Stock Update as of April 23, 2013

The word for the day is----- RELAX!

 Yesterday the PSE breached the 7,000 level and reached 7,100.

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

Philippines is now Investment Grade

from: Rappler.com


MANILA, Philippines - The Philippines won its first ever investment grade debt rating from global credit rating firm Fitch.

By upgrading the Philippines' sovereign credit rating to BBB- from BB+, Fitch gives the Philippines a vote of confidence and marks the first time the Philippines, once a basket case in Asia, joins the A-lister countries considered safe to invest in.

In a statement on Wednesday, March 27, Fitch added a stable outlook and cited a robust economy and improved fiscal management.

"The Philippine economy has been resilient, expanding 6.6% in 2012 amid a weak global economic backdrop. Strong domestic demand drove this outturn," Fitch said.

Fitch was the first among the other international credit rating firms -- Standard & Poor's (S&P) and Moody's Investors Service, which still rates the country one notch below investment grade. S&P currently rates the Philippines a BB+ market, while Moody's gave it a Ba1.

What a credit rating means

An investment grade is a seal of good housekeeping. It tells investors it is safe to do business in the country, and encourages them to put huge capital here.

An investment grade means the Philippines, as a borrowing country, has a strong ability to pay its debt. This lowers its borrowing costs, generating savings, which may be spent for social services. For Filipinos, it means better education and health care, and affordable loans for major purchases.

link to source: http://www.rappler.com/business/economy-watch/24936-a-first-investment-grade-rating-for-ph

Stock Update as of March 26, 2013

SM is planning to merge SMDC with SMPH. As you may have observed, the stock price for SMPH dropped. Now, SMDC's current price is  8.48. Think about it this way, if we get the average of the 2 stock prices, what happens? 18.46 (SMPH) + 8.48 (SMDC) / 2 = 13.47. Thats what market psychology is thinking and that is actually what's going to happen.

For now, I advise you to put SMPH on hold. This is a good thing! If SMPH and SMDC merge, they will become the largest land developer in the country (SM Land). Just hold on and don't add for now.

A few weeks ago, I was very fortunate to have been invited to talk to new friends about investing in the stock market. Thank you for the invite and I hope your investments are doing well.

This brought to mind my state of thinking when I was just beginning to invest. I remember being all excited thinking "I'm gonna be rich!". Yes...in-time.

I remember checking out stock prices everyday, and resented the fact that I didn't have additional money to add whenever the market went down.

I recall when I made my first P500 I was so happy, I bought a magnum ice-cream bar to celebrate.

But after awhile, I got so busy with work that I forgot about monitoring the stock market everyday. I also lost some excitement because of the market's slow movement. I would check the newspaper during lunch and check prices really quick. I even missed selling 2 stocks when it hit TP!

And you know whats so funny? It was at that time that my portfolio grew the most. Why? because I wasn't meddling. I wasn't stressing myself over stock prices everyday. I somewhat didn't care how my stocks were doing. I didn't move in and out of different stocks. I just let my portfolio be...

I just knew that the stocks I had at the time made me content. That those companies were solid companies and that my fretting over prices everyday actually didn't make a difference whatsoever!

Right now, I know you are feeling all those things. Checking the market everyday... wanting to add more capital when the market is down so you can buy more shares...

But forget it. Let your portfolio be. Just follow your pledge of adding capital everymonth/quarter/year and leave your stocks to grow. Whats better is you don't even need to water them!

May God bless your investments!

Playing the market

By Gus Cosio

A lot of market players are likely asking themselves if we are still in a bull market. For people who play the market by way of scalping or stagging individual stocks, price movement of the last few days can be very daunting. Anyone would be very lucky if he went long and made money. The difficulty about short term traders is they tend to chase prices both on the rise and then on the fall. The only ones who are successful doing this strategy most of the time are broker-dealers in the exchange simply because they are immersed in the stocks they trade the whole time. Also, they have no friction cost on their trade.

For the average individual, one has to be more circumspect. Investment horizons should be longer which really means one should not expect a quick profit on every trade, but be thankful for every opportunity when it happens. Today, in spite of the recent weakness in share prices, it may not be too risky to do some cherry picking provided that your investment horizon is not too short. Of course, the adage is that one should not try to catch a falling knife. Nevertheless, after this decline starts to show signs of stabilizing which to my mind it has, it would be good to be long in positions.

Yesterday's price movements were very encouraging; my view is that after a number of days of declines, the market is starting to turn. I would stick to strong rather than speculative stocks because that is where the money is going. I've always believed in following the money flow particularly in bullish trends such as what we have.

Stock Update as of March 11, 2013

The PSEI has breached the 6.800 mark.  As of this writing, PSEi is at 6,849. Here's the intraday chart.

Here's the current standing of our stocks

For those holding PNX, ex-date for the dividends is on April 5, 2013. Remain vigilant and keep monitoring this stock. Our TP for PNX is P14.9. For those who do not have PNX, DO NOT BUY anymore.

As always, Caveat Emptor!

May God bless your investments.

Stock Update as of Feb. 21, 2013

The market started to climb in the morning, reaching the 6680 level, but tapered down and reached 6620. This could be a minor correction day or it could continue throughout the week. Keep some cash ready to buy on dips.

I added 3 new stocks into our list:EEI, SMPH, and DNL. Also, COL released their new FV. Below are the new estimates and BBPs.

EEI has the largest upside of all because of the PPP Projects to be implemented this year.

As always, Caveat!

No Major Correction Yet

by Gus Cosio


Many PSE investors have been waiting for a correction, myself included, for a few weeks now. It hasn't happened in a big way yet. What we have been seeing are intra-day corrections or shallow end of day ones. The market looks expensive from an aggregate point of view, but do not mistake the forest for the trees.
I think the reason why the index has been resilient is because a good number of individual stock still offer good value.

Take 2 very expensive stocks -- ALI & BPI. Both of them were very expensive when they were 20% lower. Why does it defy pricing logic that both stock have gone higher? Well, I think it is because different investors have different investor parameters. One thing common with both ALI & BPI is they both have very stable earnings and high returns on equity. I think the way these 2 stocks are priced reveals one dynamic of the market and that is when institutional investors want an exposure to a particular market, they choose stocks that have both financial soundness and heft.

I think the same thing can be said of SM & SMPH. And as this logic proceeds, we can understand why AC and GTCAP are pushing towards what usual analyst logic would see as expensive.

What we are forgetting is the idea that a game changer has been unfolding in our market which is the idea of a credit ratings upgrade. The forward looking rationale is that money wants to be in the game before it is played. If we believe indeed that the country is up for an upgrade, then the idea of being expensive should not deter us from remaining constructive on local stocks even if analysts see it as expensive. After all, many analysts have been proven wrong many times.

As a matter of strategy then, I think it is still wise to be exposed even to some of these expensive stocks. More importantly, because we expect the economy to do better, we should even be more confident in stocks with cheap valuations and sound financial conditions. This, I think, would be the best way to derive returns in the Philippine market.