Very often market movement is shaped by general sentiment of investors; locally, that sentiment seems to be guided by foreign buying or selling. The past few days, I've seen two of my favorite stocks move in almost opposite directions, due to foreign guidance.
SCC has been moving down due to the recent sell-off by foreign funds led by Deustche. SCC's re-rating from 215-205 seems to have affected foreign perception of the stock. Locally though, funds have been re-rating the company upwards. With citiseconline giving SCC a FV of 295, consensus seems to hit beyond the 250 peso mark and that can only be good news for most investors. ATR is also said to be initiating coverage of the company soon. Investors should be mindful that based on 2010 PE ratio of 20+ the stock may seem overly priced, but from the 2011 and 2012 perspective; the company has quite a bit more room to move up. My fearless forecast is that it would shatter the 250 peso mark in the next 3-6 months and continue to move up.
DMC, on the other hand, has been steadily moving up. It broke through its all time high of 41 pesos a couple of days ago and it has continued to move up and is testing the 43 peso mark. Some people may argue that this stock is expensive, but comparing it to sectoral peers such as MPI, SMPH, AC this stock has quite a bit of an upside. Consider the business the company is in; power, mining, construction (with 48 billion pesos worth of backlog), water, and you recognize a very good business model that stretches around the whole economic growth story our country is going through. Understanding that the value, whether peaks or bottoms, are meant to be broken is part of realizing that you are not merely owning a piece of paper, but a part of the company.
Off topic, SMC has suspended share trading up until the first week of May to avoid "speculation"; I guess a lot of movement may happen if the stock was traded today. We have the SC ruling in favor of Cojuangco on his years-long battle with the government for control of a substantial amount of shares. And we also have the share rights offering that is rumored to priced at 150 pesos per share. Interesting to see where the company intends to use the proceeds, I'm guessing expansion of power assets, thats what i would do.
With holy week just around the corner, I expect trading to slow down, but who knows, there might be good companies on the cheap after the two-day slide the PSE experienced. Might be a good time to pick up some strong companies that have largely been ignored or have been sold down; EDC, SCC, CEB, UBP, URC, just to name a few
pretzel, any new news on rumors the calaca plant needs rehabilitation? also im confused who is running calaca. is it semirara mining or dmcpower? is semirara the only mining comp of dmci? i thought dmc also mines in zambales. i hope u can fill me in. tnx.
ReplyDeleteCalaca plant has already gone through rehabilitation and is currently fully operational. If I'm not mistaken, the plant actually was ahead of schedule and budget, which bodes well for SCC.
ReplyDeleteCalaca is run by SCC :)
sold all my shares in dmc, thinking of using the proceeds to beef up my scc. didnt happen though. my newly acquired interest in lc overwhelmed me. what do u think pretzel? do u hav lc in ur portfolio too?
ReplyDeleteOMG. oh my gold. go lc go. go px go.
ReplyDeletewhats wrong with scc?
ReplyDeletetook some profit on px.
added to my scc.
bad move i think. gold s all time high.
@anonymous 2
ReplyDeleteNo I dont have LC in my portfolio but I would want to add some if they do fit into my criteria of stop picks. I haven't done sufficient research to conclude that it does or does not fit
@anonymous 4
I honestly am not too worried about SCC at this point. I would not add to my positions but thats because I have more than enough already. What I can tell you is that its power subsidaries just remitted 1.2billion pesos worth of dividend income. In the long run, SCC is still poised to outpeform the PSE.
tnx, pretzel. ur comment washed away some of my scc worries. i probably wil b selling the rest of my px soon. i might use the proceeds to add more to my lc and scc, or maybe rebuy dmc on pullback. how much of a pullback do u think dmc wil make? wil it b comparable to that of aev? both were overdriven by the msci listing, i guess.
ReplyDelete