Bloomberry Will Likely Replace Converge, not MPI, in the PSEi
For the last several weeks, it has been talked about by analysts in every news outlets that Bloomberry Resorts Corporation (BLOOM) is the number one candidate that will replace Metro Pacific Investments Corporation (MPI) should MPI’s delisting plan pushes through. Aside from revising MPI’s tender offer from Php4.63 to Php5.20, in its last disclosure regarding the matter, MPI noted that its board unanimously approved to schedule the holding of a Special Stockholders’ Meeting on August 8, 2023. It added that the only agenda item to be submitted for the approval of the shareholders on the SSM is the approval of the voluntary delisting of MPIC from the PSE. This means that assuming the agenda is greenlighted, then a tender offer period, which will run for about a month, will likely take place only thereafter. This also means that a possible delisting of MPI will only take place on September at the soonest.
As some of you may know, there is actually a scheduled PSEi rebalancing every August. The changes of which are usually announced either at the last week of July or the first week of August with the changes usually effective during the middle of the month. With the scheduled rebalancing coming first, it appears that BLOOM, based on the ranked market capitalization and free-float adjusted capitalization, will indeed be the one to re-join the the Philippine Stock Exchange Index. Bloomberry has a market-capitalization of Php117.63 billion and a free-float adjusted market capitalization of Php39.78 billion. With a market capitalization of Php142.33 billion and a free-float adjusted market capitalization of Php51.70 billion, MPI is still ranked 24 and 22, respectively, among its peers in the index. The lowest ranked stock? It is Converge ICT Solutions, Inc. (CNVRG) with a market capitalization of only Php77.61 billion and free-float adjusted market capitalization of only Php23.99 billion, giving it the lowest scores in both metrics. So given these snap shots, we can say that Bloomberry will highly likely be added back in the PSEi in the August rebalancing while the one that will likely be removed is Converge.
Should MPI’s delisting pushes through on September at the soonest, then the next candidate to replace it by then will be Century Pacific Food, Inc. (CNPF). CNPF, given its market capitalization of Php90.33 billion as of the first week of July, is the biggest among the non-PSEi members (next to BLOOM).
So what’s the trading play here? Bloom has been gaining strength in the last few weeks as investors anticipate its inclusion in the PSEi. It is, therefore, wise to take profits on it either on announcement date or at the exact rebalancing date (day and even time of its inclusion in the PSEi). We can opt to rebuy as it pulls back and normalizes days after the rebalancing as it remains to be one of the relatively stronger names among all listed stock. On the other hand, it is still possible to get on board on CNPF since not much about its potential inclusion in the index has been talked about by the market yet. It may therefore stage some degree of a run should it be included in the index. If it does not make the cut in the index then we can fall back on the fact that it is still poised for an upside swing from a technical standpoint.
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