Metrobank Stock rights offering
There are certain questions that are important to us particularly in our investment decision with Metrobank.
1. What are stock rights offering?
2. How will it affect the company?
3. How will it affect the price?
The stock rights offering is a company’s effort of increasing capitalization thru offering existing shareholders rights to buy additional stock in proportion to their existing number of shares they have. These SRO’s are usually sold at a discount and limited time offering. As in the case of Metrobank, 1 share is offered at a discount for every 3.976 common shares a shareholder has.
As a ball-park figure, if you have 4 stocks hence you are entitled to buy 1 stock at a discount of about 20% discount from the current price. If you trust the fundamental valuation of Metrobank, you will avail this deal.
Metrobank is projecting to get 60 Billion infusions of capitalization from this SRO hence this infusion will increase their bank's functions and expansion plans. I believe that the Metrobank’s expansion plan is timed on the expectation of Duterte’s build build build plans and the TRAIN law that will provide more economic leverage and liquidity from the regular working man.
In the short term, expect the Metrobank stocks to bottom down in the 80’s after which I would expect a gradual pick up due to the company’s solid fundamentals
Good luck and God Bless