Today, at 10:25 am, it began to dip to the 7,000 level, but went back up to the 7,050 level by lunchtime.
The market is always moving and some of my friends were asking me what to do? Should I sell? I want to sell! What else should I buy? Should I buy? I want to buy!
Take a deep breathe and relax. The market will always be there and will always move like this. Discipline yourself to follow the simple rules we have set:
1.) As long as the price is below the buy below price, we keep buying.
2.) Once it reaches target price, we sell.
3.) Maintain 3 stocks from different sectors.
Here's the stock update
I added CPG and MEG. Here's why:
Century Properties Group, Inc. from COL's research
- Net income reaches Php1.86Bil. Century properties reported a net income of Php1.86Bil for 2012, more than double from the previous year of Php866Mil. This is in line with our estimate as it accounts for 100% of COL forecast but only 93.7% of consensus forecast. Growth in income was driven by a 104% growth in revenues for the year as the company booked revenues from its launched projects.
- Pre-sales reached Php21.40Bil. CPG reported that full year 2012 pre-sales has reached Php21.4Bil, up by 16.6% from the previous year. Strong pre-sales figure came from the back of continued successful launch of existing projects. According to CPG, total units opened for sale as of 2012 were 92% sold. The company added that pre-sales as a percentage of inventories has now accelerated to 127%. The strong take-up brought unbooked revenues to Php27.9Bil, which is good for 24 months. Meanwhile, customer split leaned further to non-Filipinos, with international clients accounted for 74%, up from 69% reported in 3Q12.
Megaworld Corporation
- We reiterate our BUY rating on MEG and raise our FV estimate from Php4.00 to Php4.90 as we increased our NAV estimate from Php5.30 to Php6.53 to reflect the favorable impact of higher property prices on its landbank. Asset price appreciation is one of the key drivers for property companies. Higher land prices and the anticipation of further increases in the future resulting from low interest rates, strong economic growth and infrastructure developments have already benefitted the share price of companies like Ayala Land and Vista Land. However, this has yet to be reflected in share price of Megaworld, notwithstanding its huge landbank found in attractive locations in McKinely and Cebu.
- Asset price appreciation has been one of the themes for property developers since last year. Investors continue to buy shares of ALI despite its expensive valuation relative to earnings largely due to the increasing value of its landbank in Nuvali, Makati, Fort Bonifacio, and most recently FTI. As ALI continues to develop these properties, prices are expected to keep rising over the long term. VLL has also benefited from the increasing value of its land in Daang Hari property. As stated in our VLL report, the Daang Hari-SLEX link project has fueled a significant increase in lot prices in VLLs project in Daang Hari.
- We believe MEG will also benefit from the ongoing appreciation in property prices given the attractive location and size of its landbank. MEG has around 45 hectares of raw land in McKinley Hill, Uptown Bonifacio, and McKinley West combined. These properties are in close proximity to Fort Bonifacio and FTI, both of which have shown a significant increase in property prices recently. According to Jones Lang LaSalle, the price of commercial lots in Fort Bonifacio have climbed to more than Php400,000/sqm from Php250,000/sqm in 2011, while commercial lots in ALI’s recently-acquired FTI property were sold at a high of Php180,000/sqm. In line with the increase in prices of the said properties, we are raising our fair value estimate for MEG’s McKinley landbank from Php70,000/sqm to Php120,000/sqm.
- We also increased our estimate for MEG’s Mactan landbank to Php25,000/sqm. We previously valued the Mactan landbank a very conservative value of only Php4,800/sqm which is based on the company’s acquisition prices. Note that commercial lots in Cebu IT Park and Cebu Business Park are already being sold at Php50,000/sqm.
- We are positive on MEG’s prospects in Cebu given the rapid growth of in the region. In 2010 and 2011, the GPD of Central Visayas, which Cebu is part of, grew faster than the national GDP. Central Visayas grew 12.5% and 7.9% in 2010 and 2011 compared with the country’s 7.6% and 3.9% respectively. In line with its strong economic growth, the island of Ceub offers much promise in hosting the next-generation CBDs. It is also very appealing to the tourism market as it is frequented by not only locals but foreigners like the Japanese and Koreans. In fact, according to MEG, a lot of Koreans and Japanese have acquired residential units in their Mactan Newtown project. Property prices should increase further once the new Mactan-Cebu International Airport is constructed as it would expand the airport’s capacity from 4.5 Mil to 8 Mil passengers annually, facilitating the growth of tourist arrivals.
So CPG and MEG are from the Real Estate Sector. For SMPH holders, switch from it to another of these 2.
As stated above, relax! The more you move in and out of stocks, the more commissions you must pay and eat away from your profits! As Warren Buffett said: Don't dance in and out of stocks. Only your brokers will be happy.
May God bless your investments...
~Crimson
