(Nov 19): One of the frothiest stocks in the Philippines continued its days-long plunge on Wednesday, erasing more than US$18 billion ($23.4 billion) of its founder’s fortune and raising new questions about its remarkable ascent and sudden nosedive.
Property developer Golden MV Holdings Inc began falling on Thursday after regulators lifted a six-month trading suspension on the stock. So far it’s down 83%, its worst streak as a public company.
It has also knocked Golden MV founder Manuel Villar off the perch as the richest man in the Philippines. He’s now worth US$4 billion, according to the Bloomberg Billionaires Index, eclipsed by business tycoon Enrique Razon.
Golden MV told regulators both on Friday, Monday and Tuesday that it didn’t know why the stock dropped, filings show. A company representative didn’t respond to requests for comment.
“When a stock returns from trading halt — especially one linked to a high-profile tycoon like Manny Villar — investors typically reassess” its price relative to the company’s fundamentals, said Toby Allan Arce, an analyst at Globalinks Securities & Stocks Inc. “The market appears to have concluded that the company’s pre-suspension valuation was far too rich.”
Regulators suspended the stock in May after the company failed to file financial results because of a disagreement with its auditor. The sticking point was the valuation of land that Golden MV acquired from its founder for US$93 million and subsequently revalued to US$23.3 billion.
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That transaction followed a run-up in Golden MV’s stock price that pushed the company’s price-to-earnings ratio above 1,000 and perplexed Manila’s financial community. Villar and parties related to him control 89% of the company’s shares.
That sequence of events had ripple effects elsewhere in Villar’s empire. His developer Vista Land & Lifescapes’ two outstanding dollar bonds slipped into distressed levels in May. Its dollar note due in 2029, sold just last year, dropped 1.6 cents on the dollar to 58.3 cents Wednesday morning, set for the largest daily drop in more than a month, according to Bloomberg-compiled data.
In its 2024 annual report filed last week, Golden MV noted that it had agreed to value the land using a method suggested by its external auditors, which yielded a value closer to what the company paid for it.
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Golden MV develops and manages cemeteries, memorial parks and low-cost housing. It’s developing a project called Villar City, which it says is a plan to transform a cluster of cities in southern Manila into the capital’s “new centre of gravity.” The land acquired last year is meant to be part of that development.
Uploaded by Magessan Varatharaja
