"Is CPG a Blue Chip Company?" Anonymous
Nationally Recognized?
CPG is widely known among the yuppies, middle class, OFWs and high net worth clients. Their real estate products are mainly intended for luxury and middle income segment although recently it started to cater the affordable market.
Being nationally recognized is relative. As far as your target market is concerned, you should be able to penetrate them, allow them to recognize you and let the buyers swarm the properties. For example, if you are selling a condo worth 10 million pesos, are you going to advertise in the national television? The logical answer is no because majority of your target market spend most of their waking life glued in their businesses, golfs, and reading broadsheets. Yes broadsheets, not tabloid. Wherever your target market goes, CPG goes also. I am an OFW and OFWs are one of the target markets of CPG. In fact, more than 60% of their sales are from overseas. Since OFWs are one of their target markets, they are advertising their products in the TFC channel. Do you know Azure Urban Residences commercial where Paris Hilton is their commercial model? Guys that is owned and developed by CPG. Oh man, the commercial shows a beautiful beach and Paris Hilton in a swimsuit. Parish Hilton designed the beach club of Azure Residences. It has a man made beach inside.Now to be called as a nationally recognized company, does a company have to be in the consciousness of the A to E people or it has to be recognized on its target market only? Meralco is a blue chip company and everybody knows Meralco. But EDC who supplies Meralco with electricity is not known to 99% of the Filipino population. How do I know that? Well, Only 1% of our population is in the stock market although it is slowly gaining its steam among the OFWs and middle income segment. Since Meralco is the one distributing the electricity to consumers, they are the one facing and receiving the brunt of angry Filipinos whenever there is an increase in the electricity charges. No wonder, Meralco is widely known to us. EDC on the other hand is happy generating electricity for Meralco and other distribution companies at a profit. What I am trying to emphasize here is that being nationally recognize doesn’t mean you have to be well known from A to E segment like Meralco, PLDT, Globe and Jollibee.
In the same way, CPG doesn’t have to be widely known from A to E segment to be considered nationally recognized in the context of Investopedia’s definition. What is essential then is that we all know what CPG is and who its customers are. CPG passed the criterion of being nationally recognized.
Well Established and Financially Sound?
CPG has been in the business for more than 26 years already while Megaworld is only 23 years old only and yet Megaworld is called blue chip while CPG is called midcap or second liner company. There you go I already spilled the beans that CPG is not yet a blue chip company but it will soon become a blue chip company, buddy.
Megaworld shocked the business community when it dared to build the Eastwood City during the height of the Asian financial crisis in 1997. It challenges the notion that only a fool would build a residential and commercial district in the midst of uncertainty and chaos. And yet, here is Megaworld standing tall to everyone, building one projects after another crushing the walls of improbability and insecurity that envelopes almost everyone. Indeed, Megaworld has come a long way already in just 23 years of operation. In fact, it is being credited for pioneering the BPO industry because of Eastwood City. Eastwood City started the wave of BPO projects in the country and has since become a major growth engine of the BPO industry. Its net income has grown from 3 billion in year 2007 to 8 billion pesos in year 2011. Megaworld is well established already and is expected to last 50 years from now.
CPG on the other hand is also expected to last 50 years from now. However, for the past 26 years CPG has managed to complete 20 buildings only with 548,000 sqm floor area whereas for the next five years it is scheduled to complete 23 buildings with 1.18 million sqm. Presently, it is very aggressive in developing brands and projects compared with the last 26 years. CPGs net income for the year 2009, 2010 and 2011 are 693M, 225M, 864M respectively. It is not yet in billions although for the year 2012, the management expects the net income to be in billions.
The financial statements of CPG captures 3 years of financials only. That is from 2009 to 2011 based on the FS submitted to PSE. It listed in PSE through backdoor listing. We do not have any information on its past operations except that it completed 20 buildings and is managing 51 properties for the past 26 years. Three years of financial statements is not enough to determine if a company is blue chip or not.
CPG is starting to put more pressure on the gas pedal to move forward. The year 2012 could be start of the company’s net income to be in billions for years to come. However, that net income in billions should be consistent. Blue chip companies thrive through good and bad times that is why they are very stable. CPG is not yet a blue chip company but I believe if the company can sustain its aggressive approach and maintain its net income in billions for the next ten to twenty years, it can become a blue chip company. Consistency and sustainability are the ingredients for CPG to become a blue chip company. PSEi
Among the 30 companies listed in PSEi, Cebu Air is the lowest in terms of full market capitalization as of today. 2
In terms of full market capitalization, CPG has 12.3 billion pesos based on its latest price of 1.38. Cebu Air has 41 billion pesos market capitalization. Can CPG catch up on Cebu Air to become a member of PSEi? It is possible but it may take time. A lot of time. Actually, there are also other companies waiting on the sidelines to become a PSEi member. In fact, PSE has already five companies in the reserve list of PSEi which can easily move up and be a PSEi member once the review and classification of PSE is conducted again. Security Bank has 71.8 billion pesos market cap as of today, while Atlas has 35.2 billion pesos market as of today.
| Symbol | Last Trade Date | Full Market Cap |
| CEB | 10-Aug-12 | 41,326,017,106 |
| BEL | 10-Aug-12 | 50,685,037,435 |
| MWC | 10-Aug-12 | 53,524,170,157 |
| SMDC | 10-Aug-12 | 56,461,633,816 |
| MEG | 10-Aug-12 | 57,999,829,266 |
| FGEN | 10-Aug-12 | 61,205,490,674 |
| RLC | 10-Aug-12 | 79,338,438,675 |
| SCC | 10-Aug-12 | 81,225,000,000 |
| PX | 10-Aug-12 | 93,430,116,903 |
| MPI | 10-Aug-12 | 104,545,829,696 |
| JFC | 10-Aug-12 | 105,349,132,922 |
| EDC | 10-Aug-12 | 108,562,500,000 |
| AGI | 10-Aug-12 | 114,405,883,686 |
| URC | 10-Aug-12 | 130,671,965,787 |
| ICT | 10-Aug-12 | 137,903,148,060 |
| GLO | 10-Aug-12 | 149,601,332,800 |
| DMC | 10-Aug-12 | 155,346,399,000 |
| MBT | 10-Aug-12 | 200,264,963,712 |
| BDO | 10-Aug-12 | 222,014,270,336 |
| JGS | 10-Aug-12 | 224,307,324,681 |
| SMPH | 10-Aug-12 | 243,578,962,195 |
| AC | 10-Aug-12 | 255,212,549,080 |
| AP | 10-Aug-12 | 255,343,569,453 |
| SMC | 10-Aug-12 | 267,813,955,452 |
| AEV | 10-Aug-12 | 270,571,719,229 |
| BPI | 10-Aug-12 | 271,349,976,000 |
| MER | 10-Aug-12 | 297,565,248,024 |
| ALI | 10-Aug-12 | 311,442,996,521 |
| SM | 10-Aug-12 | 454,267,218,800 |
| TEL | 10-Aug-12 | 588,535,931,100 |
thanks for your insight, sir.
ReplyDeleteThank you for sharing your thoughts sir.:)
ReplyDelete