Random Musings: Empire East (ELI – P0.47) Celebrates 10 Years of Listing
Empire East recently celebrated its 10th year listing anniversary. How time flies! I remember vividly in 1996 that ELI was one of the most anticipated Initial Public Offering (IPO). The issue was offered at a “fung-sui” adjusted price of P12.88 per share. I guess the “88” bodes well for the issuing company.
The offering was a success. It reached a high of P17.25 on its first day of trading. It made Megaworld – its parent company lots of money through the secondary sale of its stake in ELI. It generated additional funds for ELI through its primary offering. For a while, Andrew Tan was the undisputed “King of the Hills”. He has US$400m – roughly P21bn in current peso, in war chest to compete with the well entrenched “Castilaloy” property developers. The market capitalization of ELI and Megaworld combined is in excess of US$1.0bn. This made the Ayalas look like the friars of the forgotten past.
But the reign did not last long. As in sex – it always feels the best just before it ends. By Q297, all hell broke loose. The Thai Baht was floated triggering the now infamous Asian Financial Crisis of 1997. The crisis spread like wild fire across the ASEAN region with every asset class being sold down to its knees. Share price of ELI dropped to as low as P0.41 per share.
Looking back, the IPO of ELI ushered in the 7 year long bear market that ended in 2003. Hopefully, its 10th year listing anniversary should herald the continuation of the bull market that we are seeing now.
What have we learned from this?
1.) Two – and only two factors drive share price: earnings and growth. ELI still has not recovered from its pre-crisis high because its earnings are nowhere near the levels it predicted 10 years ago. At current levels, ELI is still 90% off its split adjusted peak of P4.00.
2.) Bull markets always end in a nasty fashion. The bull market of the early 90’s was driven by the property sector. On the flip side, this holds true as well. This is no different from the bursting of the internet bubble that drove NASDAQ down by almost 70% in one year.
The offering was a success. It reached a high of P17.25 on its first day of trading. It made Megaworld – its parent company lots of money through the secondary sale of its stake in ELI. It generated additional funds for ELI through its primary offering. For a while, Andrew Tan was the undisputed “King of the Hills”. He has US$400m – roughly P21bn in current peso, in war chest to compete with the well entrenched “Castilaloy” property developers. The market capitalization of ELI and Megaworld combined is in excess of US$1.0bn. This made the Ayalas look like the friars of the forgotten past.
But the reign did not last long. As in sex – it always feels the best just before it ends. By Q297, all hell broke loose. The Thai Baht was floated triggering the now infamous Asian Financial Crisis of 1997. The crisis spread like wild fire across the ASEAN region with every asset class being sold down to its knees. Share price of ELI dropped to as low as P0.41 per share.
Looking back, the IPO of ELI ushered in the 7 year long bear market that ended in 2003. Hopefully, its 10th year listing anniversary should herald the continuation of the bull market that we are seeing now.
What have we learned from this?
1.) Two – and only two factors drive share price: earnings and growth. ELI still has not recovered from its pre-crisis high because its earnings are nowhere near the levels it predicted 10 years ago. At current levels, ELI is still 90% off its split adjusted peak of P4.00.
2.) Bull markets always end in a nasty fashion. The bull market of the early 90’s was driven by the property sector. On the flip side, this holds true as well. This is no different from the bursting of the internet bubble that drove NASDAQ down by almost 70% in one year.
posted by jack galt at
9:26 PM
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