Gus Cosio says so

Ideas on the Philippine Stock Market

Who’s afraid of the hungry ghost?

8:20pm Wednesday  9 September 2009  Philippine Stock Exchange Index  2829.41 (-0.81%)

I would like to review Tuesday’s (+21.49 pts.) and Wednesday’s (-23.07 pts.) moves since both days simply cancelled themselves out as far as the index is concerned.  Two stocks showed significant drops, but on closer scrutiny, they actually went up in value.  FGEN closed Friday at 24.50 but was just at 17.75 at Tuesday’s close.  MPI closed Tuesday at 5.8o and today it closed at 5.00

FGEN had gone ex-stock dividend splitting the counter 3 shares for 2 or a 50% stock dividend.  Doing the math, it should have opened around 16.33, but it immediately traded at 16.75 even closing at 17.75 which is effectively gave a 1.42 gain for the package.

It is a little more complicated for MPI because the new share issue does not yet have a fixed price but a range of 3.00 to 3.75 for approximately Php9.8 billion with an option to up size by Php 4.9 billion.  Anyway, the market is guessing that the eventual equivalent is 5.oo where it closed today.  The implied result of the offering is an offering price of 3.75 for only Php9.4 billion without the up size exercise, more or less.

In my opinion, FGEN is a more tangible trade at this point because there are too many unkowns in MPI right now for it to be a manageable trade.  I would probably wait until the offering gives more definite details just so I can err on the side of prudence.

As far as the rest of the market is concerned, I am quite happy with how SPH and Tuna have been performing.  I see some more juice in these stocks simply because their earnings multiples are still in single digit, yet top-lines are growing quite well.  I am also seeing new opportunities in the blue chips notably TEL, MBT, GLO, SMPH and AC.  I think these counters are coming to the bottom of their trading range simply because the market is consolidating.  Even MER is looking pretty much oversold with very few loose shares around.

Among the smaller caps, UBP and PNB are in the weaker side of their current range.  Both would still have a good valuation play since both are still trading way below its price to book.  In stocks like EEI, it seems that supply is coming out at 2.55, but once that is put into firmer hands, I still see this stock going to 3.00 or even 3.50 where P/E will still be single digit and dividend yield of still close to 4%.

In the mining sector, it seems that only MIC made it to the most active despite gold breaking past US$1000 an ounce.  PX gained a fluc on Php 30.6 million value traded and LC/B also gained a fluc for a combined value turnover of  Php 18.1 million.  One should not really ignore mining even if gold has eased to 998 because I think the gold train is still rolling.

Looking forward, it does not seem unreasonable that the Philippine market is pulling back since the rest of Asia is also consolidating.  while Shanghai is up 0.54%, the Hang Seng was down 1.04% and the Nikkei down 0.78%.  Only Jakarta and Bangkok matched China’s move in the same breadth.  The major markets are expected to move sideways at best and down slightly at worst.  The hungry ghost may be out there after all.

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September 9, 2009 - Posted by | Financial markets in Asia

10 Comments »

  1. aaah tuna tuna tuna, too bad I didn’t see that stock before hehe… oh well! better luck next time..

    Comment by Wren | September 9, 2009 | Reply

    • Wren,
      Never despair on a missed trade. There are opportunities around. If Tuna consolidates around 2, I could take a punt because I see the stock going to 3. You can buy it with a trailing stop 3 fluctuations behind.
      Yesterday, I advised a portfolio manager to sell MPI which he was able to do at 5.60 in spite of his cost being 5.80. The stock is now at 4.65. My point is that if you make a mistake, do not make the bigger mistake of not cutting your losses.
      So if you like TUNA, buy it at a time when it is consolidating. Put a stop 3 or 4 fluctuations below in case the trend reverses. Don’t be afraid to cut loss.

      Comment by Gus Cosio | September 10, 2009 | Reply

      • Wow! Thanks so much sir, I’ll take your advice to heart 🙂

        Comment by Wren | September 10, 2009

  2. Hi tito Gus!
    Good article! 🙂

    Comment by Ern | September 10, 2009 | Reply

    • Yo Ernie,
      welcome to this site. if you’d like to trade stocks on line, i suggest you open an account with First Metro Securities. The guys there are all my friends and from the feedback i receive, their system is pretty good. their site is https://www.firstmetrosec.com.ph and you can download their opening form there. God bless.

      Comment by Gus Cosio | September 10, 2009 | Reply

      • I’m with firstmetro too, I like their site. At first when I started, there were some problems, but it seems that they upgraded their system, and now everything is doing good.

        Comment by wren | September 10, 2009

      • Hey Warren,
        That’s very good to hear. Glad you’re working with a good on-line system.

        Comment by Gus Cosio | September 11, 2009

      • Oh, I’m just their customer hehe… And all i can say is that I’m satisfied with them 🙂

        Comment by wren | September 11, 2009

  3. Mr. Gus,

    Is it true that SSS is going to buy a stake in Sph?

    Thanks!

    Comment by Bingo | September 11, 2009 | Reply

    • Bingo,
      I have no information on this. Based on my knowledge of SSS investment parameters, they probably will not buy a stake. My view, however, is that someone is probably speculating on a big acquisition that SPH will be doing. If you go back to its IPO plans, they were supposed to use the additional capital for acquisitions but they had not yet closed any. My suspicion is that they probably are in the final stages of making one. I have no definite knowledge of it; it is just my gut feel from what I know of their plans.

      Comment by Gus Cosio | September 11, 2009 | Reply


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