Gus Cosio says so

Ideas on the Philippine Stock Market

Beyond skepticism

9:50 am  Thursday  7 October 2010

Based on the comments and questions that I have been receiving, these are the stocks that many of the readers follow:

EDC,  AT,  AGI, PX,  ORE,  PNB,  FGEN,  DGTL,  MEG,  MPI,  DMC,  SCC,  SMDC,  FLI,  MBT, SECB, VLL,  AP,  SLI,  ALI, PNB, TEL and the CebuPac IPO.

I think most of these stocks will follow he bullish flow of the market.  The outperformers that I perceive among this list would be:

AGI because the patronage of its Resort World Facilities have been more than overwhelming and the gaming side of the business appears to be raking in obscene profits.

ORE because it has attracted the interest of fund managers because of its reasonably good prospects for profitable operations and growth in the next 2 years.

DMC which is still very cheap in many valuation measures.

SECB due to it relatively high ROE compared to market.  It looks to be the cheapest banking share.

SMDC because its landbank and developments are quite impressive and it has a very potent sales force that has been doing a lot of closes.  I also think that it still looks cheap.

VLL because it is the cheapest property stock in terms of its discount to book value.  It is also a low-cost producer with critical mass in market share.

TEL due to its role as a good proxy for the Philippine market, good dividend yield, relatively low PE and enormous cash generation.

The Cebu Pacific IPO: I am still going through the detailed information on the IPO.  Cursorily, I see a very good theme in the low-cost carrier story as it is in fashion among fund managers globally.  I noticed that the top-pine expectation for 2011 shows a 20% growth while the bottom line gives a 30% growth.   It tells of a high productivity story.  They are trumpeting, as well, that among global low-cost carriers, they rank fourth in available seat per kilometer.

I’ll get more information out as I digest what I am reading about the company.

In the meantime, I think that this market will continue to be fueled by the actual wealth being created in the domestic economy, meaning that companies operating profitably in the Philippines are generating a lot of value added.  This is showing up in the economic figures and these values will eventually emerge as corporate profits.  Anyway, that should be another point of discussion.  Right now, suffice it to say that this market will continue to move past the skeptic.

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October 7, 2010 - Posted by | Financial markets in Asia

58 Comments »

  1. hi sir gus,

    LC today released a report of share acquired by directors/officers on sept 15 and earlier. Aren’t they supposed to report it on the day or at least much closer to the day the transactions were made so the public would know?

    Comment by jovy | October 7, 2010 | Reply

    • No. I think it is monthly. This will be at the discretion of the Company/Director/etc

      Comment by alexis | October 7, 2010 | Reply

  2. Nice post Sir Gus! Sir, I never expected AGI to be this strong! By the way, what are your thoughts on PIP Sir? Thanks! 🙂

    Comment by KennnyV | October 7, 2010 | Reply

    • Hi Kenny,
      I do not see anything spectacular happening in PIP over the next few weeks. I would sell PIP in favor getting the Cebu Pacific IPO.

      Comment by Gus Cosio | October 7, 2010 | Reply

  3. Thanks for this very informative post sir Gus! I bought back AGI last week after taking profit 2 weeks ago. And man I’m sure glad I did!

    VLL & MEG have slowed down the past week. I’m thinking of dumping both of them for SMDC or to raise funds for Cebu Pac IPO. What do you think of this move? Thanks in advance!

    Comment by Sonn | October 7, 2010 | Reply

  4. It’s worthy to note that I think you dropped DGTL from one of your prospects. Is this an indication that you are changing your mind about the prospects of Digitel?

    Comment by Topmace | October 7, 2010 | Reply

    • actually, the stocks that Gus mentioned are the stocks the readers had been talking about the last few days and not necessarily his prospects.

      The last post (or was that the other day?) Gus already indicated what stocks he personally owns – PX, DMC, DGTL, and TEL (Is this correct? again, can’t remember) and he’s angling to get into the Cebu Pacific IPO. – i mean he already has DGTL so its no longer a prospect.. – just speculating here.

      For my case, I’m content holding on to my stocks. There’s no ‘Top-slicing’ or any kind of slice for that matter. [Although I might be forced to sell some due to my kids tuition fee becoming due 😦 ]

      Comment by jasper | October 7, 2010 | Reply

    • and SLI?

      Comment by alssy | October 7, 2010 | Reply

    • Topmace,
      I am still holding on to DGTL, although at a price above 1.60, it is not as compelling when it was 1.40. I will keep DGTL for some time more, but as of today, I will simply nurse my position. I think DGTL will follow the market higher in a couple of weeks.

      Comment by Gus Cosio | October 7, 2010 | Reply

      • thanks much sir gus…. me too is holding my dgtl maybe for a week or so

        Comment by tatels | October 7, 2010

      • From what I know, there are more stories on DGTL besides turn-around, subscriber base, debt to equity etc. I would be willing to hold esp after the Cebu Pac IPO.

        Comment by Mark Anthony | October 9, 2010

      • Mark,
        i think that is a sound idea. Some people have been suggesting JGS; I believe it is a stock to watch.

        Comment by Gus Cosio | October 11, 2010

      • Don’t worry Sir Gus. I’m not holding it against you. 😀 I’m still actually holding on to my DGTL shares. And hope that before the year end, it’ll reach its destination, i.e., price point of P2/share. 😀

        Comment by Topmace | October 9, 2010

  5. Sir Gus, Thank you so much for your post! It pretty much answered all my questions re. the present market. Looks like need to buy back some of the DMC I topsliced to get some PX.

    Comment by Cholo | October 7, 2010 | Reply

  6. Sir,
    With the continued rise of the stock market, is there something to be cautious or weary? or Im just not used to see this historic highs? Coz based on our PE’s, stocks are still cheap.

    Comment by Mark Anthony | October 7, 2010 | Reply

    • Mark,
      It is always good to be cautious. Often times, I force myself to sell just to have some cash on my side. Frankly, even if I like the market absolutely, my instinct for self preservation have always had the better of me. I would not want to go back to the old ways of just holding on without making allowances for mistakes or misreading the market. This is no crystal ball future-seeing but practical money management of both profits and losses.

      Comment by Gus Cosio | October 7, 2010 | Reply

      • LOL.. That’s exactly what I’m thinking. Guys, be flexible when there’s an opportunity because opportunity comes very rare. It doesnt mean that when you shorted one of your favorite stocks because you can see opporunity in buying fast growing stocks is suicide or you’re not honest to yourself anymore. But being flexible and practicality really rewards your courageousness.

        Comment by joppy gwapo | October 8, 2010

  7. Hi Sir Gus. I will be getting some Cebu Pacific. Like you, I have been patronizing this budget airline for quite sometime. :))

    Comment by Shan | October 7, 2010 | Reply

  8. Got an email from First Metro Sec yesterday that I was entitled for the SMDC stock rights. I bought the shares last Friday’s trading, which from COL it was already ex-rights.

    I was wondering how was that possible, although I’m glad I was awarded the rights! 😀

    Comment by Topmace | October 7, 2010 | Reply

    • O, and got another from them today, saying they made a mistake. Dang!

      Comment by Topmace | October 7, 2010 | Reply

      • …they must have read your post 🙂

        Comment by jamie | October 8, 2010

      • Hahaha. yeah right!

        Comment by Topmace | October 9, 2010

  9. nobody can predict whats going to happen in the future..

    “be cautious where others are greedy, be greedy where others are cautious.” warren buffet

    ill do some research on the stocks you highlighted sir gus..

    Comment by cliffhanger | October 7, 2010 | Reply

    • That’s the right thing to do, Cliff.

      Comment by Gus Cosio | October 7, 2010 | Reply

    • Hi Cliff, I dont think we are at the point where “everyone is greedy”, Infact, I think, right now “everyone is cautious”.

      Comment by Jack Bauer | October 7, 2010 | Reply

      • Hey Jack,
        I think you’re quite perceptive. I sense a lot of cautiousness as well.

        Comment by Gus Cosio | October 8, 2010

  10. hi gus,

    i see you are endorsing cebu air IPO…i did’nt realize pricing had been finalized….

    what is the impact of IPO on JGS?

    Comment by glacier | October 7, 2010 | Reply

    • Glacier, I think the Cebu Pacific IPO is already in the JGS price. That is not to say that JGS could not go up futher. I believe that the Gokongwei stocks are on a roll and I just want to go with the flow.

      Comment by Gus Cosio | October 7, 2010 | Reply

  11. sir, any thoughts about LC? thanks

    Comment by jonathan | October 7, 2010 | Reply

    • Sorry Jonathan, but LC is bad luck to me.

      Comment by Gus Cosio | October 8, 2010 | Reply

  12. Sir,
    Thanks for your comments on being cautious and on self preservation. With earnings report expected in the few weeks, my instinct tells me to just hold stocks that im comfortable w/ despite corrections and buy more…. Does this psychology make sense. What would be some of your principles on timing?

    Comment by mark anthony | October 7, 2010 | Reply

    • Mark,
      You have very sound thinking in viewing your portfolio. Timing is very difficult to do because it is dependent on some guess work and instinct. I’d rather go for money management, i.e. adding to positions when markets are cheap and reducing positions when profits are already generous.

      Comment by Gus Cosio | October 8, 2010 | Reply

  13. Sir Gus,

    What is the minimum/maximum shares that an individual can get from CEBU Pacific IPO?

    cxons

    Comment by cxons | October 7, 2010 | Reply

    • Please ask the underwriters.

      Comment by Gus Cosio | October 8, 2010 | Reply

  14. Sir Gus,

    If your given a choice to hold 3 stocks on the following : ORE, SLI, PX, EDC, DGTL, MPI, SMDC and PO. What will be your choice? Im currently holding all this stock and I am planning to reduce it to 3 stock. Your suggestion will be higly appriciated. Thank you so much for your time sir Gus.

    Comment by jaayem | October 7, 2010 | Reply

    • I’d go for MPI(on dips), SMDC and EDC for a long term horizon.

      Comment by John | October 8, 2010 | Reply

    • Hi Jaayem,
      If you were to ask me today, they would be ORE, SLI and DGTL, but you have to ask me again after one month because it may change.

      Comment by Gus Cosio | October 8, 2010 | Reply

      • Thank you sir Gus,

        Is it ok to you again after a month. Sir my holding period si actually one month. Thank you so much. I position to ORE, EDC, PX and a little of MPI.

        Comment by jaayem | October 8, 2010

  15. Hi Mr. Cosio,

    Do you think the market will correct 10% or more? Will cebu pac double like the IPO of olden times =)

    Comment by Nivla | October 8, 2010 | Reply

    • Nivla,
      I really have no clue whether the market will correct by 10%. I just do not want to be unprepared for it. I also do not believe that Cebu pacific will double. My only sentiment is that I like the stock.

      Comment by Gus Cosio | October 8, 2010 | Reply

  16. I’ll go for Ore, edc and mpi.

    Comment by jolly | October 8, 2010 | Reply

    • @jolly & John
      Thank for your reply guys.

      Comment by jaayem | October 8, 2010 | Reply

  17. What’s your take on Apc and Acr?

    Comment by Cathy | October 8, 2010 | Reply

    • Cathy,
      If you are not yet in APC or ACR at this point, it may be dangerous to get in. I really do not know. While I took a punt on APC, I just did it quickly because I do not have verifiable information about the company. I think ACR may have a good long term story since it is getting into the power business. I do not think they can be as big as the bigger AP, FGEN, and EDC in the near term.

      Comment by Gus Cosio | October 8, 2010 | Reply

  18. Hello Buds,

    Anybody here knows what happened to URC? thats a huge spike at 10% up and closing at the day’s highs. Any clue whats going on? perhaps a Mega DEMAND on C2 green tea?

    Gus,
    Would you recommend buying Cebu Pac on the 25th? How much will t be selling at? Sadly, I didn’t get to ride on the AGI, RFM and URC trains. Your thoughts are highly appreciated.

    Comment by Gordon Gekko | October 8, 2010 | Reply

  19. How about ANI??? Last yr it has hit 34/sh maybe this yr it will hit again or maybe more? most of the stocks are in record high, there coulc be a potential for this stock to rise considering that it already expanded its business?

    Comment by dennis | October 8, 2010 | Reply

    • I have ANI but this is only for short term. Entered at 16.50. Let see what will happen in the next 2 months for this stock. It leave some scar to investor last year that’s why it is laggard to this Bull run.

      Comment by alssy | October 8, 2010 | Reply

  20. Guys,

    What happen to PX? I entered earlier however it seems it was shaken by some recent announcement with regards to INDOPHIL? Sir Cus, could you please enlighten us? Thanks

    I’m thinking to add more position on this one.

    Comment by alssy | October 8, 2010 | Reply

    • well, whats wrong with px? Its at 15p. 50% more than about 1 and half month ago.. It seems fine imho..

      Comment by jasper | October 8, 2010 | Reply

  21. What’s your take on SMC investing $40M in Indophil?

    Comment by Mark | October 8, 2010 | Reply

  22. SIR GUS,
    WHAT DO YOU THINK ABOUT THE INITIAL PUBLIC OFFERING OF CEBU AIR, INC.?

    Comment by AL | October 8, 2010 | Reply

    • I like it.

      Comment by Gus Cosio | October 11, 2010 | Reply

  23. Hi guys,

    I will be availing of SMDC’s SRO offering. Since I was already able to qualify, should I now just sit and wait or should I sell my SMDC position and invest it elsewhere since I will be awarded cheaper shares anyway?

    Thanks

    Comment by Lester | October 9, 2010 | Reply

    • Lester,
      I think the SMDC story is very good. Whatever you do after the SRO should be cash management, i.e. how much cash you want available now since you are already exposed to SMDC.

      Comment by Gus Cosio | October 11, 2010 | Reply

  24. Hi sir,

    I have been holding on to MPI for quite some time now. I have already gained a significant amount of profit from this and that its also the core of my portfolio. I was thinking of cutting this and placing some on EDC. Is this a sound move or should I just continue to hold on?

    Thanks

    Comment by Ria | October 9, 2010 | Reply

    • Ria,
      I’d like to ask you why you want to do that? Is there a compelling reason to buy EDC? You have to ask yourself these questions to have logic to your trades.

      Comment by Gus Cosio | October 11, 2010 | Reply

  25. hello,

    any feedback on SCC? i’m just a novice and I purchased a few stocks, your feedbacks are highly appreciated.

    Comment by rome | October 10, 2010 | Reply

    • SCC will continue to give a good dividend yield and its Calaca power plant should be done with its rehabilitation in a couple of months. Earnings will be quite good.

      Comment by Gus Cosio | October 11, 2010 | Reply


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