More market observations
Trading in the United States, Asia and most of Europe last week continued to generally indicate that we may have more interesting market activities all the way up to the end of the year. Trading on Wall Street was even described to be “virtually in lockstep with the market of 1954” known as the Eisenhower rally. This “was best year when American equity share prices finally recovered all their losses from the Great Depression.”
In the local scene, events such as the three-week Zamboanga siege in September and the devastating killer-earthquake in the Visayas two weeks ago, didn’t seem to affect the otherwise positive character of the market. And even if the market succumbed to losses in the last two trading days last week, these losses were more due to profit-taking rather than the result of a general sell-off.
Investments news
According to the Mindanao Development Authority (MinDA), Mindanao in the first semester got P80 billion worth of development projects approved by the Board of Investment (BOI). This involves the building by the FDC Misamis Power Corp. of a 405-megawatt power plant in Misamis Oriental and the construction of two 150-megawatt power plants by San Miguel Consolidated Power Corp. in Davao del Sur. These two projects alone have raised the amount of investments in the area by “over 960 percent for the same period in 2012.”
Along with the announced rehab program of government due to the Zamboanga siege and the earthquake in the Visayas, life in these areas are anticipated to make a quick turnaround.
In connection with the report of the BOI last week, too, investment commitments “grew 25 percent to P309 billion in the January to September period from P248 a year ago. Investment pledges from foreign firms increased to 185 percent to P51 billion from last year’s P17.9 billion while investments from local investors rose to 12 percent to P258 billion from P230.5 billion last year.”
The US topped the list of foreign investors. Their investment commitments amounted to 82 percent of total foreign investment. This came largely from the project of US-owned GN Power Ltd. Co., which “pledged a total of P41.2 billion for its 600-megawatt (MW) coal-fired power project in Bataan.”
South Korea came in next with its investment commitments of P2.26 billion. South Korean companies’ Mirae Asia Energy Corp. will build a “P803-million solar project in Ilocos Norte” and Daesang Ricor Corp. will “infuse P284 million into a glucose project in Cagayan de Oro City.”
The balance of P3.6121 billion from the investment commitments of foreign investors came from Australia, the Netherlands and Singapore. Mindanao Mineral Processing and Refining Corp. (MMPRC) of Australia will pursue a P1.79-billion expansion project to boost “export of gold bullion with other metal contents in its plant in Agusan del Sur.” Through PhilNewEnergy Inc., of the Netherlands, it will build a P1.33-billion solar power project in Davao del Sur.” The rest of the P492.1 million was taken up by Singapore from commitments on a number of unspecified small projects.
Majority of the P258.7 billion investment pledges by local investors are also committed to energy projects. These are the P39.9 billion 400-MW coal-fired power plant in Quezon by Pagbilao Energy Corp., the P31.9 billion 405-MW coal-fired power plant in Misamis Oriental by FDC Misamis Power Corp., and the P25.5 billion 300-MW coal-fired power plant in Bataan by San Miguel Consolidated Power Corp.
The country’s peak demand for energy is expected increase to 24,534 MW in 2030, following the “2010-2030 Energy Development Plan” of the Department of Energy.
The rest of other investment pledges in the first nine months went into the real estate industry (P34.1 billion, up 11 percent), transportation and storage sectors (3 percent of total pledges) and to the manufacturing and food service sectors (2 percent and 1 percent, respectively).
There is also this “battle” for the development of the 300-hectare property of the City of Pasay. Targeted construction schedule is sometime in 2014. The SM Group has already submitted a P54.5-billion unsolicited bid. Poised to challenge the bid is Ayala Land Inc. As of last week, it has expressed intent to submit a counter-offer.
Bottom line spin
Amid the above market observations, let’s look at how three stocks have performed in the last 30 days. Let’s take GT Capital Holdings Inc. (GTCAP). At last Friday’s closing price of P858 per share, it registered a 30-day gain of about 5.3 percent. Within the same 30-day period, too, its price had traded between P760 to P884.50 a piece or a price range of 16.4 percent.
Its inclusion in the recently revised benchmark index list has apparently helped make it an actively traded favorite, despite the fact that it lags behind dividend-yielding large cap stocks. It has a dividend yield of 0.33 percent only.
The price of GTCAP in the last 52-weeks ranged from a low of P522 to a high of P899 per share. At its closing price last Friday of P858 per share, it is trading close to its 52-week high. In addition to the observation that GTCAP’s share price is already up 64.4 percent year-on-year, it’s unable to move higher.
Next is Manila Electric Co. (MER), another large-cap company. At its closing price of P311 a piece last Friday, it is 25.4 percent above its 52-week low and 21.66 percent below its 52-week high. It is, therefore, just about the middle of its 52-week high and low price range. Looking back, the market price of MER has risen to 15.4 percent a year ago.
When compared to its closing share price of P311, it looks like much of MER’s price advance was gained in the last one month only. MER’s market price increased 13.5 percent in the last 30 days.
In comparison, MER has a better dividend yield of 3.16 percent, a good net margin of 5.85 percent, a higher return on equity of 23.39 percent, a very attractive price to sales ratio of 1.24 percent, and an acceptable revenue growth of 11.08 percent. It may stay lower for profit-taking.
Megaworld Corp. (MEG) is a notable mid-cap stock that performed well, too, in the last one month. Its share price has gone up by as much as 10 percent within the last 30 days. For the last year, its market price has gone up to 56.8 percent.
With a dividend yield of only 0.90 percent, it is doing incredibly. Its attractiveness to investors is its high revenue growth of 29.93 percent and acceptable return on equity of 9.68 percent.
At last Friday’s closing price of P3.73 per share, it is 56.72 percent above its 52-week low price of P2.38 and 13.46 percent below its 52-week high price of P4.31. It has yet to move higher.
Let’s look at the progress of more market favorites next time. By the way, on Nov. 5, SM Development Corp. (SMDC) will be delisted.
Renewal movement
There is a movement going on in elevating not only the competitiveness but integrity of educational institutions by transforming teachers and students through character education by the Character Education Partnership (Philippines). There is also this parallel project of the Commission on Audit led by its chair Grace Pulido-Tan called the Citizen Participatory Audit (CPA), “a program that extols whistle-blowers and gives citizens a role in promoting a transparent government.” It has made it to the short list of the British-led Bright Spot prize, an annual award given by the Open Government Partnership (OGP), a multilateral initiative now co-chaired by the United Kingdom, “to secure commitments from governments to promote transparency, fight corruption, and harness new technologies to strengthen governance.” More power.
(The writer is a licensed stockbroker of Eagle Equities, Inc.. You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com
