Deadly Speculation on AGI companies $SUN $MEG $GERI $ELI

[See Aug 14, 2013 update at the end of this post]

Disclaimer: Speculation is the mother of all evil so act at your own risk. The statements below are purely speculative.


In quick summary: My speculation is Alliance Global Inc. (AGI) properties would be merged into one, the surviving entity will probably be Megaworld Corp. (MEG). Suntrust (SUN) will be left as a shell company for a more profitable venture (to be backdoored, Emperador? Travellers? Dunno).

AGI will hit two birds with one stone if it were to do this. SM already did it, merged its property units to SM Prime (SMPH), which will make SMPH larger than Ayala Land (ALI). To be competitive, AGI may need to do the same with its property units Global-Estate Resorts (GERI), Empire East (ELI) and Suntrust (SUN). In the merger, ELI and GERI will benefit from this (much like what happened to SMDC and HP). SUN already sold its property stake to MEG, which spurred speculations (SUN's share price up by 30%-40% today).

So why not just merge SUN with the others. It may mean AGI has bigger plans for SUN. There was a rumor before that Travellers International (Part owner of Resort's Word) will use SUN as a backdoor which lead to SUN's price to shoot up, but the rumor was silenced when AGI disclosed that Travellers Group filed for its IPO (means it won't use a backdoor listing).

Now, SUN is more or less a shell company when it sold its property stake to MEG. What is the purpose of this? Could be used as a backdoor for Emperador? Or maybe Travellers changed its mind? But in any case, the speculation is that it's highly probable, SUN will be used as a backdoor for another company.

[Update Aug 14, 2013] Seems the speculation above is coming to life. AGI announced property mergers, CHECK! SUN was left as a shell company, CHECK! And now, SUN just released a disclosure that allows existing shareholders to buy additional 2.5 shares at P1.0.

This clearly indicates a backdoor is brewing. Why? If you have a shell company, a company without assets, why would you conduct a stock rights offering. It means there is a motive to revive this shell company ito a profitable venture. The question, again, is who will it be? Emperador? Nobody knows yet since it's not included in the disclosure, which means more speculation and hype!

If you can buy SUN below P1.00 it MIGHT be a good buy, but I doubt you will be able to buy shares below P1.00 (if people know the value of their existing shares)

The story behind $SUN and some analysis

Suntrust Home Developers, Inc. (SUN) is run by Andrew Tan, which, as many of you already know, also runs AGI, MEG, ELI, and GERI.

There's a rumor circulating that SUN could be used as a backdoor for Travellers International Group (a joint venture between AGI and Genting Hong Kong, owners of Resorts World Manila and are also set to build the new Resorts World Bayshore).

Does this make any sense? My personal opinion: YES, it does. IPO is expensive, maintaining a listed company is also expensive, so it's a win win if Andrew Tan already owns a listed company that can be converted into a more profitable venture.

Conglomerates are now thinking of merging their property units, it's also possible that AGI is also thinking of merging its own property units MEG, ELI and GERI. Since SUN only has a small portfolio, it may be excluded from the merger.

If you look at SUN's history, however, you'll notice that it has a shady background before it became the SUN we know today. Before SUN changed its name in 2002, it was the controversial BW Resources (Symbol: BW). In 1999, its share price skyrocketed from P2 to P107 (5K% increase) when a rumor spread that Stanly Ho, a bigtime Macau casino operator, was investing in BW to build a Casino in the Philippines.  Stanly Ho even made an appearance in the Philippines which further contributed to an increase in BW's share price.

The deal never went through and BW's share price plunged. According to PSE's investigation, it was stock manipulation through wash sales in which the buyer and the seller are the same to deceive investors that the stock is active and profitable. Allegedly, cronyism played a major role in this scandal. Dante Tan (Major shareholder of BW) and JV Ejercito were business partners and friends.

Today, the motive may be more legitimate, and the deal may more likely push through but who really knows? No one yet. As of writing, AGI is neither confirming nor denying it. Its latest disclosure is vague, stating that Traveller's Group is looking at both debt and equity market for its financing.

However, there's another twist to the story. Remember Stanly Ho? He still owns a chunk of overvalued shares in BW Resources which is now SUN. It is also possible that this is just a way out for him, jacking the price up for profit or just to get his investment back. Again, who knows! Either way, SUN's share price would go up.

CAVEAT! Just a personal opinion, there's no guarantee in this analysis. Agree or disagree? Share it in the comment section below :)


Source 1, Source 2, Photo from archian, Special thanks to my mentor