Is MerryMart finally the one great unicorn IPO where you can find value and finally invest in? Is MerryMart a good investment? Let’s find out in this MerryMart IPO review…
Its important to know if an IPO is a good investment or not. You want to catch the unicorn while its still small and ride its journey to the top. But those unicorns are just that – rare occurrences. If value investing is your goal, its very hard to find value in things like IPO. After all, IPO means Its Probably Overpriced.
One particular stock is MerryMart. Let’s first take a quick look at what is it and why should we invest in it (if ever).
|Offer||1,594,936,709 Common Shares|
|Offer Price||₱1.00 per share|
|Offer Period||May 27 to June 5|
|Listing Date||June 15|
The market capitalization at that price is P7.59 billion.
MerryMart opened its first supermarket in April 29, 2019 as stated on their website. They intend to grow the company by building MerryMart branches all over the Philippines to up to 1,200 branches by 2030. And they intend to do that by franchising.
MERRYMART Grocery Centers Inc. celebrated two milestones last April 29, 2019. The first is the opening of its first supermarket at the Ground Floor of DoubleDragon Plaza, DD Meridian Park, Bay Area, Metro Manila, and the setting of MERRYMART’s 12-12-12 Vision 2030.
MERRYMART aims to cover all the grocery retail categories from small, medium and large grocery retail formats. MERRYMART will have three (3) grocery retail formats:
– MerryMart GroceryMerryMart website
– MerryMart Market
– MerryMart Store
From 1 store in 2019, they already did an IPO. At least they are honest about the current standing of the business. The question is how did they got approved by the PSE and SEC to do an IPO without any track record?
Looking at the Financials of MerryMart
P28 million in income with P7.59 billion in market cap. That would translate to a P/E of 271. Just think about it, you are buying the future, if you bought at this price.
If you could read the fine print on the above image, at the very bottom part of the image.
(1) Excluding the impact of PFRS 16 on Other operating expenses for the year ended December 31, 2019, Other operating expenses would be ₱88.8 million
There’s actually a -₱88.8 million expense that was excluded. So your guess is as good as mine. I think they’ll gonna brute force this one, expand heavily to catch up to the bleeding financials and hopefully, more volume would make up for the lack of income. Is that why they still proceeded with the IPO even if its a bad time? Are they running out of cash?
So as always, I don’t think this is a good investment as a value investor. But if you’re into more speculative, high growth business, then it might be your cup of tea. It might turn out to be one of the biggest in retail, who knows? But for now, I’ll stick to the very wise advise of Charlie Munger, “If there’s no cashflow, just say no.”
I hope you find this MerryMart IPO review helpful. Leave in the comments if you want me to review more stocks in the future.