Philippine's Blue Chip Companies!

As a 20 year old young man who is very fond of reading broadsheets like Manila Bulletin, Philippine Daily Inquirer, and Philippine Star, I normally flip the pages of the dailies through the sports section first, comics section, entertainment(checking the latest gossip around) and the business section. At the front page of the business section are news and articles about large companies and their major transactions that transpires within the day. These large companies are often referred to as blue chip companies.

When I was in college, I had this professor in Business Finance who asked what do large companies like San Miguel, PLDT, and Ayala are normally called. I could hear the silence in the classroom, and after a few seconds, I blurted out Blue Chip! I saw the smile of my professor and my classmates as well.

What do blue chip company really means?

A blue chip company is a nationally recognized, well-established and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.

The name "blue chip" came about because in the game of poker the blue chips have the highest value.Blue chip stocks are seen as a less volatile investment than owning shares in companies without blue chip status because blue chips have an institutional status in the economy. Investors may buy blue chip companies to provide steady growth in their portfolios.

In the Philippines, we have several blue chip companies that are being traded in the Philippine Stock Market. These blue chip companies were chosen based on GEMSS:
Growth Profitability
Earnings Visibility
Management Credibility
Superior Products/Services
Strong Balance Sheet

1. AC Ayala Corporation - Holding company of the Ayalas who owns the BPI, Ayala Land, and Manila Water Company.

2. ALI Ayala Land Corporation - Largest and most experienced real estate developer in the Philippines.

3. AP Aboitiz Power Corporation - Leading player in the power industry - power generation and distribution in Visayas and Mindanao.

4. BDO Banco De Oro - One of the largest banks in the Philippines, with corporate, retail, investment banking and insurance broking.

5. BPI Bank of the Philippines Island - one of the largest bank in the Philippines with over 800 branches in the Philippines, US, Hongkong, and Italy.It provides commercial and consumer banking services, mutual funds, electronic banking, brokerage services, investment banking, and asset management and trust services.

6.DMC DMCI Holdings, Inc. - holding company who owns various businesses in construction, equity investments and infrastructure projects, heavy fabrication, industrial construction and engineering services, sale of coal resources. DMC owns the Semirara Mining Company.

7. EDC PNOC Energy Development Corporation - Pioneer in geothermal energy industry who uses water to generate electricity.

8. ICT International Container Terminal Services - engaged in the management, operation and development of container terminals in Asia, Europe, Middle East, Africa and America.

9. JFC Jollibee Foods Corporation - owns and operates Jollibee, Red Ribbon, Chowking, Greenwhich, Delifrance, and Manong Pepe.

10. MBT Metropolitan Bank and Trust Company - One of the largest bank in the Philippines who provides deposit products, loans and trade finance, domestic and foreign fund transfers, treasury and foreign exchange services, trading and remittances, and trust services.

11. MPI Metro Pacific Investments - The holding company of Manny Pangilinan with interests in real estate, water utilities, healthcare,toll operations, power, port and others.

12. MWC Manila Water Company - owned by the Ayalas who has exclusive rights to the water delivery, sanitation and services. It caters to 6 million customers under a 25 year concession with the government.

13. SM SM Investsments Corporation - The holding company of the Sy family, engaged in shopping mall development , retail, financial services, real estate, tourism, hotels and others. Owns Banco De Oro and 20% of Megawide Construction.

14. SMPH SM Prime Holdings- Owned by the Sy family, it operates and develops shopping malls in the Philippines and China.

15. TEL - Philippine Long Distance Tel. Company - Leading telecommunications group in the Philippines with three core businesses: fixed line, wireless and information and communication technology.

16. URC Universal Robina Corporation - Owned by the Gokongwei family, leading branded convenience food and beverages company in the Philippines, southeast Asia, and greater China.

17. San Miguel - SMC is a blue chip company by its definition. In recent years it has RADICALLY diversified into mining and power such that you could have mistaken it as a mining and power company. SMC president said that the acquisitions have a return on equity as triple as the seven percent level for food and beverages. Chairman Cojuangco said that the acquisitions will secure the Companys future. While all of this maybe true, the current sentiment on San Miguel is poor according to Astro Del Castillo, Managing director of First Grade Holdings Inc. Perhaps in the future, when all the smoke has cleared, I can bet on it but right now, I want to focus with the 16 companies mentioned above before even considering buying San Miguel shares.