MerryMart (MM) 400% value surge bolsters case for ABS restructuring
MM surge in value could not be justified by fundamentals. Before the public offering (IPO), MM’s balance sheet is at 915 Million Pesos. The proceeds of the IPO at 1,500 Million Pesos (1.5 Billion) doubles MM’s balance sheet. However, the balance sheet growth will not translate into a magnificent net income growth. There is a high barrier to entry in the non-discretionary retail industry. The dominant players are well entrenched and have long established an economy of scale in their operations. SM Investments ( SM ) is well entrenched not just in SM Malls but also in third party-owned locations with Save More, Watsons, SM Supermarket, Waltermart, and Alfamart. It is not just SM but also Robinson Retail Holdings ( RRHI ) with Robinson Supermarket, Ministop, The Generics Pharmacy, Rustan’s, etc.; Puregold ( PGOLD ) with Puregold, S & R, ThreeSixty Pharmacy, etc.; Philippine Seven Corporation ( SEVN ) with7-11; Metro Retail Stores Group, Inc. ( MRSGI ) with Met...