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.
Thursday, February 24, 2011
Revolutionary Thoughts
It's no secret there's trouble brewing everywhere in the middle east and north africa. In the past, governments have found it easier to suppress dissent and maintain a tight grip of power by abolishing freedoms most of us in democratic countries consider inalienable. Tunisians, Egyptians, and Libyans are merely expressing pent up discontent from years of repression. So what form of problems will the latest, Libyan crisis, bring to our shores? OIL!
Libya hold's Africa's largest oil reserves. Recent spikes in oil prices have shown how important Libya's reserves are for the rest of the world. A disruption in supply may occur due to a lack of a coherent organization or leadership in the Libyan opposition and this has only been increased by fears that a power vacuum will come out of this once Ghadaffi steps down or is overthrown. Locally, this affects us in many ways. Oil is a commodity countries cannot go without, in comes as no surprise that Asian countries already feeling the pinch of an increase in food prices (ten percent in China for 2010 alone) will have to deal with so much more inflationary pressures.
In the PSE, stocks taking a beating from an increase in oil prices are airlines, commodity dependent stocks, and oil-based power generating stocks. With so much uncertainty on where the next major revolutionary crisis may happen, its best to take stock of your individual portfolios. There is a need to re-balance, cut losses on occasion, and move to liquidity in the worse case. I'm bullish of our 2011 prospects, but bullishness gives me no excuse to turn a blind eye to the bloodbath (metaphorically and literally) occurring everywhere else. I have re-balanced my portfolio to have stronger, less commodity dependent stocks as the majority of my holdings; DMC, EDC, MBT, SCC, and UBP constitute around 70 percent of my current portfolio and I don't intend to change the mix any time soon.
I received a report today from a friend who has a Citisec account. In the report, it states that the 2010 full year earnings for DMC have beaten consensus estimates and Citisec's own. DMC's total 2010 earnings increased 89 percent to an 8.85 Billion Pesos. Higher than COL's estimate of 7.57 Billion. Earnings for 2011 is estimated to increase to more than 10 Billion and that has decreased PE ratios to an estimated 8.7; a significant discount to the 14.1 average PE of other conglomerates and 13.8 of the PSE.
Despite DMC's amazing price movement in 2010; we can look forward to a even brighter 2011 with the expected IPO of DMC homes and the still discounted price that it is currently trading at. Citisec has stated that it's pricing is up for review considering that DMC's mining unit is benefiting from the sudden spike in coal prices and I am even more confident after an investor's briefing hosted by First Metro reiterated its confidence in DMC. As one of their most senior analyst stated, "I love DMC, its got a huge upside".
My personal opinion still stand, FYI, I would be a buyer of DMC even at 40/ share
Libya hold's Africa's largest oil reserves. Recent spikes in oil prices have shown how important Libya's reserves are for the rest of the world. A disruption in supply may occur due to a lack of a coherent organization or leadership in the Libyan opposition and this has only been increased by fears that a power vacuum will come out of this once Ghadaffi steps down or is overthrown. Locally, this affects us in many ways. Oil is a commodity countries cannot go without, in comes as no surprise that Asian countries already feeling the pinch of an increase in food prices (ten percent in China for 2010 alone) will have to deal with so much more inflationary pressures.
In the PSE, stocks taking a beating from an increase in oil prices are airlines, commodity dependent stocks, and oil-based power generating stocks. With so much uncertainty on where the next major revolutionary crisis may happen, its best to take stock of your individual portfolios. There is a need to re-balance, cut losses on occasion, and move to liquidity in the worse case. I'm bullish of our 2011 prospects, but bullishness gives me no excuse to turn a blind eye to the bloodbath (metaphorically and literally) occurring everywhere else. I have re-balanced my portfolio to have stronger, less commodity dependent stocks as the majority of my holdings; DMC, EDC, MBT, SCC, and UBP constitute around 70 percent of my current portfolio and I don't intend to change the mix any time soon.
I received a report today from a friend who has a Citisec account. In the report, it states that the 2010 full year earnings for DMC have beaten consensus estimates and Citisec's own. DMC's total 2010 earnings increased 89 percent to an 8.85 Billion Pesos. Higher than COL's estimate of 7.57 Billion. Earnings for 2011 is estimated to increase to more than 10 Billion and that has decreased PE ratios to an estimated 8.7; a significant discount to the 14.1 average PE of other conglomerates and 13.8 of the PSE.
Despite DMC's amazing price movement in 2010; we can look forward to a even brighter 2011 with the expected IPO of DMC homes and the still discounted price that it is currently trading at. Citisec has stated that it's pricing is up for review considering that DMC's mining unit is benefiting from the sudden spike in coal prices and I am even more confident after an investor's briefing hosted by First Metro reiterated its confidence in DMC. As one of their most senior analyst stated, "I love DMC, its got a huge upside".
My personal opinion still stand, FYI, I would be a buyer of DMC even at 40/ share
Thursday, February 17, 2011
Positioning to outperform
A number of traders I know have begun to think that the market has started to bottom out; as a matter of fact, just the other day "The Inquirer" has an article that says an economist figures that the sell-off would be over by March and that foreigners would be buying into the market soon. I would like to think things are looking up, but I just can't seem to find the confidence to put my money back into the market. As soon as I realized that the month was going to see a steady outflow of investment, I unloaded a good amount of my portfolio (20-25 percent) and reinvested it somewhere else. I would likewise wish for everyone else to exercise the same amount of caution when investing in equities at this point. I would like to emphasize that I am NOT changing my long-term views on the market, which is that we are in the middle of a bull run.
I remember some traders commenting that the past two years, the market was all about one direction; up. Today, we have to be selective in what we buy. I would like to disagree with that statement, in my humble opinion I believe it has never been about putting your money in any random stock. By doing so, we end up gambling, we might as well head to casinos. I'd like to think people who assume that is the case, have just decided to not do their homework and ride the bull market by putting into random stocks and chasing tips.
The way I look at things is that we have to constantly position ourselves to outperform. To outperform there are a number of factors we have to look into. Low P/E's, good growth in earnings, liquidity, good comparison to sectoral and index averages, and of course a company that gets the foreign brokers interested. Some of these stocks, I have already mentioned before; companies like DMC, EDC, SCC, MBT, AP. These companies are poised to outperform the market soon, once all this negative sentiment passes. I would put my money on it; oh wait, I already have.
I remember some traders commenting that the past two years, the market was all about one direction; up. Today, we have to be selective in what we buy. I would like to disagree with that statement, in my humble opinion I believe it has never been about putting your money in any random stock. By doing so, we end up gambling, we might as well head to casinos. I'd like to think people who assume that is the case, have just decided to not do their homework and ride the bull market by putting into random stocks and chasing tips.
The way I look at things is that we have to constantly position ourselves to outperform. To outperform there are a number of factors we have to look into. Low P/E's, good growth in earnings, liquidity, good comparison to sectoral and index averages, and of course a company that gets the foreign brokers interested. Some of these stocks, I have already mentioned before; companies like DMC, EDC, SCC, MBT, AP. These companies are poised to outperform the market soon, once all this negative sentiment passes. I would put my money on it; oh wait, I already have.
Subscribe to:
Posts (Atom)