Gus Cosio says so

Ideas on the Philippine Stock Market

back in the blog…

1:45 pm Thursday  5 August 2010

I am finally back from taking some time off.  I was actually in Cebu for some work related matters.  I had a chance to explain mutual funds to some banking officers from the region.  I personally think that people in Cebu have better absorption of free market ideas than people in Metro Manila.  Those who live in proximity to the national government think that the government should do everything – from control the price of commodities to subsidizing everybody in sight.  In contrast, I look at Cebu and see all those small and medium scale enterprises (SMEs) carry out their business solely on their wits and God-given talent.  Somehow, it seems easier to articulate investment ideas to people who understand and want to play the game of markets.

Anyway, I am amazed, but not surprised, that our local market has remained strong.  To take a global perspective, I looked again at the correlation of the PSEi to the DJIA.  I did mention that in 1Q2010, the PSE was 0.93 correlated with the U.S. index; and that in 2Q2010, the correlation factor was 0.13 or practically no correlation.  For the month of July, the correlation moved up to 0.94 reflecting strong correlation.  On further analysis, I realize that the reason why correlation dropped in 2Q2010 was because the PSE did not want to drop when the U.S. indices plunged.  I think that because of the inherent cheapness of local stocks relative to earnings and asset values, our market has kept itself on a growth track that may be difficult to suppress at this point in time.

Before I took a break, I had mentioned that I thought MPI, which at the time was trading around 2.60, was cheap.  Yesterday, I attended the MPI investors briefing and I am more convinced that it is cheap – debt load and all.  Their gross consolidated D/E ratio presently stands at 0.61X which is relatively low for an infrastructure company.  When viewed from the strength of the cash flow of their two main subsidiaries – Meralco and Maynilad – any debt servicing burden does not appear heavy at all.

MER’s revenues were up 44% for the period to Php 23.92 billionand net income rose 51% to Php 4.85 billion.  More importantly, efficiency measure have improved as system losses have been reduced from 9.05% to 7.93%, comfortably below the regulatory cap of 8.5%.  there has also been a 26% improvement in system reliability and 21% in availability.

Maynilad, on the other hand, is a gem of a company.  Revenues are up 24% to Php 5.86 billion and income by 5% to Php 2.43 billion on a 10% increase in billed volume.  End period non-revenue water is down to 52.78% compared to the average of 55.05%.  Revenue growth is well assured as the Putitan Treatment Plant is now producing 100 million liters a day and should be raised further.  They are also fast tracking development of new sources of raw water such as Wawa Dam, the Pampanga River and the Sierra Madre.  Incidentally, DMC is MPI’s minority partner in Maynilad.

In essence, if there is anything worth trading in the next few months, it should be MPI.  It has excellent liquidity and the infrastructure story is something that many portfolio managers are looking for at this time.  Of course, DMC would be another, and for those who have made the money on DMC already, I think there will be a lot more to be squeezed from both DMC and MPI.  Given that DMC has almost doubled in value, I will not be surprised if MPI will experience the same.

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August 5, 2010 - Posted by | Financial markets in Asia

127 Comments »

  1. Welcome back Sir Gus! I am sure everyone are eagerly anticipating this new blog.

    Comment by Chris M. | August 5, 2010 | Reply

    • Right Sir Gus I believe that you have boosted everyone’s spirit out here.

      Comment by Foreign Investor | August 5, 2010 | Reply

      • Thanks, Ram. Glad to be of help.

        Comment by Gus Cosio | August 5, 2010

    • everyone is … 🙂

      Comment by Chris M. | August 5, 2010 | Reply

  2. Hi Sir,
    Welcome back! Nice to see your thoughts again. Any take on PNB? Is it still worth to come-in or wait for price to further go down. Still no word on Q2 results .
    Regards,

    Comment by mark anthony | August 5, 2010 | Reply

    • Mark,
      I saw some broker reports which rate PNB as a long term buy. This stock has much to go, I think.

      Comment by Gus Cosio | August 5, 2010 | Reply

  3. Sir Gus!! Im so happy that you’re back!

    Comment by cholo | August 5, 2010 | Reply

    • Glad to be here, too.

      Comment by Gus Cosio | August 5, 2010 | Reply

  4. Sir Gus, Is it ok to buy MPI (2.82) and DMC (19) at the current price levels? Any take on DGTL? while you were out it plunged down to 1.39. I think it closed today at 1.40. Is it affected by the new unlimited texting promos that Globe is offering the capture their market share?

    Appreciate your thoughts as always!

    Thanks!

    Comment by cholo | August 5, 2010 | Reply

    • Actually I just heard on the radio this morning that SUN has already rolled out their own unlimited texting to OTHER networks for as low as a 100 a week. Cheap! I am using globe but this made me think twice since most of my contacts are sun and smart..

      Comment by joseph | August 5, 2010 | Reply

      • Joseph,
        DGTL will surely be a competitor to contend with. I think the stock is cheap vis-a-vis its competitors.

        Comment by Gus Cosio | August 5, 2010

    • Tel started diversifying when it acquired part of MER I presume in anticipation of the now declining cellular business. I remember its share price dropped for few days after the announcement but recovered.

      Glo seems not to have done anything towards this end but instead ” maximized leverage”, by borrowing more and paying dividends. I read somewhere that paying excessive dividends seem to show lack of imagination on the part of those running the company,it is no brainer to pay dividends rather than think of something to add to company revenue stream, acquiring MER for instance on the part of TEL showed imagination.

      I wont presume to know better than those running Glo it being an AC company and they have been in business for so long.

      Again my hat is off to DGTL, small as it is it managed to change the landscape of the cellular business and such is now being admitted by the bigger players. Also, the entry of JGS into the BPO business is another future revenue stream, for DGTl via the internet facilities.

      thanks

      Comment by alex | August 5, 2010 | Reply

      • Well said, Alex.
        One reason for my cursory bias for DGTL is their having managed to carve market share from competitors notably GLO. If GLO’s share of consumer wallet has been declining and TEL has remained steady, then DGTL is the only player that is growing. People do not realize that DGTL has a Luzon-wide digital land-line backbone and an international gateway. This will allow them to compete more strongly than GLO in the broadband space. Seeing the price action on related stock, namely JGS, RLC and URC, I think DGTL may be a stock whose time has come. If you bought it at 1.50, it is cheaper to buy it now. This is a level that I think many will be happy with.

        Comment by Gus Cosio | August 5, 2010

    • Cholo,
      I attended the MPI briefing yesterday and discussed my thought with some analysts. There are the usual skeptics which I really appreciate because these are the guys who will be left chasing the stocks later. Maynilad is going to be a gem to MPI and MER is raking in solid cash together with the tollways. How can MPI go wrong. They have very competent people. Actually, the president is a long time friend, but that is beside the point. The present COO of Meralco is Oscar Reyes who ran Shell Philippine for a long time. They also have a battery of foreign water utilities experts running Maynilad.

      Comment by Gus Cosio | August 5, 2010 | Reply

      • Greetings Sir Gus,
        If you don’t mind me asking… How can an individual join company briefings. Does an individual need a certain share of the company? Or even a basic shareholder can join only if he/she has the stock certificates under their names? or?

        Thank you for your reply in advance
        Regards,
        Ram

        Comment by Foreign Investor | August 6, 2010

      • Hi Ram,
        the next time we have a briefing, I’ll let you know. We normally conduct our briefing at the PSBank 19th floor seminar hall which accommodates around 150 people so we give priority to our fund holders. We normally start it with Macro economics from our economist partners.

        Comment by Gus Cosio | August 6, 2010

    • Cholo,
      I would buy some MPI and DMC at these levels. I am also comfortable with DGTL at 1.40.

      Comment by Gus Cosio | August 6, 2010 | Reply

  5. Finally… (immediately shifts to read mode)

    Comment by herecomesthebaby | August 5, 2010 | Reply

  6. Sir Gus, what’s your take on AEV given that the news is unfavorable as regards their 2Q earning? what’s the sell price for if it continues to go south? thanks

    Comment by amie | August 5, 2010 | Reply

    • Hi Amie,
      Where did you get that news about AEV? AP just disclosed that 2Q net income surged 334% compared to the same period last year, or 696% year-to-date. AP is 75% owned by AEV. How could that be possible?

      Comment by Pepito | August 5, 2010 | Reply

      • I guess there was a mix up with the interpretation of the news about the Aboitiz transport net loss, which is remote compared with the overall performance which is very favorable. Thanks for the comment, I just read last night the news about AP and it performed very well…my apologies

        Comment by amie | August 6, 2010

    • Actually, the AP portion of the AEV report was very good.

      Comment by Gus Cosio | August 6, 2010 | Reply

  7. Hi Sir Gus.

    Welcome back! I sold my PNB shares with 42% profit. Thank you very much for your advice. 🙂

    Comment by Tubski | August 5, 2010 | Reply

    • Wonderful Tubski,
      I recommend that you continue to follow PNB. FYI, I own PNB in the 20’s and I recently bought more last Friday at 37.85. It will probably settle somewhere between 48 and 55 which is the analyst range for fair value of PNB.

      Comment by Gus Cosio | August 5, 2010 | Reply

  8. Im still learning in this stock market. My dividend play with SMC didn’t work, it was down P6 today which is more than its dividend. The sad part, it is 50% of my portfolio.

    Comment by jaayem | August 5, 2010 | Reply

    • Jaayem,
      One reason I am wary of SMC is I do not understand what they are doing. They seem to be shedding their food and beverage business in favor of power and energy. I am not sure if they can really pull it off.

      Comment by Gus Cosio | August 5, 2010 | Reply

      • Sir how about its SRO, priced at P75, what is your insight. Thank you so much for you time, you really a big help to us newbie.

        Comment by jaayem | August 5, 2010

      • If you mean SMC, I think you should read the offering memo. SMC has not been very transparent.

        Comment by Gus Cosio | August 6, 2010

    • There seems to me growth areas in food business if only SMC have the focus. Take URC, it manages to carve niche in Thailand and Vietnam competing against multinationals.

      Many years of company work are often times rewarded via share price increase in few months in the stock market.

      It maybe worth waiting for the SMC 2nd qrt result before making a move on the SRO. Also, it is not easy to understnd the current shareholder structure of SMC. Its majority shareholder is a company where SMC also invested. . .part of the money the shareholders bought the shares with, comes from SMC.

      Tks

      Comment by alex | August 5, 2010 | Reply

      • alex,
        I am not a follower of SMC right now. I own some shares which I bought ages ago.

        Comment by Gus Cosio | August 6, 2010

  9. Hi Sir Gus,
    It is good to have you back. I hope you enjoyed your stay in Cebu. What is your take on EDC? It has been on a downtrend lately despite good earnings. Is it ok to get in at the 4.4 level? Thanks!

    Comment by finch | August 5, 2010 | Reply

    • Finch,
      Unfortunately, I am also stuck with EDC at a cost of 4.65 or so. I like the stock, but I think it is not yet set up for a recovery. A number of portfolios are cutting their exposure. You could wait a little more until you see stronger support base for EDC. I suspect 4.20, but I cannot cast that in stone.

      Comment by Gus Cosio | August 5, 2010 | Reply

  10. Nice sir, you are back. I wanted to buy DGTL but I became hesitant when I read the GLO & TEL press release that the telco is at its maturity level already. Also, subscribers base of dgtl may be up but how about its marketing expenses, for sure it is a huge amount leaving a minimal contribution to net profit. Other bias is that it doesn’t declare dividends unlike GLO and TEL.

    By the way FLI and MEG are chasing each other, will it be good to chase prices at their levels or wait till it corrects?

    Comment by Cliff | August 5, 2010 | Reply

    • Cliff,
      The fact that the telco industrry has matured does not mean that there will be no opportunistic movements that can be profitable. If we viewed stock investing this way, we will only buy stocks in industries that are growing rapidly which may not always work in different stages of the business cycle.

      On FLI and MEG, it may be worth trading FLI. I prefer AGI to MEG. After all, AGI has MEG in it.

      Comment by Gus Cosio | August 6, 2010 | Reply

  11. HI Sir Gus! Nice to have you back…Sir, what is the fair value of DGTL?

    Thank you

    Comment by Jolly | August 5, 2010 | Reply

    • Jolly,
      I’m looking at 2.00

      Comment by Gus Cosio | August 6, 2010 | Reply

  12. Sir Gus! Congrats on winning ICAP awards on FAMI!

    Comment by James T. | August 5, 2010 | Reply

    • Thanks James. If you get impatient trading your own portfolio, you can pick up our equity (SALEF) or balanced (SALBAF) fund. Alternatively, you could benchmark your own trading performance to that of our funds.

      Comment by Gus Cosio | August 6, 2010 | Reply

      • Glad to have u back, Gus!
        Do you have any suggestions on how we can learn more about the stock market? Helpful materials? I think the next few years under PNoy’s leadership is a good time to invest in the philippines.
        Thanks!

        Comment by Cherchako | August 6, 2010

      • Yep. I’ll be definitely doing that..hehe its a good exercise to gauge performance…More power to FAMI!

        Comment by James T. | August 6, 2010

  13. Sir gus, what about fitch ratings of pnb/allied at d/e?

    Comment by WitcH | August 5, 2010 | Reply

    • I haven’t seen Fitch’s report. D/E is not a problem with banks. The ratio to watch is their capital adequacy ratio or CAR.

      Comment by Gus Cosio | August 6, 2010 | Reply

      • Sorry, I was very vague on my post… I did not mean debt-to-equity ratio, I meant that PNB was rated E by fitch, and allied rated D

        Comment by WitcH | August 6, 2010

  14. Wooot! Sir Gus is back!

    What are your thoughts on PX sir? Is it going to drop some more? Anyways, FAMI is just awesome, it ranked 1st in Equity, Bond and Balanced fund return YTD. I’ve actually influenced my gf on investing on FAMI’s balanced fund. We’ll be doing it together before the month ends.

    Comment by KennyV | August 5, 2010 | Reply

    • Kenny,
      I wouldn’t count on PX dropping further. The reason it is down is because commodity prices have eased and resource stock are not the flavor of the month. When the wind changes, this stock could go very quickly. The catalyst would be if the US economy and Europe rebounds strongly.

      Comment by Gus Cosio | August 6, 2010 | Reply

    • Sir Gus,

      As of writing, PX is now 9.8, would you be a buyer at this level?

      Comment by KennyV | August 6, 2010 | Reply

      • Yes Kenny, I would. i consider PX a long term buy. Incidentally, I am long PX at higher levels, but I’m not yet worried.

        Comment by Gus Cosio | August 6, 2010

      • I meant 9.98 on the post above^. Thanks sir! I got more PX@9.94, if you are not worried, then I have no reason to be. On the technical perspective PX’s RSI is at 23.83, I think it’s over sold. Thanks for the advice Sir!

        Comment by KennyV | August 6, 2010

  15. Welcome back Sir Gus most of my portfolio are holdings like jgs and aev, jgs is doing fine but aev is slowing – what can you say about it? is it okey to chase jfc at this time?
    Appreciate your inputs.

    Comment by art | August 5, 2010 | Reply

    • Art,
      I wouldn’t chase JFC, it is the kind of stock that you buy on downturns. AEV is taking a rest. I prefer owning AP now compared to AEV. You could also switch to MPI which has a good infrastructure story.

      Comment by Gus Cosio | August 11, 2010 | Reply

  16. Welcome back Sir Gus most of my portfolio are holdings like jgs and aev, jgs is doing fine but aev is slowing – what can you say about it? is it okey to chase jfc at this time?
    Appreciate your inputs.

    Comment by beginner | August 5, 2010 | Reply

    • Beginner,
      Be patient. Sometimes watching a stock is like watching a tree grow. AEV just like its subs -AP and UBP – are gems of a company.

      Comment by Gus Cosio | August 6, 2010 | Reply

  17. Sir,
    Was thinking of adding more positions on PNB, AP, DMC and MPI. How would you prioritize these issues at current price levels? Any thoughts as well on prices to enter?
    thanks

    Comment by mark anthony | August 5, 2010 | Reply

    • Just as you wrote it – PNB, AP, DMC and MPI in that order.

      Comment by Gus Cosio | August 6, 2010 | Reply

  18. Sir, any thoughts on Q2 report from AP. Ytd EPS P1.73. Is this good enough? Triple digit power generation growth while power distribution earnings down by 4% due to higher operating costs…

    Comment by mark anthony | August 5, 2010 | Reply

    • Mark,
      AP is a gem. I’ll write the details in my post later.

      Comment by Gus Cosio | August 6, 2010 | Reply

  19. Hi Gus, good to have you back

    Do you think MPI will run away from us this month? I took a small position a few days ago, but want to gradually accumulate.. sure hope it doest run away.

    I had a change of heart regarding MPI because of what happened to my GLO. Monopoly is always better.. But I need to decide first what to do with my GLO. (btw: Yo gp – I think its better if we fully divest glo even at a loss. its going against strong economic headwinds. lets just pretend we never bought it in the first place :/ besides there are wonderful stocks out there waiting to be discovered. the only question now for me is if ill do it sooner or later)

    What do you think Gus? (Hey I just realized, its highly probable people ask you this question all the time!)

    Comment by jasper | August 6, 2010 | Reply

    • Jasper,
      I do not think any stock will run away this month, but you should have a small position on MPI already then average down should it drop. For GLO, the fundamental reason why I would sell GLO and buy DGTL is because Globe’s market share is declining while Sun’s is growing. It is also looking to be the same in broadband to institutional users such as BPOs. In short, DGTL’s earnings are growing at the expense of the shrinking in GLO. Then I look at DGTL’s price in 2007 when it had less than half of today’s subscriber base; it was 2.12 versus today’s 1.40. Something’s bound to give.

      Comment by Gus Cosio | August 6, 2010 | Reply

    • Thanks for the update Jasper. You have a point, a lot of people I know use 2 phones and it’s always GLO/SUN or SMART/SUN, SUN being the common denominator. GLO has also been weighing down my portfolio since last year. Might as well sell it after qualifying for the upcoming 40 dividend. Could it be possible that they would also give a special dividend just like last year? That would help cushion the difference between our buying and selling price.

      Comment by gp | August 6, 2010 | Reply

  20. Hi Sir Gus,
    Nice to have you back. What are your thoughts on BDO given that their first semester income is up 94%? Is it a good buy @ 48.50?

    Comment by CJ | August 6, 2010 | Reply

    • CJ,
      on an absolute basis, BDO should be okay. But if you want to bet on a faster horse, for big banks, I prefer MBT. For medium sized – SECB, UBP or PNB. For speculation RCB. For a 3 month horizon, PNB is still my best banking bet. My problem with BDO is its high PE and price to book.

      Comment by Gus Cosio | August 6, 2010 | Reply

      • Sir Gus, your insights are really informative.

        I do like the banks as well. SECB for its conservative loan portfolio (NPL loan reserve coverage of more than 100%), UBP for its 5% dividend yield and low PE, RCB is trading below book value and low PE. PNB is trading below book value and the synergies it will have with Allied Bank. PNB+Allied tandem will mean Filipino+Chinese depositors together in one bank.

        As BPI will have a 10B rights offer, I am speculating it will soon acquire a smaller bank. Would you recommend selling my FGEN now to buy either UBP or SECB as these are the banks that had small gains recently? Buying UBP and SECB are not speculative as these are still cheap banks and with sound fundamentals.

        PNB was a buy when it hit 37 but I do not want to chase prices at more than 42. I already have RCB in my portfolio.

        Comment by alexis | August 6, 2010

      • Alexis,
        I think given the strong underlying economic fundamentals, banks become good proxies for economic growth benefits. Since you seem knowledgeable in looking at banks, try to see which may be your best bets. I can agree with you that RCB may be a godd recovery play on banks.

        Comment by Gus Cosio | August 6, 2010

  21. When Market Peaks Smart Investor Buys Dollars/Euro………….

    Comment by SmartMoney | August 6, 2010 | Reply

    • I don’t know.

      Comment by Gus Cosio | August 6, 2010 | Reply

  22. hi sir,

    what is the difference between cash flow and free cash flow? or are they the same?

    How do i find or compute free cash flow?

    A bit confused on this matter sir.

    Thanks.

    Comment by jovy | August 6, 2010 | Reply

  23. Hi Sir, Im thinking of selling my EDC shares (im stuck with @ 4.75 ave price). Which stock in your opinion will help me recover losses from EDC?

    Thank you!

    Comment by cholo | August 6, 2010 | Reply

    • I got my EDC shares at 4.57 (on the average). I sold them at 4.38 earlier to cut losses. I bought some DGTL shares. Hopefully it will cover all the losses I incurred from EDC.

      Comment by Aika | August 6, 2010 | Reply

    • My opinion – EDC’s income has gone up considerably. Estimated 3x this year. Sooner or later the stock price will reflect this fact. I think this is a perfect time to accumulate this stock. Or actually, I would want it to go down some more. I’m holding on for 4.3 then I’ll average down.

      Comment by jasper | August 6, 2010 | Reply

  24. MPI is going up.. up.. wait wait wait! :/

    Comment by jasper | August 6, 2010 | Reply

    • Yay! I’m so glad I didn’t sell all my MPI shares when it hit 2.82!

      Comment by Aika | August 6, 2010 | Reply

      • Someone reminded me I once said Greed is Good…

        Comment by Foreign Investor | August 6, 2010

  25. Hello Ladies and Gentlemen…

    I just read a post from Finance Manila.. This will make you laugh..

    http://www.financemanila.net/2010/08/dmn-aug-6-bad-job/

    “Every dog has its day, and today was MPI’s turn to say RUFF RUFF”

    —I’m not promoting any post.. just trying to make everyone happy during trading/investing

    Have a great day

    Comment by Foreign Investor | August 6, 2010 | Reply

  26. Hi Sir,

    What do you think on BPI’s rights offering? It is said that the price would be around 32-35 per share. I was thinking of investing my funds either to PNB or MPI but since i would also like to expand my portfolio, would this rights offering be a good addition?

    thanks!

    Comment by joseph | August 6, 2010 | Reply

    • After BPI offring Bank stocks will move sideways until January………

      Comment by Cambi | August 7, 2010 | Reply

  27. Hi, welcome back, whats your take on Fgen? price seems to be collapsing so with Edc?……I like reading your comments on this forum?…..would it be possible if you can make it look like Finance manila or traders pizza with you and a select few as moderator? More power to you!…same procedure….may members….may guest….may log in etc

    Comment by MIKE | August 7, 2010 | Reply

    • Unfortunately, this is not a forum, this is a blog. We can only invite Sir Gus to join the other forums, but not to let him allow other members/followers to post here as well.

      I wish though this was in a custom domain.

      Comment by deuts | August 7, 2010 | Reply

  28. […] infrastructure story is something that many portfolio managers are looking for at this time.” https://guscosio.wordpress.com/2010/08/05/back-in-the-blog/ Share on […]

    Pingback by MPI, Metro Pacific Investments Corp on the Rise! | AiDz's Trading Diary - A pinoy trader in Singapore | August 7, 2010 | Reply

  29. BUY DOLLAR/$…………..44.00

    Comment by philip | August 7, 2010 | Reply

  30. hi sir gus and followersi, if dgtl goes 1.43 in monday or tuesday with volume exceeding 30m and with relatively small fluctuations (plus/minus .03), then it seems to be tracing back its jan 2008 price action and i expect strong movement all the way to 1.9 in the next two – three weeks. i beleived many technical analysts thought that breakout will happen after july 22, but if you factor in fluctuations and relatuve pricing, 1.37 to 1.38 should be dgtl’s bottom, again im speculating purely on the statistical side.

    Comment by chris m. | August 8, 2010 | Reply

  31. so ur saying is buy mpi???

    Comment by gerald | August 8, 2010 | Reply

  32. Before buying study first the Risk vs. Reward ratio…40% stock 60% dollar………..If Pse Goes above 3700 I’ll be 100% dollar…….

    Comment by DollarBull | August 8, 2010 | Reply

  33. Hi Sir,

    I was wondering if it would be a sound move shifting my portfolio core to MPI for a long term hold? Right now, I have DGTL, JGS, DMC, MBT and PNB(46%). I can start to take profits now from JGS, DMC and MBT and place them to MPI which hopefully within 1-2 years, would spring back to its past level of P6.

    Thanks! 🙂

    Comment by Cholo | August 8, 2010 | Reply

    • Cholo,
      You can take profits on JGS and shift to MPI. I think DGTL can go as soon as the overhang is gone. MBT has about a 15% upside while PNB and DMC have both around 25% upside. Of course, MPI has 40 to 45% upside. You make the choice.

      Comment by Gus Cosio | August 10, 2010 | Reply

      • Hello Sir Gus,
        I totally agree with you with regards to MPI, Ive read their quarterly, yearly reports as well as the last stockholders meeting speech, they are really on the way they are really quite diversified and took over more hospitals now they are throughout the 3 major regions. Amazing company but hopefully their debts goes down significantly

        Comment by Foreign Investor | August 10, 2010

  34. LPZ going to 6+….

    Comment by robin | August 9, 2010 | Reply

    • after 6 its going to 11….

      Comment by albert | August 9, 2010 | Reply

  35. Sir Gus,
    What’s your take on MPI. Still worth chasing at 3.05 or better wait for a correction? If you were to choose between MPI and DMC in terms of potential for upsides at current prices in the next 2-3 months, what would be the priority?
    Regards,

    Comment by CM | August 9, 2010 | Reply

    • Hi,

      Maybe hard for MPI to reach 6 as that was before it issued additional shares.

      Thanks

      Comment by alex | August 9, 2010 | Reply

    • CM,
      I like them both, but MPI has stronger momentum. Buying at 3.05 is fine since I think it is worth 4. If at all it goes down below 3, buy a lot more.

      Comment by Gus Cosio | August 10, 2010 | Reply

  36. It seems that MPI all of a sudden became a ‘hot’ stock. And just when I wanted to buy too, all of a sudden it shot up like a bullet (it was 2.6 a couple of weeks back :/)

    Comment by jasper | August 9, 2010 | Reply

    • Jasper,
      With stocks of good value, you should learn to buy it when it is down. If you recall, I mentioned that it should be a good buy at 2.60 because my valuation of the stock is 4.

      Comment by Gus Cosio | August 10, 2010 | Reply

      • hi gus

        Yes, I already bought MPI since then. But I can accumulate only so fast. I thought Aug will give me a little room to accumulate at/or near the same price. But it seems that it is slipping away from me (though I will still buy it until 3.25 or so)

        btw: CHIB is part of my core. I’m actually happy it went down as I have wanted to accumulate for some time now.

        btw2: hey gp – GLO is falling so fast and we’ve lost so much value I’m starting to question the wisdom of holding on till the dividend record date :/

        Comment by jasper | August 10, 2010

  37. btw: whats up with CHIB? Why is it dropping down like a comet? I can’t figure it out. Earnings are up. There doesn’t seem to be any bad news. Everything seems good, and yet its 400 now from about 460’sh a couple of months ago.

    Anyone has anything to share regarding this?

    Comment by jasper | August 9, 2010 | Reply

    • Jasper,
      I think CHIB is a conservative bank with steady earnings. I haven’t heard anything adverse about CHIB except that earnings for the first half of 2010 is up 8%. If this is a stock you like for core holdings, you should wait for it to stabilize and perhaps consider adding to your position. By the way, CHIB is not a trading stock. You buy this to hold it for longer term horizon.

      Comment by Gus Cosio | August 10, 2010 | Reply

    • The thing that a lot of people miss about Chib is that it declares not just cash dividends but also stock dividends practically every year. This misleads people into thinking that its earnings per share does not grow, but the truth is that its earnings usually grow (although not this latest quarter, I think) except that because the number of shares increase due to the yearly stock dividends, earnings per share always seems flatter than it truly is. It also makes the price to earnings (per share) ratio not look impressive. But if you bought this and held for a long time, you would have made a ton of money, probably more than with any other bank.

      So as sir Gus says, this is not a good trading stock because people will not get excited about the eps growth and low pe of this stock. But if you look at the historical data of this stock and factor in the stock and cash dividends, I don’t think that there is any banking stock out there that would beat this over the past ten years. So This is the kind of stock for long term (Very very long term) investing. Note that every time you receive a stock div, next year all dividends will be based on your new number of shares, and so forth. Imagine how much you get by year ten.

      Good luck.

      Comment by Warren | August 10, 2010 | Reply

      • Hi Sir Gus/Warren,

        Aside CHIB, what stocks do you suggest that should be in the core. Im looking forward to keep it 4 years minimum so stocks that give out regular cash and/or stock dividends would be the best.

        I was able to get 250 shares of TEL @ 2410 each btw and planning to double it if it reaches that price again. Thanks a lot!

        Comment by Dex | August 11, 2010

    • Hi Jasper,

      I was thinking the same thing about GLO just this morning when I looked it up. It’s 2 days before ex-div date so I might as well hold it or sell when the price jumps up tomorrow. It’s uncanny how we’re interested in the same stocks sir. I saw CHIB earlier today at 400 and was wondering what the story was behind the drop in price. I was also looking at MPI when it was at 2.60 and hoping for it to hit 2.50 before buying which never happened only to watch it run up to 3++. I think it has great businesses but the thing that worries me is the amount of debt it carries. Am I right to assume that you are also a fundamental analyst sir?

      Btw, I would like to say thank you very much to Sir Gus for putting up this very insightful blog which I just recently discovered and for sharing your wealth of knowledge with us. More power to you sir!

      Comment by gp | August 10, 2010 | Reply

      • Wow, you read my thoughts exactly

        > are you a fundamental analyst sir?
        Well, I’m not by training. I’m a software engineer. But I took up some finance course just so I can analyze annual reports before I buy a stock.

        Basically, I’m heavily influenced by value investing as ‘the intelligent investor’ was the very first book I read about investing on stocks and even though I’ve read quite a few since then, what Ben wrote there is still stuck by me.

        Comment by jasper | August 11, 2010

      • On hindsight, we should have sold GLO a week or so ago at around 860+ and taken our losses which would have been relatively minimal then, but which may not be the case anymore. Even with the 40 cash div qualification tomorrow, GLO’s price is falling like crazy. I don’t even want to think where it will be tomorrow.

        I see sir, I also have the intelligent investor and I also read and analyze annual reports (or at least try to) before deciding whether to buy a stock or not. Btw, may I know where you took up your finance course sir or if you can recommend any finance courses? I think I understand the BS of most companies but I need some help with the banks. They seem different. HLCM also breaks their BS down into multiple parts which makes it harder to read. And there’s also the question of footnotes. Need to be able to filter the unimportant details from the useful ones.

        Comment by gp | August 11, 2010

  38. Hi sir Gus! I’m thinking of cutting my losses on EDC & FGEN and try to average down my position in MEG. I am also looking at buying MPI if its price falls below 2.8. Would buying MEG & MPI be a good strategy?

    Comment by Sonn | August 10, 2010 | Reply

    • just curious Sonn, how much did you pay for EDC and how long have you held it? (I have some EDC stocks too)

      Comment by jasper | August 10, 2010 | Reply

      • Hi jasper, I got my EDC shares at an average of 4.6331 just last month. At that time MEG was only around 1.3 – 1.5 range. It got me thinking I should bought MEG instead.

        Comment by Sonn | August 10, 2010

      • Sonn,
        Hindsight is always 20-20. You should, however, use your observations (document it) to help your stock picking decision in the future.

        Comment by Gus Cosio | August 11, 2010

      • It happens all the time to me too. I wanted to buy VLL at 1.9 but bought another instead. Now VLL is at 2.52 and the other stock lost 5% value. Talk about bad moves.

        But I think EDC is still a good buy(wonder what gus thinks about it though). I’ll probably accumulate till price tops 4.6 and hold as long as earnings are good.

        Comment by jasper | August 10, 2010

      • Jasper,
        I still like EDC for value. I do not think I will lose money on EDC even if my cost is around 4.65; It may take a little longer, but I think EDC is worth between 5.50 and 6.

        Comment by Gus Cosio | August 11, 2010

  39. Sir,
    do you think AP has lost its steam? Been trading flat despite heavy NFS and good Q2 results.

    Comment by CM | August 10, 2010 | Reply

    • correction heavy NFB instead

      Comment by CM | August 10, 2010 | Reply

    • AP is just taking a rest. Do not forget, this stock was 3.30 18 months ago. It’s gone up 6 times already. It deserves a rest.

      Comment by Gus Cosio | August 11, 2010 | Reply

      • MPI is also loosing its steam just like AP.. this one might take some time

        Comment by Foreign Investor | August 11, 2010

  40. gus, I’m curious do you have two sets of stocks? One for long term holding (3++ years), and one set just for short-term trading?

    Comment by jasper | August 10, 2010 | Reply

    • Yes jasper,
      I am keeping TEL and DMC as core holdings. Right now PNB is my banking core holding, but when it reaches its full value, I may want to switch out to something like MBT, BPI or CHIB.

      Comment by Gus Cosio | August 11, 2010 | Reply

      • MPI seems also loosing its steam

        Comment by Foreign Investor | August 11, 2010

  41. LPZ the coming thing………Very Cash Rich because of Meralco…

    Comment by Robin | August 10, 2010 | Reply

  42. Hello All!!

    Just for your info:

    Unilab gets ownership of Purefoods– August 10, 2010 12 MM

    http://teampilipinas.info/2010/08/purefoods-out-of-pba-as-new-owners-take.html

    Comment by Foreign Investor | August 10, 2010 | Reply

  43. Hi, Sir Gus,

    Im wondering what would be your TP on BPI ? since its profit reports are pretty good; should i hold. have loads of BPI

    thanks
    Aids

    Comment by Adrian | August 10, 2010 | Reply

    • Adrian,
      If you have loads of BPI, perhaps you should diversify a little. If you are a long term holder, you could switch to CHIB which as Warren points out has very good return over a long period of time. You could also consider PNB and MBT, if you want to remain in the banking sector. I personally think the growth is going to be most pronounced in infrastructure and power. This is why I like MPI and DMC.

      Comment by Gus Cosio | August 11, 2010 | Reply

      • Sir Gus,

        Phils I think is strong on consumers as well. I think consumer oriented stocks may have way to go in the next few months.

        thanks

        Comment by alex | August 11, 2010

  44. one more, last –

    how do you compute NAV? my computation for MPI places it at 4.75 (just (asset-liabilities)/total stock outstanding). But the firstmetro analysis places it at 2.58.. I wonder how is that computed.

    Comment by jasper | August 10, 2010 | Reply

    • did you strip out intangibles in your computation? more prudent to leave those things out.

      Comment by ed | August 10, 2010 | Reply

  45. Lopez Stock LPZ,Edc and Fgen…….No.1 LPZ

    Comment by jenny | August 11, 2010 | Reply

    • @ jenny your very correct about LPZ…Very,very CASH RICh…

      Comment by robin | August 11, 2010 | Reply

      • @All yes its surging

        Comment by Foreign Investor | August 11, 2010

  46. Hi Sir Gus/Anybody,

    Just wondering about the logic or objective of cross-transaction (Same code between buyer or seller). Is this the same as buy-back? I asked because I noticed a huge volume for FLI today and this is attributed to the cross transaction.

    Thanks in advance.

    Comment by Cliff | August 11, 2010 | Reply

    • Great question Cliff, I think everyone wants to find about this..even me

      Comment by Foreign Investor | August 11, 2010 | Reply

    • I think this happens because buyer & seller have the same broker.

      example: my online broker is First Metro. I sell my FLI shares. Cliff’s online broker is First Metro. He buys the FLI shares I posted for sale. Last sale for FLI would be First Metro buying from First Metro.

      Sir Gus/Anybody, please correct me if I’m wrong. Thanks! 😀

      Comment by Sonn | August 11, 2010 | Reply

      • Sonn,
        If that were the case, there would be an automated time stamp and the earliest posts at the same price will be matched for the amount on bid or offer for the corresponding amount in the same broker. If buyer’s or seller’s amount is bigger than the matched trade, the balance will be done in the market.

        Comment by Gus Cosio | August 11, 2010


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