Blue Chips Stock Portfolio Update Sep 6, 2012

Stock	Buy Below	Current Price	Target Price	Average Cost	Return
BDO	60.00	60.20	81.00	60.10	0.17%
ALI	18.00	22.15	22.50	-	-
PGOLD	24.00	29.30	30.00	-	-
EDC	6.00	5.90	8.50	5.94	(0.68%)
TEL	2,400.00	2,702.00	3,000.00	-	-
AGI	11.00	12.22	15.00	-	-

As I told yesterday, I bought EDC and BDO since they are within the Buy Below price.

The PSEi started in green but ended flat similar to what happened to DOW and S&P yesterday. As usual, follow the leader. There is not much activity today with trades totaling P3.5B.

JFC bounced back strong today gaining 2.45% and is the only blue chip in the top 20 gainers. There is no blue chip stocks included in the top 20 losers whose minimum loss is 2.16%.

BDO- increased by 1.18% today. Foreigners bought (net) a paltry P1M. Not bad. I was able to buy at 5.92 plus taxes, etc which total 5.94 cost.

ALI- is offering a new type of bond called Ayala Land Home Starter Bond worth P3B that will give investors fixed income, plus a bonus credit if and when the investor decides to purchase an Ayala Land residential property. Proceeds will be used for general corporate purposes. 4

 

Still expensive at its price today although it decrease by 0.89%. Foreigners sold (net) P5M today while yesterday they dumped P8M.

 

PGOLD- opened another store but this time in Roxas Isabela last August 13, 2012. It is the 112^th store of Puregold.⁵

Price is 29.30 as foreigners snap up P9M today.53% of the trades were executed at 29.30 price. It is quite strong at this level.

In a disclosure to PSE, it will have a special stockholders meeting on October 17, 2012 to vote for the consolidation of Puregold Price Club, Inc., Puregold Junior Supermarket, Inc. and Gant Group of Companies.  

EDC- declares special cash dividend of .04 per share with an ex date of Sep 17, 2012. At today’s closing price of 5.90, that will translate to 0.68% return. It already declared a cash dividend of .10 last March 2012. Total dividend return for year 2012 at today’s price is 2.37%.

In another disclosure to PSE, EDC drops one of its geothermal projects in Peru due to the results of the initial geoscientific surveys. Earlier this year, EDC signed a joint venture agreement with HRL for the development of the Calerias and Longavi projects in Chile and Quellaapacheta and Chocopata in Peru. 

Last July, EDC dropped the two geothermal projects in Chile. ⁶

Shares sold (net) by foreigners amounted to P28M. Yesterday dumping is P21M.

TEL - foreigners disposed (net) P41M. Almost 50% of the trades were executed at the 2,702 price which means that during the last minutes of the trading day, sellers scrambled to dump their shares. 2,600 price levels is in the horizon now.

It is seeking new revenue streams to help it cope with the popularity of VOIP like Skype or Google talk. MVNO (mobile virtual network operator) initiative allows PLDT to use the technical network of the foreign telco. In exchange, the foreign partner could ride on PLDT’s popularity among Filipino communities abroad.²

The company aims to long-tail its legacy wholesale businesses and go retail. Pangilinan said the reason for the company's shift to retail is to continue capturing voice minutes as traffic shifts from fixed to mobile. It is completing this year a major $1.5 billion network modernization program that gives TEL unmatched capacity to handle the fast-growing domestic and international voice and data traffic. ¹

Based on PLDT’s financial statement as of end-June, PLDT has P5.99 billion in maturing debt, of which P4 billion is denominated in dollars and P1.95 billion in the local currency—from July to December this year. Scheduled debt maturities for the coming years are P12.36 billion for 2013, P24.87 billion for 2014, P15.27 billion for 2015 and P55.97 billion for 2015 onwards.

By refinancing some of its obligations, PLDT will be able to better manage its debt stock. As of end-June, PLDT had P100.3 billion in long-term debt, of which P13.9 billion is current or maturing within a year. ³

AGI - is the most active stock today with P280M value of shares. It increased to 12.22 with 1.33% gain. It did not even touch the psychological 12 pesos price. Again the foreigners continued their buying frenzy with a net buy of P238M, an 85% market participation in AGI trades! Yesterday was P109M net buy. 55% of the trades were executed at the 12.22 price. Our 11 Buy Below price is a long shot for now. Let their party continue.

Source: pse.com.ph Sep 6 trading activity, COL data

¹http://www.interaksyon.com/business/42274/pldt-shifting-focus-to-retail-market-says-mvp

²http://www.bworldonline.com/content.php?section=Corporate&title=New-revenue-streams-sought&id=57988

³http://business.inquirer.net/80034/pldt-plans-to-issue-p8b-in-long-term-debt-paper

⁴http://www.pinoymoneytalk.com/ayala-land-homestarter-bond-2012/

⁵http://puregold.com.ph/news.do?id=13342

⁶http://www.abs-cbnnews.com/business/09/06/12/edc-drops-project-peru

Note: This is not a solicitation to buy. Buy at your own risk.

Blue Chips Stock Portfolio Update Sep 5, 2012

Stock	Buy Below	Current Price	Target Price	Actual Price Bought	Actual Return
BDO	60.00	59.50	81.00	-	-
ALI	18.00	22.35	22.50	-	-
PGOLD	24.00	29.05	30.00	-	-
EDC	6.00	5.90	8.50	-	-
TEL	2,400.00	2,726.00	3,000.00	-	-
AGI	11.00	12.06	15.00	-	-

We are still in the month of ghost. Likewise, September is such a horrible month for stocks. Again, only BDO and EDC are currently below the buy threshold while others are still expensive. Most likely, I’ll have BDO and EDC tomorrow.

The market started out strong today with the PSEi increasing to .30% before it suddenly went in reverse and post a .48% decrease. Notable decliners among the blue chips are Megaworld (-2.25%), Robinson Land (-2.14%) and Jollibee (-3.59%). Jollibee (JFC) which was very active at the ticker tape was battered and bruised throughout the day as foreigners liquidated P50M. It’s his day today.Most of the blue chips are in red though. Megaworld (MEG) started in green but suddenly became red also with foreigners selling P49M.

BDO is treading over and under P60 during the day. Mr. Market is undecided to where it wants the price to go. Foreigners however are net sellers disposing P37M of BDO shares. It also disclosed that Sybase Equity, a major stockholder disposed 700,000 shares for the month of August.

ALI insider disposed 90,000 shares at a price minimum of 22.25. Foreigners disposed (net) 8M today. It recently won the FTI bid against other developers.

PGOLD shares also disposed (net) by foreigners but at a paltry P2M only. At this point, PGOLD is just expensive.

EDC shares sold (net) by foreigners amounted to P21M. EDC is planning to boost its power portfolio by targeting 17 new projects. ¹ It currently has 1,400MW under its wings.

TEL – foreigners bought (net) P4M only. When will this go back at 2400 level?      

AGI continued its ascent above 12. Foreigners today snap (net) up P109M. Wow!

Foreign investors are net sellers today liquidating P209 million worth of shares. Among the notable stocks that foreigners bought (net) are SECB at P52M, and MPI at P38M. Noteworthy stocks disposed (net) by foreigners includes MBT at P35M, CHIB at P44M, SM at P47M. Second liner PIP is the darling of the foreigner as they grab P23M (net).

Towards the end of the trading day, the ticker becomes very active as the last minute buyers and sellers scrambles to liquidate their position or to position themselves for tomorrow’s battle.

Source: pse.com.ph, Sep 5 trading activity

¹ http://businessmirror.com.ph/home/companies/32165-edc-eyes-17-new-projects-to-boost-power-portfolio

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.