Merkado Barkada
October 29, 2024 | 8:20am
Axelum Resources [AXLM 2.14, down 1.8%; 20% avgVol] [link], the coconut products producer that took a significant investment from Metro Pacific a few years ago, reported that a fire occurred at its “Medina Plant Site” in Misamis Oriental. This is AXLM’s largest production facility. The company said that the fire was put out without any damage to AXLM’s production area, though AXLM did say that “the cause of the fire and its possible effects on the operations and business… is still to be determined.”
MB bottom-line: Fires are a big problem with a long tail, meaning that even a small fire can cause disruptions that feel orders of magnitude larger than they should given the size of the fire itself. Fire damage is difficult to initially assess. Smoke travels quickly and can damage buildings, systems, inventory, and raw materials. The water-based response to put out the fire can also be just as damaging in its own way. I’m not building a case here that AXLM is under-reporting this issue. I like that they disclosed the event immediately even though it’s clear from the writing that they don’t think this will be a big deal. But we’ve seen fires cast long shadows, most notably with AllHome [HOME 0.72 unch; 20% avgVol]. Fingers crossed for shareholders that AXLM’s facility won’t be disrupted and that it will come out of this stronger with better systems and perhaps a quick review of some backup plans.
Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Be the first to comment