Shares in AllHome Corp.'s initial public offering, the biggest in the Philippines in three years, stand a good chance of gaining when they start trading Thursday, according to analysts and investors.
That's because the home improvement and furniture retailer priced its IPO at the lower end. Also, with overseas demand exceeding the allocation limit for non-locals, foreign investors could provide support for AllHome's share price, they said.
The lower IPO price made AllHome's valuation "attractive" while "there's pent-up demand from foreigners," who didn't get all the shares they wanted, said Noel Reyes, chief investment officer at Security Bank Corp.
AllHome is the nation's biggest IPO since Pilipinas Shell Petroleum Corp.'s $390 million flotation in 2016. It's the third company go to public this year in the country, while the nation awaits its biggest IPO from Metro Pacific Investments Corp.'s hospital unit. Axelum Resources Corp., a coconut products producer that sold shares before AllHome, was priced at the lower end of its range and sank 6.2% when it began trading on Oct. 7.
Allhome's IPO raised 12.94 billion pesos ($250 million) from the sale of 1.125 billion shares at 11.50 pesos each - the low end of its indicative price, with the top end at 16 pesos a share. The amount doesn't include an additional 168.75 million shares set aside as an over-allotment option.
At its IPO price, valuation is at 28 times estimated 2020 earnings, making AllHome comparable with Wilcon Depot Inc., a retailer of hardware and home building materials, according to Rachelle Cruz, an analyst at AP Securities Inc.