Telecom stocks lift PSEi
The local stock barometer gained slightly on Tuesday as telecom stocks made up for the slump seen by index-heavy SM companies.
The main-share Philippine Stock Exchange Index added 50.27 points, or 0.8 percent, to close at 6,362.30 as investors priced in second quarter earnings and other corporate developments.
“I think most investors are taking advantage of the bargains they are seeing in the market and have probably already priced in the effect of rising policy rates on their portfolios. As the US market is already in a recession (using the textbook definition of two successive quarters of contraction), investors are likely expecting perhaps just one more hike from the Fed (Federal Reserve) which would also mean either the BSP (Bangko Sentral ng Pilipinas) stays put or raises just once more,” said Manuel Lisbona, president of PNB Securities.
The services counter rose 2.31 percent, led by telecom stocks, while the mining and oil counter added 2.72 percent. The financial, property and industrial counters all inched up by less than 1 percent.
PLDT’s towers
Manny Cruz, chief strategist at Papa Securities, said news about PLDT’s P13.2 billion proceeds from the sale of 1,013 telecom towers had boosted telecom stocks. In the case of Converge, he said the company’s stocks had just rebounded from “oversold” levels.
Shares of Converge and PLDT rose by 5.97 percent and 4.41 percent, respectively.
On the other hand, the holding firm counter slipped by 0.03 percent, weighed down by leading conglomerate SM Investments, which fell 1.41 percent, while its banking arm BDO lost 1.05 percent.
Despite BDO meeting the market’s second quarter profit expectations, online stock brokerage COL Financial said there was some concern on the significant increase in loan loss provisions made by the bank in the second quarter. To recall, debt jitters on the Udenna group, whose aggressive expansion BDO had long supported, recently escalated.
BDO performance
“Note that the first half provisions translate to an annualized credit cost of 66 bps (basis points), higher than what the bank initially guided in its first quarter 2022 briefing at 50-60 bps,” COL said in a research note.
But COL added that the continued provisioning was part of BDO’s plan to boost its bad loan cover “in order to build reserves for unforeseen events.” BDO’s plan is to set up P1.50 to P1.70 in credit loss provisions for every P1 of bad loan, up from the P1.38 provision as of the second quarter.
“More importantly, BDO confirmed that it has sufficient collateral cover on its P36-billion exposure to the Udenna Group. The appraised value of its collateral is worth 105 percent of its exposure. Moreover, the bank has already provisioned 25 percent of its exposure, increasing its total coverage to 130 percent,” COL said. INQ
