Home' Trinidad and Tobago Guardian : February 11th 2016 Contents FEBRUARY 11 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
COVER STORY | BG5
When state-owned National Gas Company
offered 75.8 million shares in TTNGL for
sale last year at $20 a share, the IPO had
a total oversubscription of 1.77 times the
shares offered for sale. Each individual
application received up to the first 2,000 shares and 92.3 per
cent of the remaining balance (if any).
TTNGL began trading on the T&T Stock Exchange on Mon-
day, October 19, 2015. On its first day of trading, TTNGL s
share price increased by the full 15 per cent that local stocks
are allowed to move on a daily basis. It traded at $25 on
Tuesday, when more than 7.6 million shares changed hands,
and also on Wednesday that week.
Since its first three days, TTNGL s share price has declined
and last week the share---which is based on a company, Phoenix
Park Gas Processors, that produces propane, butane and natural
gasoline mostly for export---traded at $18.88.
From its peak of $25 on October 20 and 21, TTNGL has
declined by 24.5 per cent, causing concern among individual
In October7, just before it started trading, TTNGL s credit
rating was taken down a notch by CariCris from CariAAA
(foreign and local currency ratings) to Cari AA+ (foreign and
local currency ratings).
On November 19, one month after it began trading, TTNGL
reported a profit of $130.9 million for the nine-month period
ended September 30, 2015. In the seven-month period ending
September 30, 2014, the company made $276.2, which means
that it profit in 2015 was down more than 50 per cent from
the previous year.
In the financial report, NGC chairman, Gerry Brooks, said:
"As indicated at the listing, PPGL (Phoenix Park Gas Processors
Ltd) has embarked on several strategic initiatives which are
designed to enhance revenue and profitability."
The Business Guardian asked JMMB Securities
research analyst Michael Jordan and Godfrey Gosein
CEO of Republic Securities, a number of questions relat-
ing to TTNGL.
1. What do you believe are some of the
reasons for the continuous decline in
the company's share price?
I believe that some of the main reasons behind the decline
of the company s share price include:
• Investors in the market are very aware of the current state
of the global energy markets and are also very aware of the
underlying asset of TTNGL, Phoenix Park Gas Processors Ltd,
having significant exposure to these prices. Oil and natural
gas prices have been in a freefall with WTI falling 64 per cent
since mid-2014 and natural gas prices falling 68 per cent since
• In the current economic climate, some investors may be
more inclined to liquidate their investments and prepare them-
selves for "hard times." Some of these investors may have
incorporated the current trajectory of the share price in their
choice of which shares to liquidate, and try to cut their loss-
• Some investors may have had lower pre-IPO valuations
and are awaiting their buying opportunities. Many derived
prices were floating around before the shares floated, some
of which were significantly below the IPO price of $20. There
may be some investors that are simply waiting until the share
price falls into the range that makes it most valuable for them.
Energy prices on the world market have been struggling
since TTNGL started trading on October 19, 2015. Investors
are therefore wary that profits of Phoenix Park Gas Processors
Limited (PPGPL) and by extension TTNGL will decline in the
short term, hence the over exuberance to sell. And that is
forcing the price down.
2. Do you believe that there has been
panic selling taking place in the market
regarding the stock?
I would not classify the decline as panic selling. I think the
decline is more a function of differences in strategies and val-
uations than an all-out panic. Some investors took part in the
IPO with FCB in mind and sought to take advantage of an
early jump, others intended to hang on to the shares for the
long haul, and yet another group likely saw value but at much
lower levels than the IPO price, and are sitting on the sidelines
Yes there is a bit of panic selling taking place in the mar-
3. Based on the current energy market
situation, what is your outlook for the
TTNGL stock price movement for the
near to medium term?
Based on the current energy market situation, I believe that
in the near to medium term, the shares will move downward
until the market becomes more clear or until they become
more of a bargain.
At last week Tuesday s close of $19.00, TTNGL had an esti-
mated dividend yield of over 5.0 per cent which is on the
higher end of the TTSE, assuming the ability to pay dividends,
that makes it much more attractive to many investors.
I believe that the share price will stabilise between $19.00
and $19.50 in the near to medium term and will start to appre-
ciate when energy prices begin to recover. The oil experts
predict that oil prices will recover to end the year at around
$45.00 per barrel. Having already paid an interim dividend
of $0.50 per share and with a final dividend expected before
March 31, 2016 and a hardening of oil prices, I am recom-
mending TTNGL as a "Buy" @ $19.00
TTNGL's post-IPO performance
"In the current economic
climate, some investors
may be more inclined to
liquidate their investments
and prepare themselves for
hard times . "
"I believe that the share
price will stabilize between
$19.00 and $19.50 in the
near to medium term"
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