CALATA - An Empty Can

Calata's first trading day closing at +2.67% is not impressive for its much hyped IPO (over subscription was claimed in so many fora). In fact, if not for Sun Securities buying up at the last 7 minutes for P7.7, it could very well have ended flat (0% a7 P7.5) or even negative as before Sun started buying up, it was at P7.45 or -1%. Sun Securities ended up the top buyer, buying 61% of the total sales.

 

In my humble opinion, CAL has no solid assets to boast of. As the largest combined distributor of agrochemicals, feeds, fertilizers, veterinary medicines and other agricultural products of big manufacturers, I will classify it at best as an A1 service company which main asset is its relationship with its principals and ultimately the quality of its service to its principals' ultimate client, the farmers. It has no branded product of its own. It has only a successful distributorship behind its name. 

The god of green market.

I accessed its website and reviewed the prospectus. The various business risks of Calata were enumerated and I would say that the total risk in investing in this stock is too much for just a 5% after tax profit as shown in its 2011 FS. The GP is just 11.35%! Even if, with the divine intervention of the Mighty Hulk,  it will show strength tomorrow and turn green, I will not invest a single centavo in it.