MANILA, Philippines – Shares of Medilines Distributors plunged by 30% in its debut on the Philippine Stock Exchange (PSE) on Tuesday, December 7, the worst in recent trading history.
From Medilines’ initial public offering (IPO) price of P2.30 apiece, its shares opened 13% lower, then hit the floor price of P1.61.
“MEDIC needed a medic,” a trader commented, referring to the company’s ticker symbol.
The average price of the stock was at P1.79 upon closing.
In recent years, companies that went public closed slightly lower from their IPO price on listing day. But in the case of Medilines, it fell to the lowest possible price for the trading day.
PNB Capital and Investment Corporation, the sole issue manager, lead underwriter, and sole bookrunner of Medilines’ IPO, said the equity issue was oversubscribed 2.5 times the offer size and was well supported by long-only domestic institutional investors.
PNB Capital added that the offer was “fairly priced” per their estimates, “given [Medilines’] dominance in the medical equipment distribution market.”
“Investors’ behavior is market-driven – there were headwinds and investors’ risk appetite may have been dampened. The market is two-way and there may be some investors who placed orders and needed liquidity ahead of the rest of the other investors for the upcoming IPOs,” PNB Capital said.
According to Japhet Tantiangco of Philstocks, Medilines’ price to earnings (PE) ratio estimates for 2021 and 2022 are at 27.68x and 21.90x, respectively.
“These are above the PE ratio average as of 1H 2021 of its regional peers of 21.60x. With this, Medic is considered relatively overvalued and this is the reason we see for its sell-off today,” Tantiangco said.
Medilines, led by tycoon Manny Villar‘s brother Virgilio Villar, was founded in 2002. It distributes medical devices, including diagnostics imaging, dialysis, and cancer therapy equipment.
In his welcome message during the listing ceremony, PSE president and CEO Ramon Monzon said: “I am pleased that the PSE was able to serve as the company’s partner in its fundraising activity. I hope that Medilines’ IPO will encourage other companies supplying products and equipment to the healthcare industry and especially those principally in the healthcare space to likewise consider tapping the equities market for capital.”
“I hope that this IPO will just be the beginning of bigger and better opportunities for Medilines to realize its vision of introducing more quality lifesaving innovations in the country,” added Monzon.
Medilines’ dismal performance was contrary to the performance of the PSE index, which managed to gain 0.2% on Tuesday. – Rappler.com