I finally took some profits a couple of days ago from one of my favorite picks, DMC. The company was trading at all time highs and it has for the most part received a lot of selling pressure at the 48 level. I sold more than half between 47-48 and have left behind a small position. Today its trading at the 44-45 level and I expect it to go a tad bit lower before I would find this stock attractive again. Don't take it as my advice to stay away from the stock, I love the company and think its got some room to grow for 2011, 2012, and 2013; but numbers tell me that the company is already being overbought and it would be prudent to take profit then see your profits slowly melt away.
Lately, I've been asked by a number of friends whether or not LR and AGI is worth looking into. Truth is, I've never really bothered. I pay close attention to its prices and its numbers, but I've never really considered in depth research. This is what I've been hearing; both companies are worth at least 15 pesos a share and that AGI has recently broken through resistance, while LR has finally met some. Either way; the price movement of both these companies have been for the most part phenomenal in the past few months. And if past number are any indication to its potential, they've got some way to go.
SCC, has recently declared a 10 peso per share cash dividend due to be credited on June 22, 2011. On top of that, most foreign and local brokers have re-rated it upwards. Prices may have fallen recently, but I personally think that was a great opportunity to buy. If any of you are interested in a vertically integrated company with plays on resources and consumer needs; then SCC is definitely worth looking into. Don't let its past numbers scare you, do your research; you will find that the company at today's price is relatively cheap.
Wednesday, April 27, 2011
Wednesday, April 13, 2011
Guidance
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
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
Sunday, April 10, 2011
Bullishness
Week on week our market has been pushing boundaries and with foreigners buying more than they are selling our market is in a pretty good spot at this point. Strong buying can be seen in some of my favorite stocks such as EDC, DMC, MBT, AP, and a recent addition ICT. I wouldn't mind adding to my positions in EDC, MBT, and AP; but I would probably shy away from adding more to DMC until I see what their first quarter results are like. I've also started to take a keen interest in the banks simply cause of the recent interest rate increase and speculation that more are to follow. A number of banks that I can't seem to get enough of are MBT(being a sectoral leader), UBP(good, steady growth, 2.5 pesos per share dividends), and SECB(numbers are just all green).
I've taken an interest in ICTSI, because of its global story. The company has acquired numerous ports in different countries; ranging from Brazil to China to the USA to Madagascar (you get the picture). And it continues to do so! A good friend of mine tells me that its books are in order and their numbers have a dark shade of green. FMSC has recently initiated coverage of ICT, estimating the price to be around 50 pesos per share. Looking forward to 2012, their PE ratio would stand at 15-16 and that would be not factoring in their recent acquisitions. One major factor that may affect growth of earnings, may be the slowdown of trade due to the recent earthquake and tsunami in Japan.
So where do I see the market going from here, I think we're due for a little pullback and that would only mean a better opportunity to jump on the bull market. One thing this comeback has shown is that research(doing you homework) pays off.
I've taken an interest in ICTSI, because of its global story. The company has acquired numerous ports in different countries; ranging from Brazil to China to the USA to Madagascar (you get the picture). And it continues to do so! A good friend of mine tells me that its books are in order and their numbers have a dark shade of green. FMSC has recently initiated coverage of ICT, estimating the price to be around 50 pesos per share. Looking forward to 2012, their PE ratio would stand at 15-16 and that would be not factoring in their recent acquisitions. One major factor that may affect growth of earnings, may be the slowdown of trade due to the recent earthquake and tsunami in Japan.
So where do I see the market going from here, I think we're due for a little pullback and that would only mean a better opportunity to jump on the bull market. One thing this comeback has shown is that research(doing you homework) pays off.
Saturday, March 26, 2011
Semirara... again
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.
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.
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.
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