COSCO moves to unlock value after being overtaken by MM in market capitalization

COSCO Capital is a conglomerate that owns 49.16% of the retail behemoth Puregold Price Club (PGOLD). Aside from its controlling stake in PGOLD it also owns a liquor distribution business, a real estate and property leasing business, a specialty retail company, and an oil and mining firm.

Despite having a total consolidated revenue of 126.2 Billion Pesos for the nine-month period ending on September 30, 2020, COSCO’s market value stood only at 38.44 Billion Pesos. COSCO’s market value is dwarfed by that of MM (MerryMart) which stood at 53.54 Billion Pesos. That is despite MM only generating a revenue of 2.4 Billion Pesos for the nine-month period ending on September 30, 2020.

COSCO is currently trading at 5.4 level which is believed to be grossly undervalued. The value of COSCO’s holding in PGOLD alone is estimated to be worth around 7 Pesos a share.

Heavily discounted by the market, COSCO moves to unlock the value of its businesses. COSCO plans to extract the value of its liquor distribution business by listing it through the backdoor. It will swap its holdings in the liquor distribution businesses with controlling shares of the listed shell company Da Vinci Capital Holdings (DAVIN) through a tax-free exchange.

DAVIN saw significant spike in trading volume recently and has grown to a market value of 7.31 Billion. Despite the impending transaction DAVIN have not yet soared to the moon.

The transaction just like any other value crystallization exercise of other conglomerates would eventually land COSCO a windfall.

This analysis is an independent viewpoint on publicly traded stocks in the Philippine market.  Accuretti Systems Inc. trades stocks in the Philippine market.

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