BUSINESS BANTER: Clear skies ahead for Cebu Pacific

By Maiki Oreta, ABS-CBN News

Posted at Oct 28 2010 12:45 AM | Updated as of Dec 04 2010 01:05 AM

This is a blog entry of ABS-CBN's Maiki Oreta who covers business issues in the Philippines. Her blog, titled Business Banter, is her platform to share viewpoints, insights and intelligent rumors culled in between her formal coverages, as well as from coffee shop talks, boardroom buzz, and other sources.

While the market corrected (PSEi -.2% to 4,279.53), the shares of Cebu Air Inc. (CEB) went up up and away. Perhaps, the correction was accentuated by the fact that investors opted to lighten up on certain positions to funnel more cash into the newest entrant in the market and the first IPO in since Q3 2009!

The shares of CEB stayed above water throughout the trading morning, above the offer price of Php 125.00/share. They reached a low of Php 128.00 and a high of Php 133.50, before ending the day with a gain of 6.4% or Php 8.00 to Php 133.00/share.

Through the exercise, CEB was able to raise about Php 26.8 billion or $611 million (a record amount in dollar terms for a local IPO).

Thanks to this added war chest, they’ll be able to expand their fleet and consequently their passenger base. You can only suspect that earnings will rise in tandem with this, especially since the carrier’s
President and CEO, Lance Gokongwei has ambitious plans.

He says they plan to double their passenger count from the current 10 million to 20 million, by 2014. Apart form that, they also plan to fly to more areas within the Asia-Pacific region, or to areas within a four and a half radius from the Philippines. This will put CEB neck and neck with Asia’s other budget carriers.

Now that will be a sight to see!

In the meantime, don’t go crazy trying to peg exactly where this stock’s price is headed. Instead, sit back relax and just take somewhat of a cue from the other listed firms of the Gokongwei group, as their numbers alone speak volumes of the potential of this particular stock.

First, there is the holding firm, JG Summit Holdings. Year to date (Jan.- today) its up by a whopping 267.42% to Php 24.25/share while the shares of their food and beverage arm, Universal Robina Corporation are up by an astounding 172% to Php 44.20/share.

Want to be even more amazed??? Compare these figures (YTD) to other firms within their same industry, or even to just the PSEi!!!

So, with its stellar growth thus far and its sheer potential, I see CEB becoming a mainstay in people’s portfolios in the years to come.