Top Line Business Development Corporation (Top Line) is planning to build fuel depots in Mactan and Bohol with a combined storage capacity of 30 million liters to support the continued expansion of its fuel retailing business in the Visayas.
Based on the firm’s draft prospectus filed with the Securities and Exchange Commission, the firm plans to fund its aggressive expansion program with proceeds from its planned P3.16 billion initial public offering.
The Cebu-based fuel retailer said the two fuel depots it plans to build will be equipped with terminals for receiving and deliveries. Separate tanks will be provided for diesel, premium, and regular gasoline.
The main storage in Mactan will have a capacity of 25 million and will serve as the receiving facility for the imported supplies, while the Bohol storage will serve as a satellite depot that will ensure the availability of stocks in the surrounding region.
Construction of these fuel depots will commence within 2025 and be operational by mid-2026. The Company will allocate P980.0 million for these depots.
As part of its strategy to penetrate the retail market including the underserved sectors, Top Line will allocate a portion of the proceeds for the construction of additional 10 Light Fuels service stations.
Construction of these stations will commence by 2025 and is intended to be operational by 2025 – 2026 at a cost of P65 million.
To ensure the faster movement of supply from the main storage to the satellite depot and to the other customers, Top Line will invest P300 million to acquire two units of compartmentalized fuel tankers with a capacity of five million liters for each vessel.
To complement further the fuel logistics platform, the Company will also invest P160 million to acquire 40 units of tank trucks with rated capacities of at least 20,000 liters. The acquisition of tank trucks will take place between 2024 and 2025.
There will also be a requirement for P937.5 million in working capital to fund the supply of stocks that will be sourced from local and imported supplies.
These supplies will be temporarily stored in the fuel depots to ensure supply reliability at any given time.
The Company intends to apply the proceeds allocated for working capital within the fourth quarter of 2024.
Net proceeds from the primary offering is estimated at P275.8 million with the rest of the proceeds (P311.8 million) to be used for general corporate purposes.
Top Line has filed a registration statement and listing application with the Securities and Exchange Commission and The Philippine Stock Exchange, Inc., respectively, in relation to its planned IPO.
Subject to obtaining the necessary regulatory approvals, Top Line is planning to offer to the public up to 3.68 billion primary common shares with an overallotment option of up to 368.31 million secondary common shares.
The indicative offer price is up to P0.78 per share subject to a bookbuilding process. The tentative offer period will be from 9:00 a.m. on Oct. 28, 2024 to 5:00 p.m. on Nov. 5, 2024.
“With our accelerating growth in recent years in the fuel sector of the Visayas region, we are poised for the company’s historic milestone of listing on the PSE,” Top Line’s Chairman, President and CEO Erik Lim, said.
Top Line’s first half gross revenues in 2024 accelerated by 15 percent at P1.56 billion compared to the same period last year at P1.36 billion. Its first half net income has also surged by 190 percent year-on-year at P60.6 million from P20.8 million.
“Earnings from our commercial fuel trading boosted our sales in the first half with robust fuel demand in Metro Cebu and Cebu Province,” Lim added.
Top Line’s commercial fuel trading operations caters to customers with requirements of at least 4,000 liters per order in transportation, construction, shipping, and mining, among others.
In terms of retail fuel under the Light Fuels brand, two new Light Fuels service stations are expected to open this month which will bring the Company’s total operating retail fuel stations to three.
“We are still set to meet our target of 10 operating service stations this year. Our expansion in the retail fuel market will further support our vertical integration plans, supporting Top Line’s continued growth,” Lim said.
The Company is currently constructing five more Light Fuels service stations and two Light Fuels Express stations in Metro Cebu and Cebu Province.
The Light Fuels Express stations are meant to meet the needs of motorcycle riders and other lighter vehicles which are growing rapidly in terms of vehicle type usage in Metro Cebu.