I can't seem to read enough good news on SCC, Semirara Mining, and most brokers can't seem to as well. With earnings growth exceeding 110 percent in 2010, it's no wonder SCC has gotten a lot of attention. One undeniable fact about this company is that it has a play in two of sectors that is seen by many to drive the index this year, power and commodities. With its recent inclusion in the FTSE Asia- Pacific Index, along with parent company DMC, the company is poised to grab more attention from foreign brokers.
Here's what some brokers having been saying about SCC
ATR Kim Eng - "SCC is NOT RATED at the moment, but our initiating coverage report is
underway."
COL - "Although FY10 earnings were in line, we will be reviewing our forecasts in light of the higher than expected net coal production and the recent increase in coal prices. Given that the company is a net beneficiary of higher coal prices, this could lead to a potential upgrade in our FV estimate." Mind you, COL is still rating SCC as a "BUY", meaning an upside of at least 15 percent in the next 6-12 months
Abacus - "Our sum-of-the-approach methodology yields an NAV estimate of P300.00/sh for SCC"
My personal opinion is very similar, although a bit more optimistic. With earnings growth forecast-ed to almost increase by 75 percent from 4 to 7 Billion pesos in 2011. It is no surprise that I see SCC having a huge upside. Maybe not as optimistic as the 300/sh but better than most brokers. At this price 2011, earnings would net a P/E ratio of less than 12. A very good number in comparison to other commodities and power play.
Saturday, March 26, 2011
Friday, March 18, 2011
Trade Shows
I've been away from active real-time trading for the past three days due to the Worldbex convention in Manila. One thing I noticed about trade shows here in the Philippines is that people go to the shows for retail purchases. Abroad, trade shows are where big deals are made and quantities are set via containers and not individual pieces. It seems to me that no matter how much we push for world-class events, people can't seem to grasp certain ideas. I attended the show on the supplier side and in the two days I was there, there were no more than 3 people who I spoke to who had an active knowledge of the product I was selling. I'm not trying to sound arrogant (although I might come out that way), but it was just ridiculous. An event that was suppose to bring out entrepreneurship was instead made into another excuse to party (clowns, loud music, and women in skimpy outfits all around).
Going back to the market, from my understanding the week has been pretty eventful for followers of EDC, DMC, and SCC; three of my favorite stocks. From my understanding, DMC and SCC are benefiting from their soon to be members status of FTSE Asia Pacific Index. Although, I'm not particularly fond of stocks rising due to inclusions into certain indexes; I don't mind riding the wave on this one. EDC, on the other hand is coming off a double digit growth in profits last year due to their geothermal plants. I recently spoke to a number of investors and analysts recently and they all mentioned that although commodities may be the prevailing theme this year for most of the world. Locally, companies like EDC, AP, SCC, power companies in general are still poised to set the pace for growth in the long term. Mindanao has a severe shortage of supply, Luzon's reserves are below recommended, and in the Visayas you hear news of power generating barges moved from one place to another all the time. This just tells me that the next big player in the market, may already be a big player today, it all depends who's investing in the right places.
On other news, NIKL may have to scale back its growth prospects due to the recent earthquake in Japan. NIKL sells quite a bit to a Japanese smelting plant that was recently affected by the quake, and although damage assessment has yet to be disclosed. It may prove to be a game changer for NIKL if they can't find another client to pick up some of the shipment.
Going back to the market, from my understanding the week has been pretty eventful for followers of EDC, DMC, and SCC; three of my favorite stocks. From my understanding, DMC and SCC are benefiting from their soon to be members status of FTSE Asia Pacific Index. Although, I'm not particularly fond of stocks rising due to inclusions into certain indexes; I don't mind riding the wave on this one. EDC, on the other hand is coming off a double digit growth in profits last year due to their geothermal plants. I recently spoke to a number of investors and analysts recently and they all mentioned that although commodities may be the prevailing theme this year for most of the world. Locally, companies like EDC, AP, SCC, power companies in general are still poised to set the pace for growth in the long term. Mindanao has a severe shortage of supply, Luzon's reserves are below recommended, and in the Visayas you hear news of power generating barges moved from one place to another all the time. This just tells me that the next big player in the market, may already be a big player today, it all depends who's investing in the right places.
On other news, NIKL may have to scale back its growth prospects due to the recent earthquake in Japan. NIKL sells quite a bit to a Japanese smelting plant that was recently affected by the quake, and although damage assessment has yet to be disclosed. It may prove to be a game changer for NIKL if they can't find another client to pick up some of the shipment.
Monday, March 14, 2011
One After Another
Seems like we just can't stop getting one bad news after another. My heart goes out to the victims of the quake and tsunami in Japan. The Nikkei has plummeted dropping 6 percent of its value Monday and losing another 6 at the first hour of trading for Tuesday. Insurers are now saying that this may be the costliest natural disaster in history; and in an advanced economy such as Japan, I have no doubt that that may be the case. What makes it worse; is how local prankster seem to be getting a kick out of sowing panic with stories of radiation leaks, panic that has led to the closure of PUP campuses yesterday.
Recently, our market has been benefiting from an increase in net foreign buying. Foreigners have started showing interest in companies that have started becoming quite cheap, valuation wise. This has led to the market zooming past the 3900 mark quite easily and I believe we have started to form a new support level there, this may be a sign for us to start accumulating. I have done so by bottom fishing stocks like DMC, EDC, AP, NIKL, and AT.
First metro recently came out with a special report that mentions how the selling seems to have started to slowly bottom out and that we should see a resurgence in the bull market. Mr. Gus Cosio, mentioned in his new blow (www.guscosio.com) that the market may see itself through the 4200 level by the end or march. I wouldn't be one to be that particularly optimistic, but I do think accumulation would be a good theme for this month.
Corporate earnings have come out, showing that most of my favorite stocks have reported double digit growth numbers with DMC, MBT, SCC leading the way. I made a pretty regretful mistake by selling off quite a large position of SCC, while I switched positions to NIKL and EDC. I have also recently taken quite an interest in ICT, I hope to come out with a more detailed entry on the stock when I've completed research on the company.
Recently, our market has been benefiting from an increase in net foreign buying. Foreigners have started showing interest in companies that have started becoming quite cheap, valuation wise. This has led to the market zooming past the 3900 mark quite easily and I believe we have started to form a new support level there, this may be a sign for us to start accumulating. I have done so by bottom fishing stocks like DMC, EDC, AP, NIKL, and AT.
First metro recently came out with a special report that mentions how the selling seems to have started to slowly bottom out and that we should see a resurgence in the bull market. Mr. Gus Cosio, mentioned in his new blow (www.guscosio.com) that the market may see itself through the 4200 level by the end or march. I wouldn't be one to be that particularly optimistic, but I do think accumulation would be a good theme for this month.
Corporate earnings have come out, showing that most of my favorite stocks have reported double digit growth numbers with DMC, MBT, SCC leading the way. I made a pretty regretful mistake by selling off quite a large position of SCC, while I switched positions to NIKL and EDC. I have also recently taken quite an interest in ICT, I hope to come out with a more detailed entry on the stock when I've completed research on the company.
Wednesday, March 9, 2011
Green for a Change
I can't count how many times I've actually had fellow traders mentioned that phrase to me the past two weeks. "Thank goodness it's green for a change". So what's been happening?
Nothing much has changed in the broader international geo-political landscape; the ME and North Africa is still in turmoil or is heading there. Protests are still popping up despite repressive decrees and laws. And to traders, oil is still much higher than what it should be trading at today.
Locally, foreigners have been buying into stocks that I seem to like; especially SCC, EDC, DMC, etc. These stocks have for some time been under the radar of numerous local and foreign brokers and have been frequently mentioned by big-time brokers like Mr. Gus Cosio. These stocks have had good support levels and have held them when the market was dropping fast. They now seem to be picking up in terms of pricing. Valuation-wise, earnings and prospective earnings have made it clear that these companies have some more upside.
Some significant notes to make for each of these companies.
DMC - the government has released their lineup of PPP projects for the year, and although DMC is not expected to bid directly; it is to benefit from contractor work. Full year 2010 earnings have also seen an 89 percent jump and is poised to grow even more. Numerous brokers have mentioned that DMC is in line for a major re-rating of valuation.
SCC - coal prices have been steadily creeping up due to delays and adverse weather conditions in Australia. Calaca power plant is expected to boost earnings after major rehab finished last year.
EDC - while it has under-performed both the market and the sector. EDC has been valued by JP Morgan, ATR Kim Eng, First Metro, BPI, COL, Deutsche just to name a few. It is expected to outperform this year with a trend in green energy putting a premium on its value.
Nothing much has changed in the broader international geo-political landscape; the ME and North Africa is still in turmoil or is heading there. Protests are still popping up despite repressive decrees and laws. And to traders, oil is still much higher than what it should be trading at today.
Locally, foreigners have been buying into stocks that I seem to like; especially SCC, EDC, DMC, etc. These stocks have for some time been under the radar of numerous local and foreign brokers and have been frequently mentioned by big-time brokers like Mr. Gus Cosio. These stocks have had good support levels and have held them when the market was dropping fast. They now seem to be picking up in terms of pricing. Valuation-wise, earnings and prospective earnings have made it clear that these companies have some more upside.
Some significant notes to make for each of these companies.
DMC - the government has released their lineup of PPP projects for the year, and although DMC is not expected to bid directly; it is to benefit from contractor work. Full year 2010 earnings have also seen an 89 percent jump and is poised to grow even more. Numerous brokers have mentioned that DMC is in line for a major re-rating of valuation.
SCC - coal prices have been steadily creeping up due to delays and adverse weather conditions in Australia. Calaca power plant is expected to boost earnings after major rehab finished last year.
EDC - while it has under-performed both the market and the sector. EDC has been valued by JP Morgan, ATR Kim Eng, First Metro, BPI, COL, Deutsche just to name a few. It is expected to outperform this year with a trend in green energy putting a premium on its value.
Thursday, March 3, 2011
Switching Sides
The local market has been outperforming peers lately and buyers have overwhelmed sellers as of late. I was very much surprised with some of my favorite picks, such as AP, DMC, EDC, MBT, and SCC. They have all outperformed the index and have performed very well near their support levels (some have even broken through multiple resistance). I, however, am inclined to steer away from my usual favorites in power generation, holdings, and financial; and have started to closely monitor the mining industry.
The mining industry is favored by a very large group of investors, simply because of the high risk/reward these companies can generate. Take PX for instance, I remember purchasing some shares for 3 pesos and added to it at 6/sh, when MVP decided he wanted a slice of Philex, the stock shot up to 19/sh in a matter of months. Of course, there were others who decided that it was worth so much more and lost money when the price dropped to 14/sh. Now, this was an unusual case of speculation driving prices. I am not advocating buying due to speculation, I am simply showing how the risk/reward balances each other out in the mining industry.
I am still a strong advocate of investing in companies with strong numbers (fundamentals). The reason I have started to look into the mining industry is that the rising prices of commodities is happening all around us. Copper, Nickel, Gold, etc; their price action just cannot be ignored. Take for instance electrical wires, prices have shot up more than 60 percent in less than a year; the most basic commodity used aside from the insulation is copper!
A few things to remember with the mining industry.
1.) Profits are very much reliant on commodity prices
2.) Shipments come in bulks and they have to be consistent
3.) Resources are finite.
All these things play a part in determining the profitability and attractiveness of the company. Recently, I've been looking into AT, PX, NIKL, and SCC (obviously). These companies have proven track records of shipment and commodities they mine are in demand worldwide. But don't take my word for it, do your homework.
The mining industry is favored by a very large group of investors, simply because of the high risk/reward these companies can generate. Take PX for instance, I remember purchasing some shares for 3 pesos and added to it at 6/sh, when MVP decided he wanted a slice of Philex, the stock shot up to 19/sh in a matter of months. Of course, there were others who decided that it was worth so much more and lost money when the price dropped to 14/sh. Now, this was an unusual case of speculation driving prices. I am not advocating buying due to speculation, I am simply showing how the risk/reward balances each other out in the mining industry.
I am still a strong advocate of investing in companies with strong numbers (fundamentals). The reason I have started to look into the mining industry is that the rising prices of commodities is happening all around us. Copper, Nickel, Gold, etc; their price action just cannot be ignored. Take for instance electrical wires, prices have shot up more than 60 percent in less than a year; the most basic commodity used aside from the insulation is copper!
A few things to remember with the mining industry.
1.) Profits are very much reliant on commodity prices
2.) Shipments come in bulks and they have to be consistent
3.) Resources are finite.
All these things play a part in determining the profitability and attractiveness of the company. Recently, I've been looking into AT, PX, NIKL, and SCC (obviously). These companies have proven track records of shipment and commodities they mine are in demand worldwide. But don't take my word for it, do your homework.
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