tuesday, 26 march 2013 - col financial - philippines · pdf file15-mar-13 ubp union bank of...

The PSEi continued its rally, increasing by another 78.88 points or 1.21% to close at 6,597.59.

Index gainers led decliners 24 to 5 while only 1 issue remained unchanged. The Property sector (+2.28%) was the strongest during the last trading session. Significant gainers were led by ALI (+3.69%), BLOOM (+3.68%), AGI (+3.34%), MPI (+2.84%), and MBT (+2.75%). On the other hand, notable decliners were SCC (-1.15%) and MER (-0.64%).

Value turnover declined to Php9.9Bil from Php9.3Bil last Friday. Foreigners were net buyers, acquiring of Php219Mil worth of shares.

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Market Summary

Close Points % YTD%PSEi 5,210.89 21.52 0.41 19.19All Shares 3,459.02 14.18 0.41 13.60Financials 1,304.87 5.26 0.40 34.67Holding Firms 4,369.45 10.57 0.24 24.71Industrial 7,907.14 21.75 0.28 11.77Mining & Oil 23,177.28 -59.86 -0.26 -1.39Property 1,908.65 31.58 1.68 28.85Services 1,783.59 -1.00 -0.06 10.35

INDICES

Ticker Company Price %SMPH SM Prime Hldgs 13.60 4.29RLC Robinsons Land Corp 18.46 2.56MPI Metro Pacific Inv Corp 4.20 1.94MEG Megaworld 2.15 1.90ICT Int'l Container Term 71.70 1.85

INDEX GAINERS

Ticker Company Price %URC Universal Robina Corp 59.45 -3.25SCC Semirara Mining 220.00 -2.65DMC DMCI Hldgs, Inc 57.90 -1.53GLO Globe Telecom, Inc 1,135.00 -1.13JFC Jollibee Foods Corp 105.80 -1.12

INDEX LOSERS

Ticker Company TurnoverAC Ayala Corporation 378,414,800ALI Ayala Land Inc 232,134,500RLC Robinsons Land Corp 207,296,400BDO BDO Unibank, Inc 192,199,500TEL Phil Long Distance Co 183,260,600

TOP 5 MOST ACTIVE STOCKSEVENTS CALENDARDATE TICKER COMPANY EVENTS13-Mar-13 MPI Metro Pacific Investments Corp Ex-date Php0.02 Cash Dividend14-Mar-13 AP Aboitiz Power Corp Ex-date Php1.66 Cash Dividend14-Mar-13 AEV Aboitiz Equity Ventures Inc Ex-date Php1.44 Cash Dividend14-Mar-13 AEV Aboitiz Equity Ventures Inc Ex-date Php0.56 Cash Dividend14-Mar-13 TEL Philippine Long Distance Telephone Co Ex-date Php112 Cash Dividend14-Mar-13 DTEL Philippine Long Distance Telephone Co Ex-date Php112 Cash Dividend15-Mar-13 UBP Union Bank Of Philippines Ex-date Php3.50 Cash Dividend19-Mar-13 AT Atlas Consolidated Mining & Development Ex-date Php0.25 Cash Dividend19-Mar-13 PHN Phinma Corp Ex-date Php0.40 Cash Dividend21-Mar-13 MER Manila Electric Co Ex-date Php6.10 Cash Dividend21-Mar-13 TA Trans-Asia Oil & Energy Development Annual Shareholdings Meeting22-Mar-13 DFNN DFNN Inc Annual Shareholdings Meeting22-Mar-13 LR Leisure & Resorts World Corp Annual Shareholdings Meeting25-Mar-13 FOOD Alliance Select Foods International Inc Annual Shareholdings Meeting26-Mar-13 PNC Philippine National Construction Corp Annual Shareholdings Meeting27-Mar-13 CMT Southeast Asia Cement Hldgs Annual Shareholdings Meeting

Headlines:

Technical Spotlight:

GMA7: FY12 results disappoint on poor 4Q performance

RFM: Management guiding Php800Mil in net profits for FY13

Economy: SEC publishes relaxed foreign ownership draft rules

Economy: March inflation is expected to be steady

Economy: Budget deficit significantly rises from last year

Corrective Trends: Knowing your ABC’s

TUESDAY, 26 MARCH 2013

INDICES

INDEX GAINERS

INDEX LOSERS

TOP 5 MOST ACTIVE STOCKS

Close Points % YTD%PSEi 6,597.59 78.88 1.21 50.91All Shares 4,137.49 38.23 0.93 35.88Financials 1,748.03 18.17 1.05 80.41Holding Firms 5,751.48 49.10 0.86 64.16Industrial 9,976.69 110.29 1.12 41.02Mining & Oil 21,395.90 -95.56 -0.44 -8.97Property 2,713.94 60.60 2.28 83.22Services 1,939.82 20.89 1.09 20.01

Ticker Company Price %ALI Ayala Land Inc 30.90 3.69BLOOMBloomberry Resorts 14.10 3.68AGI Alliance Global Inc 20.40 3.34MPI Metro Pacific Inv Corp 5.43 2.84MBT Metrobank 115.80 2.75

Ticker Company Price %SCC Semirara Mining Corp 258.00 -1.15MER Manila Electric Co 312.00 -0.64BDO BDO Unibank Inc 87.45 -0.51DMC DMCI Hldgs Inc 53.70 -0.37MWC Manila Water Co 36.75 -0.14

Ticker Company TurnoverSM SM Inv Corp 703,952,900AGI Alliance Global Inc 702,494,500URC Universal Robina Corp 556,876,600TEL Phil Long Distance Co 526,280,700RLC Robinsons Land Corp 457,627,100

(As of March 25, 2013)

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P H I L I P P I N E E Q U I T Y R E S E A R C H

Tuesday, 26 March 2013 page 2

GMA Network, Inc:FY12 results disappoint on poor 4Q performance

FY12 results disappoint on poor 4Q performance. GMA reported FY12 net profits of Php1.61Bil, much lower than consensus estimate of Php2.26Bil. The decline was largely due to higher operating expenses incurred in the 4Q12. This more than offset the better than expected revenue growth of 6.5% for FY12 to Php13.9Bil.

Higher 4Q12 operating expenses drag down FY12 results. Net profits in the 4Q12 declined by 79% to Php30Mil largely due to higher operating expenses incurred during the period. According to GMA, the rise was due to an upsurge in amortization of program rights and the increase in depreciation charges from the commissioning of its Media Asset Management System (MMS). While overall operating income rose by just 5.7% in the FY12, EBITDA level grew at a faster pace of 10.4% to Php3.39Bil.

Revenues come in higher than expected; 2013 to be a good year. Revenues came in higher than expected as GMA network managed to post a 7.0% increase in airtime sales to Php12.7Bil. Management cited data by AC Nielsen that continues to show GMA’s dominance with higher ratings over main competitors ABS and TV5. In fact, according to GMA Chairman Gozon, the momentum continues to show in first two months of the year with GMA7 hitting an all time high in February alone.

Consensus has a HOLD rating. Consensus has a HOLD rating on GMA7 with a FV estimate of Php9.00/sh.

EDMUND [email protected]

Exhibit 1: Results Summary

COL ConsensusRevenue 13,083 13,929 6.5 - 107.7Operating Income 4,104 4,336 5.7 - -

Operating Margin (%) 31.4 31.1 (0.2) - -EBITDA 3,076 3,397 10.4 - 93.5

EBITDA Margin (%) 23.5 24.4 0.9 - -Net Income 1,705 1,617 (5.2) - 71.4

Net Margin (%) 13.0 11.6 (1.4) - -Source: GM A, Bloomberg

FY11 FY12 %Change % of Full Year Forecastin PhpMil


Tuesday, 26 March 2013

RFM Corporation:Management guiding Php800Mil in net profits for FY13

Management guiding Php800Mil in net profits for FY13. RFM Corp expects back-to-back banner years with the company set to record its highest revenue and profit total for FY13. The food and beverage company is targeting revenues and profits to rise by 15-20% for FY13 with overall net income to breach the Php800Mil mark this year. According to EVP and COO Nacino, economic growth has been driven by domestic consumption and the company plans to capitalize through the launch of new products under its existing brands. Election spending is also expected to contribute to sales particularly in its beverage lines.

Consensus has a BUY rating. Consensus has a BUY rating on RFM with a FV estimate of Php6.03/sh. Based on management’s guidance of Php800Mil in net profits, the company is trading at 18.8X FY13 P/E, a significant discount to the 25.7X average consumer P/E in the Philippines.

Economy:SEC publishes relaxed foreign ownership draft rules

As was hinted earlier in the year, the Securities and Exchange Commision (SEC) published a more relaxed draft guideline regarding foreign ownership limits. In the said draft, the foreign ownership limit on covered companies will be applied on both total voting outstanding shares and also on total voting and non-voting outstanding shares. The draft rules also specified that the percentage of ownership of a company is measured specifically by voting stocks.

With these relaxed draft rules, we believe that SEC will no longer require companies to adhere to the foreign ownership limit on each class of shares, one of the biggest issues a handful of corporations were facing last year. Since these said companies (TEL, GLO, MWC, ICT and ALI) have voting preferred shares to dilute total voting shares, they should be effectively well within the specified 40% foreign ownership limit.

Economy:March inflation is expected to be steady

The Bangko Sentral ng Pilipinas said that they expect March inflation to fall within 2.8-3.7%. The BSP added that the upward adjustment in electricity rates will most likely be offset by lower dometic oil prices and price reductions in selected food items. This is quite favorable for the economy as it gives the BSP room to keep key policy rates low in order to boost the economy.

EDMUND [email protected]

KERVIN [email protected]




Economy:Budget deficit significantly rises from last year

The government reportedly incurred a budget deficit of Php19.5 Bil in January, up by 22.5% from the deficit incurred on the same period last year. Although the spending outpaced tax collection growth, overall this is still positive for the economy as increased government spending should boost economic growth. In addition, the deficit of Php19.5 Bil is still just 8% of the deficit cap of Php238 Bil.




Technical Spotlight


More on our A-B-C’s:

• Corrective motions in markets are commonly patterned after the basic reactive swings of the Elliot Wave Theory; these show corrections to be driven by three process waves known as an A-B-C (as shown on the right)

• The three wave correction is first began by a breach of our short to medium term support (A), and then opening into a quick oversold rally into short term averages (B) then completing the corrective curve with another reactive or consolidating base-out swing (C)

• In the short term we may have completed the first part of this corrective wave know as the ‘A’ (sample “A”s are shown in page 7)

• The B-wave rally is a technical rebound brought about by the hasty decline of ‘A’ usually into oversold levels – this rebound on occasion may be traded for a possible bounce to its short term averages (32 or 16-day MAs) (see “B” samples in page 7)

• These rallies however may be fickle and brief and if traded, must be entered into as soon as the bounce is identified and commonly triggered by the presence of a key support like a previous low, key moving average or a 38% to 50% Fibonacci retracement zone (it is essential to move in only on well traded issues that seems to have upward potential to its next resistance) Then the ‘C’ wave…

• After the oversold bounce, sellers waiting for better prices (along with those who bought into the rebound looking to take short term profits) will come back and take control of the corrective wave

• These reactive swings may need some time to unfurl and may extend the decline either close to or at and even below the lows of the ‘A’ wave

• In stronger trends (like our market today) stocks may just use the ‘C’ wave swings to prepare a second try at support with a higher-low or a retest of the base ‘A’ then try to slowly resume their upward poise once again

• This is more likely to happen for stocks that can keep themselves hoisted over their medium term (65-day) moving average

• Keep in mind however that breaks below the 130-day Moving Averages are usually more tender… conducting wider reactive drives that show less spirit into rebounds



Technical Spotlight


The protracted ‘C’ decline:

• Keep in mind however that breaks below the 65-day Moving Averages are usually more tender… conducting wider reactive drives that show less spirit into rebounds

• When markets or industries show continuing fallibility due to cyclical weakness or sectoral pressures, corrections may hold out longer than usual and drive thru a Full ABC swing with a new “C” low base, if not even a 5-wave extended channel on the way down

• MPI in 2010 showed this example (see sample 3 below) as it broke below its 3.70 low and 65-day MA and forced on a longer reaction which later needed a retest action to turn itself around Looking for the stronger option with two firm feet:

• With the strength recently exhibited by local stocks, it seems more likely that many issues may contain their reactions and rallies into the first two types (higher-lows and retest possibilities)

• Try to keep sighted on issues standing over their 65-day MA in preference to those not doing so

• Keep in mind that “B” rallies may be fleeting and that a possible 2nd reaction may yet come off the brief rebound as we need two legs to stand firmly on

• A higher-low base or a clear double support test may open better chances of a major bottom showing and should correspondingly offer a window for more solid and well volumed trades



Investment Rating Definitions

Stocks that have a BUY rating have attractive fundamentals and valuations, based on our analysis. We expect the share price

to outperform the market in the next six to twelve months.

Stocks that have a HOLD rating have either 1.) attractive fundamentals but expensive

valuations; 2.) attractive valuations but near term earnings outlook might be poor or vulnerable to numerous risks. Given the

said factors, the share price of the stock may perform merely inline or underperform the market in the next six to twelve months.

We dislike both the valuations and fundamentals of stocks with a SELL rating.

We expect the share price to underperform in the next six to twelve months.

BUY HOLD SELL

Securities recommended, offered or sold by COL Financial Group, Inc.are subject to investment risks, including the possible loss of the principal amount invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report.

Important Disclaimers

2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City 1605 PhilippinesTel: +632 636-5411 Fax: +632 635-4632 Website: http://www.colfinancial.com

tuesday, 26 march 2013 - col financial - philippines · pdf file15-mar-13 ubp union bank of...

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