Stock Update as of October 31, 2012

AC cp - 440, bbp - 452, tp - 520

AP cp - 33, bbp - 33.21, tp - 38.19 note: Future Value (FV) estimates have been raised

BPI cp - 83.1, bbp - 79.13, tp - 91 note: stop buying for now.

FPH cp - 85, bbp - 96.19, tp - 110.62 note: currently on breakout from resistance of 80

JGS cp - 33.05, bbp - 34.78, tp - 40 note: slow mover

MBT cp - 93, bbp - 104.35, tp - 120

MEG cp - 2.42, bbp - 2.5, tp - 2.87 note: slow mover

SMPH cp - 14.3, bbp - 14.78, tp - 17

Caveat Emptor!

Technical Spotlight: Some Key Stocks and Trend Calls

SM Prime Holdings

9M12 earnings poised to beat forecast

9M12 income grows 15.4%. SM Prime’s 3Q12 net income grew 15.9% y/y, faster than the 15.3% growth registered in 9M12. This brought net income for the first half to Php7.4 Bil, 15.5% higher than a year ago. The said amount is also equivalent to 72.9% and 71.8% of COL and consensus full year estimates. Last year, net income for the first nine months accounted for just 70.8% of full year earnings. Earnings momentum of SMPH remains strong going into 4Q12, putting it in position to beat full-year estimates.

Revenues jump for both Philippine and China operations. For the first nine months of 2012, revenues from Philippine malls jumped 13.7% to Php20.2 Bil. This was driven by the strong growth in same store sales (SSS) and the first full period contribution of malls opened last year. SSS growth reached 8%, faster than the 7% growth recorded last year. Management also expects SSS growth to remain strong going forward (between 7% to 8%) as domestic consumer spending remains robust. SMPH also benefited from the first full period contribution of the 380,000sqm of GFA added to its Philippine mall operations last year. This is equivalent to 7.6% of its end 2010 GFA.

Revenues from SMPH’s Chinese operations were also strong, growing by 27% to Php1.9 Bil as both rental rates and occupancy levels improved. China currently accounts for around 9% of total revenues.

Five malls added in the Philippines, one to open in China. SM Prime has completed all the local malls in their pipeline this year. This year they opened five malls with a total GFA of 430,838sqm. This added 9% to SMPH’s mall GFA in the Philippines to a total of 5.5 Mil sqm. For its China expansion, SMPH will open their 150,000-sqm Chongqing mall in December. This will bring SMPH’s GFA in China to 795,172 sqm by the end of this year.

Reiterate BUY with FV estimate of Php17.00.  BUY rating on SMPH with a fair value estimate of Php17.00 is reiterated. We continue to like SMPH for being a major beneficiary of the favorable outlook for consumer spending in the country. We forecast revenues to increase at a CAGR of 13.7% from FY12 to FY14, and net income to increase at a CAGR of 12.5%. Although SMPH trades at a FY13E P/E of 21.8X, a slight premium compared to the 19.4X average FY13E P/E of other local consumer plays (JFC, PGOLD and URC), we believe the premium is warranted. Unlike other consumer plays, SMPH is resilient to fluctuations in commodity prices. Cash flow generation is also more stable, with the company consistently delivering earnings growth during the past 18 years.

Opening an account with an online broker (Citiseconline)

Steps in being able to use an online broker (I'll use Citiseconline because this is what I use, and what I have experience in but feel free to try others. There's First Metro Sec and BPItrade.)

*edit: For people living in Cebu, First Metro Sec has an office beside Metrobank - Fuente. All you need to do is open a savings account with Metrobank (minimum balance I think is P2,000.). Ask them where Norman Go is or just ask them where the office for First Metro Sec is and apply there.

1. Get Electronic banking to be able to fund your Citiseconline (COL) account.

2. Once approved by the bank (usually takes 3-5 working days if sa BDO), download and print the forms from here: COL Forms

Print out and fill-up the following: Individual CAIF, Trading Agreement, Signature Cards (2 copies)

*make sure nga ang email address you will put is your main one. They will call you and also send an email once approved na imo account.

3. Prepare 1 photocopy of a valid Philippines Government issued ID (driver's license, passport, SSS)

4. Prepare a recent billing statement (ako migo, since wala siya iya own billing statement, used sa iyang mama. As long as same address with your gov't. ID) because dili man ta maka personal appearance ngadto.

5. Send these documents via courier to the following address:

CitisecOnline.com Inc. Business Center 2403-B East Tower, Philippine Stock Exchange Centre Exchange Road, Ortigas Center Pasig City, Philippines 1605

6. Once sent, wait for 3-5 days. They will call AND send you an email if approved naka. They will then give you your account number. This is what you use to fund your COL account.

Payment via online banking:

1. Bank of the Philippine Islands (BPI)

Enrollment Process:

1. Log on to www.bpiexpressonline.com

2. Enter your username and password

3. Under Payments & Reloading, click Bills Payments, click Enroll all other Bills

4. Enter your BPI account number and Joint Account Indicator No.

5. Under Bill information, select CITISECONLINE.COM INC. (COL) or COL FINANCIAL GROUP, INC.(I think ila gi change, so check lang) as the enrollee merchant

6. Enter your CitisecOnline account number (8-digit code username) on the space under Reference Number

7. Click Submit

Payment Process:

1. Under Payments & Reloading, click Bills Payment, click Pay Bills Today

2. Under Pay, choose your CitisecOnline Account

3. Enter the amount

4. Choose a BPI account from where payment will come from

5. Click Submit

* You should receive a confirmation email from BPI if payment was successful.

2. Banco de Oro (BDO)

Enrollment Process:

1. Login to www.mybdo.com.ph

2. Click the Add Company/Biller icon

3. Fill-out the Enrollment Details and choose the Channels or electronic banking services where you may want to pay your bills in the future. Click Submit.

4. Click OK when the confirmation dialogue box appears

Payment Process:

1. Click the Pay Bills icon

2. Fill-out the Payment Details, choose your Payment Schedule, click Submit.

3. Click OK when the confirmation dialogue box appears

* You should receive a confirmation email from BDO if payment was successful.

3. Metrobank

No enrollment needed.

Payment Process:

1. Login to www.metrobank.com.ph

2. Under eBanking Solutions, click Pay Bills

3. Under Special bill, select CITISECONLINE.COM, INC or COL FINANCIAL GROUP, INC.(I think ila gi change, so check lang)

4. Enter your COL account number under Subscriber/Account Number

5. Enter your Phone No.

6. Choose the Metrobank account from which the payment will come from

7. Enter the amount

8. Select Immediate Payment

You should receive a confirmation email from Metrobank if payment was successful.

Once you have funded your account, you will receive an email from COL with your account number and your temporary password.

You can now enter citiseconline.com/ citiseconline.com.ph/ colfinancial.com

Here are the stocks I recommend for those starting out:

legend:
Buy Below Price - BBP
Target Price - TP
Current Price - CP

AP - BBP P33.21, TP 38.19, CP 33.4
FPH - BBP 80, TP 102.43, CP 79
MBT - BBP 104.35, TP 120, CP 94
MEG - BBP 2.50, TP 2.87, CP2.47
SMPH - BBP 14.78, TP 17, CP 14.26
BDO - BBP 75, TP 86.5, CP 63.5

How does this work? Lets take for example, MBT (MetroBank). As long as the current price is still below the Buy Below Price(BBP), we will continue to buy that stock. If it reaches the BBP, we stop buying, and just wait until our Target Price(TP) is reached. Once ma reach na ang TP, we sell that stock, and lock in our earnings.

What are the advantages to these stocks compared to penny stocks (very volatile, fast-moving stocks: higher risk-higher gain), if you are like me nga nag trabaho and doesnt have the time to stare at my computer screen to monitor my stocks, then this is the best way to go.

I am currently using Citiseconline.com(COL) as my online broker. Very nice and user friendly siya and you make all the decisions yourself. Compared to broker companies, gamay ra ang service charge per transaction sa COL.

For those nga starting out pa lang, I recommend getting electronic banking sa imo bank account. Ako BDO man ko, I just print and fill out a form found in their website that allows me to do electronic banking.

Whats so nice about electronic banking is this: I work from Monday to Saturday. Wala najud ko time to pay my bills sa credit card, etc. So I do it all online. Sure, naa risk of hackers, but just make sure nga the email you register is secure (I recommend gmail), unya your password is a combination of alpha-numeric characters. For example: instead of password, I would change it to p4ssw0rd.

Once you have electronic banking (registration lasts 3-5 working days), go to www.citiseconline.com and read their Easy Investment Program(EIP)...mao ni akoa karon.

To open a Regular account you need to fund P25,000 for your account. For EIP you only need P5,000 to fund your account to start. After the initial funding, ikaw na bahala how much you want to fund your account. I dont know how much ang minimum, pero naka try nako ug fund ug P1,000 kay na short ko.

Ang maayo ani nga method is this, of the recommended stocks posted, choose 3. Ayaw ug try to buy all, because if like me, gamay ra atoh i-deposit, gamay ra atoh ma palit. Hinay2x lang jud ta. My current 3 are MBT, SMPH, and MEG. Of course, if masdaghan paka ug capital, then feel free to invest as many number of the recommended stocks.

I add to my deposit every month 5,000. Do not try to match the number of stocks for every stock (e.g. 500 shares of MBT, 500 shares of SMPH, 500 shares of MEG)

You match the peso amount invested in each. For example, pag January, I invested P5,000 into MBT. Pag february ako gi butang ako new-earned P5,000 into SMPH. March - MEG. April, MBT nasad and so on and so forth until mu reach ang buy below price. If ma reach na gani ang BBP sa MBT, I switch to lets say CEB (cebu pacific).

Very important: Kailangan jud ug discipline ani...Pagsugod pa lang nako, sayop nako is this...Hots kaayo ko unya na suya jud ko sa mga uban penny stocks, so invest2x ko adto. Lost P4,000. Stick to blue-chip stocks, set your BBP and TP and you will be fine.

Do not worry if the Philippine Stock Exchange(PSE) goes up or goes down. Bisan pa sa time ni Marco and Martial Law, sigi ra japon inching upwards ang PSE.

For 2012, the PSE reached an all-time record high of 5,400. The Philippines' GDP grew by 6.4% at the first quarter, which makes us the 2nd fastest growing economy in Asia (with China being no. 1).

Even if mag gubat ta sa China, invest anyway. Even if pila ka typhoon mu agi, invest anyway. Why? because these giant companies will continue to operate. And they need capital to expand their business. We are just hitching a ride on the big blue whale.

This is now your money working for you.

How does the stock market work?

Time to focus now sa investing and how the stock market works. I'll borrow material from Bo Sanchez, because nindot unya simple iya explanation for it:

When I was eight years old, I learned that my parents invested in the stock market. I overheard them say that they owned shares of San Miguel. (My father worked for San Miguel Corporation for most of his life.)

I asked my father, “What do you mean by stocks, dad?”

He said, “If I bought a few shares of stock of San Miguel, that means I own a tiny part of San Miguel.”

“Wow,” I gushed, “if you own a part of San Miguel, does that mean they’ll give us free Magnolia ice cream and Coke?” (at that time, San Miguel also owned both companies.)

Dad shook his head. “No. It means if San Miguel earns money, they’ll give me a tiny part of their profits. They call them dividends.”

“Oh, I see.”

Actually, it was as clear as mud to me.
Dad looked at my face and knew I was lost. So he gave me an example. “let’s say your mother puts up a small candy store in
front of our house...” “But dad, Mommy doesn’t like candies. She loves 
chocolates.”

Dad rolled up his eyes. “this is just an example!”

“Then make it realistic. let her open a chocolate store.”

“Okay! Mommy needs P50 to buy the chocolates and another P50 to buy a small table for the store. So she needs a total of P100. But let’s say she doesn’t have p100. let’s say she only has P90. So she walks up to you and asks, “Bo, can you give me p10? In return, you’ll own 10 percent of my candy store...”
“Chocolate store,” I frowned.

“OK, chocolate store. So you give Mommy your P10. At the end of the year, the chocolate store earns a nice profit of P10. So Mommy decides to share with you P1, since you own 10 percent of the store. that P1 is what you call your dividend.”

“That’s great. So you’re earning dividends from San Miguel, dad?”


“Yes, but that’s just one way of earning. the other way is through capital appreciation.”

“Capital what?”

The Company Gets Bigger

“Let’s go back to Mommy’s chocolate store. do you remember how much was the store worth?”
“No.” “how much did she need to buy all the stuff?”

“P100.”

“Yes. that’s how much Mommy spent to buy the 
chocolates and the table. But after a year, business was so good, she decided to sell biscuits too. From the profits of the business, she bought an entire pack of biscuits worth P50. She also bought a second table for another P50. So Bo, how much is the store now?”“P200.”

“And how much percent do you own?”

“I own 10 percent of the store.”

“That’s right. one day, your sister says, ‘Bo, I want to buy your ownership of Mommy’s chocolate store.’ What will you say?”

I crossed my arms and pouted. "I'll tell her it's not for sale.”
“But if you wanted to sell it, how much should she pay you?”
“Ten percent of P200 is P20?” I flashed a smile, “Hey, I earned P10...”
“That’s capital appreciation. You pick up fast. But that’s not all...”
The Company Has More Potential
“You know how your sisters like to buy the same shoes and clothes? Let’s say your other four sisters want to also be a part-owner of Mommy’s chocolate store. Because they believe that the chocolate store will spread to 100 branches all over the world. they foresee Mom opening stores in Paris, New York, Moscow, Tokyo... So they go to you and beg you to sell them your 10 percent share. What will you do?”
“I don’t know.”

“Think.”

“I guess they’ll gang up on me, twist my arm, pinch my ear, and whoever causes the most pain wins.”
Dad rolled up his eyes to the ceiling again. “Bo, imagine if all your sisters are kneeling down in front of you, asking, ‘C’mon Bo, sell me your 10 percent ownership! please! pleeeeeeaaaaase!’”

That was my lightbulb moment. I got it.

“Hey, I won’t sell it for P20,” I said, “Since they’re fighting over it, I’ll sell it for P30. Or P40. Or even P50! I’ll sell it for P100. plus, whoever buys it from me must be my slave for the next five years.”

Dad chuckled. “So you realize that the price of the stock is determined by two things: Real Value and perceived Value. Real value means the cost of the store — how much are the chocolates and tables. perceived value means how much are people willing to buy it. Perceived value is based on potential. perceived value is based on demand.”

On Savings

So, ngano di manko mu prefer to put my savings inside the bank?

Lets say you have P1 million sa banko. If you keep your money in a time deposit account for 36 years, ang P1 million will become P4 million.

If you put that very same P1 million into recommended stocks (I'll post them here for free), for the same 36 years, ang imo P1 million will become P64 million. Large difference, diba?

Now the question is: How does one save?

Sa una, ako buhaton was 
1.) pay all my bills
2.) spend on my needs and wants
3.) whatever is left, put into savings.

Of course, after numbers 1 and 2, wala najud mabilin sa ako savings. And dira ko na sayop. Angay unta is this:
1.) Savings
2.) Bills and needs
3.) Wants

Lisod jud ni siya at first, mao nang you really need discipline. A good percentage of savings is 20%-30% of your net income(i.e. after SSS, witholding tax, pag-ibig, philhealth). The rest, kaw na bahala ana. Currently, mao ni ako setup:
30% savings/retirement fund
10% emergency fund(butang lang sa bdo savings account, ayaw jud ni hilabti except for emergencies!)
60% for bills, dates, walks, clothes, gas

Investing in the PSE

I wanted to start this thread because I wanted to  share on what I have learned with regards to getting financial freedom. I am 29 yrs. old on2012, and I regretted as to why I did not get the initiative to start saving or planning for my early retirement(more wealth to help others?....hehe  ). 

Hopefully, in this thread, I hope to motivate younger Filipinos on the values of becoming financially literate.

So on my first post with regards to Financial Health, I will be sharing about investing in the Philippine stock market, and it isn't good to just put money in your bank. I'm still writing down my material to have a nice format,  but here's the main point.

Every year, inflation(cost of commodities: oil, food, clothes, gas, electricty) rises on an average of 7%.

If you put your money on a savings account, your interest gain per year is only 3%.

If you put your money in a time deposit, interest gain per year is 5%.

If you put your money in the stock market, and in giant-solid companies (like SM, Ayala, Cebu Pacific), it is already proven that interest gain per year is at least 11%. And computation for compounded interest is not yet included.

There is a huge difference and you still beat inflation!

More to come...