Amazing October

The month of October was an amazing month. Contrary to the market’s notion as a dreaded time for stocks, the market made solid gains—like I said it would.

Making solid gains for the country, too, is the Commission on Audit (COA) with its Citizen Participatory Audit or CPA project, a transparency program that encourages citizens to take part in “whistle-blowing and truth-telling” by reporting for investigation or assessment committed irregularities in government programs, or by its agencies or functionaries. It was declared this year’s winner for the Bright Spot prize last Nov. 1 at the Open Governance Partnership (OGP) Summit in London—a multilateral initiative formed to secure concrete commitments from governments to promote transparency, fight corruption and strengthen governance, among others.

Congratulations and more power to COA Chair Grace Pulido-Tan and the rest of the COA team.

Performance

From Sept. 30 to Oct. 31, the market made a total advance of 393.58 points or 6.36 percent. From the week ending Sept. 27 to the week ending Oct. 31, however, we may see that the market’s total advance was equivalent to 205.58 points or 3.22 percent only. The difference was what the market lost on Sept. 30 (Monday), which was equivalent to 188 points or 2.95 percent.

There are negative and positive meanings one can draw from these observations. On one hand, the market’s sudden one-day hard fall on Sept. 30 is suggestive of its continuing weakness. The market’s one-month overall gain of almost 400 points, on the other hand, is indicative of its growing positive outlook. This may explain why growth-and-value stocks like those that I previously mentioned, namely GT Capital Holdings Inc. (GTCAP), Manila Electric Co. (MER) and Megaworld Corp. (MEG) are trending but at the same time unable to breakout.

GTCAP continued to move sideways to lower last week. It is experiencing market resistance as its latest traded prices are already near the upper limits of the stock’s 52-week high. At the traded price of P856 a share last Thursday, GTCAP is about 88.15 percent above its 52-week low of P536 and only 11.84 percent below its 52-week high of P899.

For those stocks whose prices are at the middle of their 52-week lows and highs like MER, they may also continue to linger sideways to lower due to the market’s continued weakness, especially when most of their price gains were realized during the month of October. For instance, MER’s price gain for the month is almost equivalent to its total price advance for the year, too. Likewise, the stock price of MEG is expected to taper soon even if it continued to advance last week. Its price is fast getting close to its 52-week high, too.

One thing is sure, the market’s current momentum and direction will likely change as new corporate developments will unfold till the end of year. Stay tuned to breaking news.

IPOs

Just completed its public offering—and listed last Wednesday—was Harbor Star Shipping Services Inc., with the trading symbol of TUGS. The offering raised P341.4 million from about 180 million new shares, equivalent to 30 percent of total outstanding shares.

TUGS, accordingly, is more than just a tugboat operator. It also deals with ship salvage, wreck removal, firefighting, oil spill abatement and recovery and handling hazardous chemicals. At the offer price of P1.88 a share, this represents a price-to-earnings ratio (P/E multiple) of 8.54x estimated 2013 earnings.  Its estimated book value (BV) is P1.175 a share. Since its listing last week, TUGS price is about to fall. It only managed to hit the high of P2.02 on listing date just to fall quickly to the low of P1.80 the following day.  At the end of trading session last Thursday, it stood at P1.81.

Robinsons Retail Holdings Inc. (RRHI) and Travellers International Hotel Group Inc. (RWM) have also made their public debut last week. The domestic public offering of RRHI ends today, Nov. 5, and its scheduled listing date is on Nov. 11.  RWM will be listed today.

The RRHI offer price is P58 a share with a total issue consisting of 461.9 million new common shares to raise P26.79 billion and 22.85 million shares—to be applied in part or in full—for market-making. Seventy percent of the offered shares equivalent to 323.33 million shares (amounting to P18.73 billion) have been allocated for the international market. The balance of 30 percent or 138.57 million shares (amounting to P8.04 billion) have been allotted for the domestic market.

RWM is a gaming operator positioned to participate in one of the four gaming franchises offered by the Philippine government. The total offering consists of 1.57 billion common shares with a total value of P17.75 billion. Another 235.98 million shares have been set aside to cover market-making activities. Included in the listing are 14.16 billion shares representing the total number of outstanding shares prior to the IPO and 10.84 billion treasury shares of the company.

Subject to a 180-day lock-up are the following: Adams Properties Inc. 3.54 billion shares; Alliance Global Group Inc., 2.83 billion shares; Star Cruises Philippines Holdings B.V., 2.83 billion, and Asian Travellers Ltd., 1.78 billion shares.

With an unproven market and business that is yet to start, the offer price of P11.28 per share is seemingly just beyond gamblers’ odds.

The writer is a licensed stockbroker of Eagle Equities Inc. You may reach him at [email protected], [email protected] or at www.kapitaltek.com