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Philippine stock soars on Qatari fund's bet
A QATARI fund's bet in one of the world's most beautiful islands is driving this year's hottest property stock rally.
Premiere Horizon Alliance Corp, which is building one of the largest Philippine tourism estates, has more than tripled this year, beating all of its global peers with more than US$15 million in market value.
More gains may be coming, said chief executive officer Augusto Serafica Jr, with Qatar's Sama Global Investment about to release the funds to develop Premiere's 850-hectare property in the western island of Palawan.
Investors are hoping the money will revive the former film-making company, whose stock fell in seven of the past 10 years.
Sama is ready to lend Premiere more than US$280 million, about 16 times the builder's capital and 23 times its market value of 647 million pesos (S$16.6 million) as at December 2018, as soon as Premiere completes its requirements - it needs to provide documents including a business plan, said Mr Serafica, declining to give a timeline.
"It's a game-changing deal," he said in an interview on Wednesday. "This will get our tourism project off the ground. It will be our crown jewel."
Sama could be Mr Serafica's biggest coup since the investment bank that took Premiere public more than two decades ago brought him in in 2010 to "clean up the mess" from a failed gaming partnership with a South Korean investor. After restructuring the company, he sold that venture in 2014.
Palawan is home to the Puerto-Princesa Subterranean River, a Unesco World Heritage site, and is dotted with pristine beaches, limestone rock formations, forests and reefs teeming with marine life.
It was voted No 1 in Conde Nast Traveler's list of the world's best islands in January 2016.
While Premiere's rally is stellar, the shares have lost almost 30 per cent since a high in February. The volatility indicates the stock remains a speculative play, according to Rachelle Cruz, an analyst at AP Securities.
It's one of the many Philippine companies that are not covered by analysts, and its debt was three times its equity at the end of the third quarter.
Its valuation of almost 60 times earnings is about three times that of Philippine Stock Exchange Property Index members.
"It's a huge and attractive project, but because of the absence of details, many investors are cautious," Ms Cruz said.
Premiere's Palawan plan includes building five hotels, a golf course and three malls in three years. The developments could generate US$248 million in revenue from lot sales and memberships, plus an annual US$86 million income from hotels and leasing, Premiere estimated.
Talks are ongoing with a global luxury brand to come in as both resort operator and co-developer, with an agreement that could be signed at the end of June, Mr Serafica said.
He is also looking at improving Premiere's debt-to-equity position to attract institutional investors.
Mr Serafica plans to sell 15 per cent of the company later this year and use the proceeds for a push into mining, infrastructure and renewable energy once the Palawan project gains momentum.
"It's offending that some think the stock is purely speculative, but once everything pans out, this issue of credibility will be put to rest," he said.
"Somebody believed in our concept. Eventually, money will come in and we will deliver. Serendipitous things can happen." BLOOMBERG