sensibly answer this question. “My company struggled and then became successful in the 25 years we have been in business. Why do I need the PSE?”
Okay, I will answer it: To raise money for expansion and/or enhancement and/or to reduce debt. But honestly, going into 2024, if my family owned any of the corporations I hinted at above, my response to the PSE would be “I’ve got your number. I’ll call you. Promise.”
E-mail me at firstname.lastname@example.org. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.