Korean chipmaker plans to exit PSE; P2.22 tender offer made

The bourse may see its third exit this year as challenging market conditions dampened SFA Semicon Philippines Corp.’s hopes of improving its share price.

Controlling stockholder SFA Semicon Co. Ltd. (SFA Korea) on Thursday said it planned to buy out the semiconductor manufacturer’s minority shareholders in a P454.35-million tender offer and voluntarily delist SFA from the Philippine Stock Exchange (PSE).

Trading of SFA’s shares will be suspended until 9 a.m. on Aug. 27 to allow the market to absorb the news.

In a regulatory filing, SFA said the 204.66 million shares owned by the public would be priced at P2.22 each.

While this is 48 percent above its closing price of P1.50 on Wednesday, Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., pointed out that this was still 30 percent below SFA’s initial public offering (IPO) price of P3.15 per share.

Its share price has also fallen by 32 percent since the beginning of the year.

“What the PSE has to look into is whether the tender offer price of P2.22 is fair to shareholders,” Colet said in a Viber message.

SFA, whose business involves semiconductor assembly, debuted on the local stock market in December 2014.

It explained that the tender offer price was based on the highest valuation of its shares as reported by a third-party firm, as well as its one-year volume weighted average price.

While the application for voluntary delisting has already been approved by SFA’s board of directors, this is still subject to the approval of its shareholders.

Under the PSE’s voluntary delisting rules, SFA Korea also needs to obtain at least 95 percent of SFA’s shares before the latter could exit the bourse.

SFA Korea currently owns 89.98 percent of the company, while the public holds a 10.01-percent stake.

Illiquid stock

According to Colet, SFA’s delisting was expected due to its “bare minimum public float, the lack of liquidity in their stock, and how the market has undervalued them for years.”

“With that, it makes more sense to take the company private and give minority shareholders an opportunity to exit,” he added.

Ron Acoba, chief investment strategist at Trading Edge Consultancy, also pointed out that SFA was “hardly trading,” and that investors “would not miss it.”

“SFA delisting does not mean much to the PSE as SFA, with a market capitalization of only P3 billion, only accounts for 0.017 percent of the total market capitalization of all of the local public companies,” Acoba said.

Once SFA goes private, it will even out the score between delistings and IPOs in the Philippines this year.

The stock market has so far seen two exits—Premium Leisure Corp. and Cebu Holdings Inc.—against three IPOs by OceanaGold Philippines Inc., Citicore Renewable Energy Corp. and NexGen Energy Corp.

Despite this, Colet said delistings may not overtake IPOs, as was the case in 2023.

Kervin Sisayan, head of research at Maybank Securities Inc., also said they were hoping to see more IPOs and listings “soon” as market conditions improve.

The benchmark Philippine Stock Exchange Index has so far risen by at around 5 percent versus the beginning of the year, with experts projecting a breach of the 7,000 barrier as investors cheered the interest rate cut.