Monday, February 27, 2012

Pursue Your Dreams!


The oil stocks play has been the name of the game of late except for DIZON and the AEV, UBP, RCB and BPI rumors. Good thing though that I bought the stock somewhere at .033 and .044 with an average price of .035, I sold it at .051 taking a profit of 46% in six figure income. Anyway, all of these are just paper gains because I’m back with OV again at .049 levels and the profit I made might go and wipe out together with my capital.
If I lost everything, fine. I have conditioned my mind already in this kind of scenario. I play to win and not to go at the level where my fears are taking charge of my financial direction. It’s a make or break. Of course, I have to do my own share of research in picking my stocks. If I win, then my financial goal for the year is achieved and perhaps our dream house we bought with Century Properties might be fully paid. If I lost, it’s fine as well because I will always find a way to achieve my financial goal. The lost doesn’t matter to me as far as emotional burden is concern. At the end of the day, I just wanted to find a way to reach that financial goal.

I take full responsibility in all the losses and gains I made. Whether I just follow the others lead or take the decisions in my hands, the decision always is on me. I have the freedom to choose in picking stocks. All of the information is just a click away; so in every case I need to make a due diligence in researching stocks. All of the things I do are purely internet based and if the information is not available on the web, then I am at a disadvantage. One of the things that analyst do is visit the companies and discuss with the decision makers of that Company the way forward. I don’t have that luxury. I also don’t have the luxury to visit the site of the mining companies or oil companies or whatever companies I needed to study because I live here in abroad. Aside from that, I humbly know that I do not even know half of what other people know about stock market. Every day is a learning process but at the end of the day, my gains or losses depends entirely on what I perceive is correct.

I am a blue-chip investor before but because of the very slow upwards movement, I just felt that I might find other ways to reach my financial goal. You see when you are desperate of something; you tend to go beyond your comfort zone to achieve it. If climbing the highest mountain, or crossing the roughest seas you’ve seen or going to the moon is the only way to achieve your goal, you’ll do it. Yes, it’s a desperate moment where no boundaries will hinder you from achieving your goal. Desperate in a sense that you are committed in achieving your financial goal. Goals always fire you up. Oh I remember this passage from Martin Luther King who said that a person without a dream is not fully fit to live.
Being desperate means you are getting aggressive with your dreams. I am not talking about personality here. I am talking about our dreams, our goals. You know, one of my role models is a close relative of mine. She is meek, respectful and kind and yet she pursues her dreams as if no one will be able to stop her.

Heart
http://www.flickr.com/photos/35660391@N08/4163385728

Well yes we all have our own dreams but sometimes we view it as a wishful thinking. Sometimes, we suppose that our dreams are beyond reach. Sometimes we tend to think that our dreams are meant to be if it is our destiny. Sometimes, we feel that the world is conspiring against our dreams. Sometimes, a setback seems so insurmountable to get past it. But sometimes also we fail to see that victory lies in the moment that you are about to give up. Sometimes triumph lies beyond your comfort zone. Sometimes success is all about being persistent. And sometimes, our God is just waiting for you to act on your potential and use it for the benefit of humanity and of mankind.

Saturday, February 25, 2012

EEI CORPORATION (EEI)


Wow! I’m back. After a hiatus of 2 weeks of not even checking my blog and writing something, I’m here sitting in front of my laptop after an energy sapping weeks, but  a spirited and determined one .

Let’s get back to where I ended in my last blogs. As far as construction companies are concerned, we’ll take a look at EEI first. Actually I’ve done this two weeks ago  but my laptop was broken and too busy with my job. Paguwi ko sa bahay tulog na lang. Anyway, I’ve done a minor research on EEI two weeks ago pa and I just wanted to post it.


 Here you go…

EEI CORPORATION (EEI)
Fundamentals:

Huge Backlogs – the construction backlog of EEI is 12.85 billion

As of Sep 30, 2011 the company has 12.85 billion pesos backlogs including international operations. At the very least, its 2012 revenues are already secured partially by these backlogs. The company can complete this 12.85 billion in 2012, and 2013 and the years thereafter depending on the completion date of each project and the percentage it completes every year.

Backlogs:


Domestic

11.62 billion
International
Saudi Arabia
6.67 billion (13.61billion @ 49%)

Singapore
384.27 million

New Caledonia
182.4 million
Total

18.86 billion


Petron Project
EEI Corp. is eyeing the second phase construction of Petron Corp.’s Fluidized Catalytic Cracker, which alone could double its domestic backlog and boost its overall revenues in the next two years.

EEI is hoping to secure a $200-million to $300-million contract for the Petron project, which is estimated to cost around $1 billion.
The project is seen to increase EEI’s backlog by P8.6 billion to P12.9 billion. Total construction backlog from domestic projects amounted to P11.62 billion as of the end of September 2011.
If EEI will get a piece of the action, it could boost EEI revenues further this year if the  construction starts this year and completed in 2013.

PPP
The main catalyst of the growth in revenues for the construction companies.
154 billion pesos will be rolled out this year and if EEI could get a piece of the pie, it could further grow its revenues this year.

Financials:
In Year 2006 and 2007, the P/E ratio of EEI is 14.33 and 13.63 respectively. It bottomed in 2008 during the financial crisis with a 1.56 P/E ratio and slowly starting to go up again from then on. By year 2010, the P/E is 6.2. Can EEI go back again in its 14.33 and 13.63 P/E ratio?

One of the interesting facts on the financials of EEI is the reduction in the % of cost of goods sold. In 2007 and 2008, the cost of goods sold is 92% of the sales. In 2009, it became 86% and in year 2010, it is 84%. Year 2011 cost of goods sold should be around 84 to 85% based on its 9M2011. The management has been getting better in reducing the cost of goods sold. Efficiency is the name of the game.

2010 revenue is 6.9 billion pesos. 9M2011 revenue is already at 6.2 billion pesos. Factoring the 4th quarter revenue will lead to an 8.3 billion pesos forecast for year 2011. 2012 forecast based on it’s 2007 and 2008 difference is 23% and my forecast is 10.2 billion pesos with a net income of 1 billion pesos.

A 1% decrease in cost of goods sold will result in 10 million pesos additional revenues for every 1 billion sales.

Today’s closing prices almost 5.22 and using it results in 5.18 P/E. It’s low.



Technicals
Citiseconline

RSI is a sell signal. Nangyari ito nang malapit ng magsarado ang stock market. Biglang bumaba ang mga stocks at nadamay na rin itong EEI. Lowest RSI since Dec 2011. Is this a sign of more downward movement or just forming a lower base? As always, in a bullish market, we always need a healthy correction para makgkaroon ng legs kapag umakyat uli. Let's see the activity on Monday if the price and volume will act towards a move upwards or downwards.

MACD is not in a good position also. Pababa yung kulay blue kaya downtrend ito. Pero kung contrarian investor ka kung saan kapag bumababa ang presyo saka ka bumibili, then you can buy. 

Summary:

With the Petron project looming, huge backlogs, and PPP forthcoming, the potential of EEI to have record revenues this year is achievable. I also like the efficiency of the management in lowering the cost of goods sold which is a big boost to the bottom-line






Thursday, February 9, 2012

The Power of Compounding Interest

Ano po ba ang compound interest? Ayon sa Wikipedia, Compound interest arises when interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest. This addition of interest to the principal is called compounding. A bank account, for example, may have its interest compounded every year: in this case, an account with 1000 initial principal and 20% interest per year would have a balance of 1200 at the end of the first year, 1440 at the end of the second year, and so on.

Fifty+Percent+Angel
http://www.flickr.com/photos/60279093@N00/1292179973

Hayan, yung explanation nang Wikipedia ay simple lamang po. Kung meron kang 100 pesos at dineposito mo ito sa bangko na may 10% interest per year, magkakaroon ka ng 10 pesos (100x10%) na tubo after one year. Dahil may pera ka pa namang pangastos, hindi mo muna ginalaw yung 110 pesos mo sa bangko. After second year, tiningnan mo ang pero mo ngayon, ang tubo ng iyong pera sa taong iyon ay 11 pesos na (110x10). Isinama na po yung tubo nating 10 pesos last year sa computation ng 10% interest sa second year. Maganda hindi po ba? Habang patagal ng patagal ang iyong pera sa bangko lalo namang lumalaki ang iyong tubo kada taon dahil naisasama ang tubo mo sa computation ng interest.Iyan po ang tawag sa compound interest.
Sa larangan ng stock market naman, pwede po nating gamitin ang prinsipyo ng compound interest. Papaano? Halimbawa po mayroon tayong 10,000 pesos na pambili ng stocks. Ngayong araw na ito bumili tayo ng SM stocks. Sa loob lamang ng 15 days, ibinenta mo ito dahil tumaas na ito ng 15%. Hayan yung pera po natin ngayon ay 11,500 pesos(10,000+1500 profit) na. Bumili uli tayo ng stocks pero sa ngayon Ayala Land naman ang pinili natin. Ang pinambili mo ay 11,500 na. After 15 days uli, tumaas ang Ayala Land ng 15%. Yung pera natin ngayon ay 13,225 (11,500x15%). Yan po ang kagandahan ng compound interest. Sa stock market yung tubo po natin sa stocks ay nagiging bahagi ng ating cost sa pagbili ng ibang stocks.
Halimbawa naman po yung 10,000 pesos natin ay pinambili natin ng SM stocks. Binenta po natin ito after 30 days dahil tumaas ito ng 30%. Alin po kaya ang mas malaki ang tubo? Yung una na SM stocks na binili natin after 15 days with 15% profit, then bought Ayala Land and sold at 15% o yung binili nating SM stocks the sold after 30 days with 30% profit. Both have 30 days period and 30% profit.
Principal
   10,000.00
SM (15 days@15%)
     1,500.00
Ayala Land (15 days@15%)
     1,725.00
Profit
     3,225.00
Principal
   10,000.00
SM (30 days@30%)
     3,000.00
Profit
     3,000.00

Tingnan po natin yung table sa taas.Mas mataas po ang tubo ng una dahil isinama ang tubo doon sa unang 15% samantalang sa pangalawa ang base principal is 10,000 pesos pa rin.
What I am trying to say is that in stock market, it pays to sell your stocks at a profit, buy another one with another profit. Sa ganoon po tumataas ang value ng ating pera.