Ayala Land wins FTI and its effect with PHES

ALI bagging the FTI deal raises doubts on the probability of the PHES JV deal. PHES is down today with 17M pesos transactions. Volume is considerably higher than the previous two days.

For the past 3 months PHES traded sideways with major support of .63 holding very well. Mr. Market tried to break the sideways trend but failed. Let’s see if the FTI deal will break .63. The FTI deal really drags down PHES but it will be worth watching the next few days whether PHES will go below .63. If .63 holds after a week of selling with volume, then I'll take the stride and hold knowing that the market could have discounted the FTI news. ALI's desire to beef its landbank to capitalize on strong demand for real estate is the cause of the JV with PHES. Now that the FTI bid is in the bag, where will the ALI/PHES JV go?

http://www.flickr.com/photos/21496790@N06/5065834411

ALI surprises everyone in the Ortigas deal and perhaps the FTI's deal also. It looks like ALI is good in surprises. I, on the other hand won’t be surprised if the JV is consummated notwithstanding the fact that the FTI and Ortigas deal devours most of the allocated budget of ALI. ALI is the premier developer and favorite of foreigners for nothing.

FTI is one of the last parcels of land of this size close to Manila’s CBDs.¹The other one I believe is the Plastic City.

PHES has been in the .60s level without the FTI deal and should go down today considerably (+10%) but it did not. The market has factored the JV speculation already at these price ranges. However if the JV will not materialize that is a different story and the price can go south dramatically and eventually will break the .63 barrier.

House 111 sold most of the shares it bought above .7 when PHES rose recently but House 219 and 106 bought it shares.

http://www.flickr.com/photos/91545223@N00/2772190827

The Play

The play at .63 to .67 is still intact as I wrote three days ago. If the JV with ALI will not materialize or .63 is broken, then it’s time to sell because the price may go back to where it started before at .20 ranges. Go back again in PHES if it goes to .2 ranges and then wait for another JV story.

¹ http://bworldonline.com/content.php?section=TopStory&title=Ayala-wins-FTI-auction&id=56817

What is Average Price in Citiseconline's Portfolio?

Recently, I tried to compute the average price column as shown in my portfolio by using the sales price of the shares. Unfortunately, I did not come up with the correct figures. I have used all the mathematical equation I know but all of them were futile.

Action	Stock Code	Market Price	Ave. Price	% Gain/Loss
BUY | SELL	ALI	15.9000	15.0918	5.36%
BUY | SELL	FPH	60.7000	62.8556	-3.43%
BUY | SELL	MWIDE	11.0600	8.9262	23.90%
BUY | SELL	SCC	214.8000	213.5281	0.60%
BUY | SELL	VLL	3.1800	3.1794	0.02%

So I asked the helpdesk of Citsec to provide the computation of the Ave. Price column. The customer service replied quickly to my queries and explained this Ave. Price column.


All the while, I thought the computation is based on selling price but when I received the e-mail from Citisec, the computation is based on cost. 


Below are data taken from my actual portfolio with Citisec. I bought ALI twice on a different date and price.

The average price computation in your portfolio shows the actual cost per share that you paid for based on your total purchase cost (including transactions charges) divided by your total number of shares.  This is a running computation, which is automatically computed by the system every time you acquire shares of the same stock.  

Below is a sample computation of your purchase and average costs:

                

   Average Cost    = (21,061.95 + 851.40) / (1,400 + 52)

                                             = 21913.35 / 1,452

                                             = 15.0918

By the way, I want o thank Citisec for their superb customer service. It really helps for us investors who are just starting to venture in the stock market.

Stock Market Terms and Definitions

Closing Price - Last traded market price for the company or index for that day. 


Example: Ayala Land was traded between 15 to 16 yesterday. When the stock market closed at 12:10 nn, the price of Ayala Land is 15.5, then the closing price of Ayala Land is 15.5.


Target Price - Target price is a company's estimated worth or fair market value as computed by various ways specific to its industry (i.e DCF, NAV, P/BV, PER). 



Example:Ayala Land is currently trading at 15 per share. Analysts will estimate how much will be the price of Ayala Land in the future.


Outstanding Shares - Also referred to as Issued Shares, this number acknowledges the number of shares currently held by shareholders. This includes shares held by public and those restricted or held by the company's officials and insiders. 


Example: I incorporate a company with 100,000 shares, out of these 100,000 shares, I only paid 5,000 shares. That 5000 shares is called Outstanding Shares.

Market Capitalization - Market Capitalization is computed by multiplying its Outstanding Shares by its market price. It is the value that an entity would theoretically have to pay to buy the entire company. 


Example: Ayala Land has 5,000 outstanding shares and is trading at 15.5. The market capitalization is 77,500 (5000x15.5)

Sales - Sales is the amount of revenues a company registers in a period. Increasing revenues is key to a company's growth. Also known as a company's top line.

Net Profit - Net profit is the amount a company earns in a period. Also known as net income, earnings or a company's bottom line.

Earnings Per Share (EPS) - Earnings per share is the amount of net profit for each outstanding share.

Net Profit Margin - Net profit margin is a measure of profitability. This is calculated by dividing net income by the total sales. The higher this percentage is, then the more profitable the company because a much bigger portion of sales ends up as earnings for the shareholder.

PE Ratio (PER) - The PE ratio is the most commonly used valuations measure. It shows how much is paid for each unit of earnings. The PE of a stock describes the price of a share relative to the earnings of the underlying asset. The lower the PE, the less you have to pay for the stock, relative to what it earns.

Dividend Yield - The dividend yield is a measure of the return on investment that the dividend gives. It is the dividend per share divided by the price per share.






Price to Book value (P/BV) - Price to book value is calculated by dividing the Market capitalization by the latest book value (book value is simply total assets minus liabilities.) It measures the amount paid for each peso of book value, which is the same as stockholder's equity.

ROE (for current fiscal year) - Return on Equity is the return on investment that the company is generating on funds invested by stockholder's. It is computed by dividing net income by stockholder's equity.

We Will Ride This Slide All the Way Down!

Two days ago, I bought ALI(Ayala Land) and FPH(First Philippine Holdings). These stocks are going down and may even go down further until the investors will go out of their cave and plunge again in the stock market. The investors are a bit cautious on what is happening in Europe's debt crisis,and US weak economic data.

Even with the underspending of the government in the 1st quarter, our economy has posted a modest 4.9% growth. Actually, the income of the government through taxes, fees, duties, etc in the 1st quarter is bigger than the expenses. We have a surplus in budget. Because of these excesses in the the budget, the government is planning to dramatically increase the spending in infrastructures in the 2nd half of 2011. This will somehow help in achieving the 7 to 8% target set by our government officials.

This month, we have seen the stocks slide down. SCC which I bought at 220, and 214 respectively is now trading at 203. If I am going to sell them today, I will lose money. Fortunately, stock market is just a cycle. A cycle of ups and downs. With the current price of the stocks right now, most of them are trading at a discount. ALI which is selling at 18 plus last month is now selling for 15. The bargain hunters like me are on the hunt and are trying to put up additional funds in this fearful market conditions. I always remember what Warren Buffet said in his book, be fearful when others are greedy and be greedy when others are fearful. Today, the investors are fearful and it's the time to be greedy. Few investors will plunge in because of the uncertainty of the global economy but if you are optimistic on the fundamentals of our economy, most likely you will ignore the noise outside.

The noise outside are what really drives the investors to sell. And we don't blame them because that is a normal reaction when someone invested his money. On the other hand, we must
ignore our emotional swings upon reading one news after another because we might end up in a loss. Yes, stock market winners are people who stick with the fundamentals. People who stick with their own research and thinking. I have seen last Feb 2011 how awful my money in the stock market looks like. If I sold my stocks at that time, I would have lost 20,000 pesos. And yet I stick with my stocks looking very optimistic that the stock market will soon go up. And yes, the wait has paid off. Last April, the stocks started to go up like an airplane taking off from the tarmac. I ended up taking a 40,000 pesos profit when I sold them.
In the midst of May, the stock market is going down again and I am on the prowl looking for stocks being sold at a bargain. Mind you, I am not talking about penny stocks. What I'm looking for stocks are blue chip companies, or emerging companies with potential to become a blue chip company.

I have a great colleague who also tried the stock market. We have been discussing the pros and cons of the stock market before and eventually he decided to give it a try. He bought stocks upon seeing the rising stock market in their own country. In just a few weeks, the stock market in their country went down dramatically. He started to question the viability of investing in the stock market. He started questioning the investors, the traders and the volatility of the stock market. He sold most of his stocks incurring a loss and not bothering to invest again. He said that he will just concentrate in real estate from which I did not object.

First experience in the stock market with a stagerring loss will deprive you with sleep. It will become stressful for you especially if you are just trying to give it a shot. Based on my experience, I would suggest that you buy when the market is down so that when it goes up, you can sell at a profit. This will provide positive feelings that hopefully will translate into a routininary savings in the market instead of the banks. However, do not be carried away by your profit because there will come a time that the market will be in a long downward movement which will require your patience and discipline.

Since I plunge into the stock market and learned the fundamentals, I never stop enhancing my knowledge. Every purchase is a learning experience for me and I take that into account when buying in stocks in the future. With our current state of economy, I am very optimistic in the stock market. Under the Aquino administration, investors are flocking in our economy. We are a money magnet from foreign investors. Our economy is very alive, the government has been ticking the right buttons here and there, and with next five years, the stock market will be on a roll. This will be the best legacy that Pnoy will leave after his presidency.

With the next three years or less, I have a target of how much I will earn in the stock market. I believe it will happen and it will happen sooner. I just need to be faithful in
doing the right thing.

Ayala Land, Inc.

General Info:

Ayala Land, (ALI) is one of the companies owned by the Ayala family. ALI leads the property sector in the Philippines and has almost singlehandedly transformed Makati's infrastructure pedigree from a grasslands municipality into a booming city with towering skyscrapers, prestigious hotels, and landmark buildings. ALI is the premier leading real estate developer that focuses on high-end and middle market subdivisions and condominiums, construction of high-rise and commercial and residential buildings, construction of vast lands into industrial parks, development and management of shopping malls, and management of cinema, hotel and entertainment operations. ALI has more than 80 years of real estate experience since it's inception.

Subsidiaries and Affiliates
ALI has more than 50 subsidiaries they owned directly, or through affiliates and subsidiaries as of Year 2009. This companies are either 100% owned by ALI or have a controlling interest to the subsidiary or affiliate. These subsidiaries operates under the direction of ALI.

Property Development

Under this business segment falls the sale of residential lots and units and sale of

commercial and industrial lots. This includes the Ayala Land Premier which caters to high end market, Community Innovations which focuses on upper middle income market and the Avida Land which serves the affordable market. The recurring revenues of the residential segment in Year 2010 is 61% of the total revenues. ALI is very well positioned to capitalize on the positive outlook of the property sector given it's huge land bank 4300 hectares which is sufficient to

support development for at least 10 years.

Ayala Land Premier
This high-end market company has 10 on going projects as of Year 2009 which includes condo, lots and club shares. The projects were strategically located in Laguna, Taguig, Makati, Bataan, Las Pinas and Cavite.

Alveo Land

Formery known as Community Innovations, it caters to the urban achievers. As of Year 2009, this Company has 11 ongoing projects located perfectly in Pasig, Laguna, Makati, Taguig and Manila.

Avida Land

Caters to the affordable market. It has 23 ongoing projects as of Year 2009. The projects were located in Laguna, Makati, Paranaque, Quezon City, Cavite, Manila, Antipolo, Pampanga, Batangas, Lucena, Naga, and Tayabas.

Commercial Leasing
This includes the rent on shopping malls and offices. Shopping malls accounted for 17% of the revenues and 6% for office rent for the year 2010. Shopping malls developed by ALI includes
among others the Ayala Center, Glorietta, Market Market, Marquee Mall, Trinoma and Q Mall in Pampanga.

Others

ALI is also into hotels and resorts. ALI develop the Hotel Intercon, Cebu City Marriott, El Nido Hotel in Palawan among others. ALI ventures in property management as well.

Opinion

ALI is the largest and most diversified real estate company in the Philippines. As much as I wanted to put all the information about the Company in this blog, it will take more than 10 pages to put it here. I would suggest to go to their website as indicated in the source below to have a deeper understanding about their operations. For me, ALI is a brand of it's own. A company that sets the benchmark in almost every aspect of real estate industry.

The share price against it earnings is expensive. Investors are willing to put a premium to the price of it's share given it's vast knowledge and experience in real estate. Since the company has 4300 hectares of land bank, it is well position to capitalize on the hot property market in the next ten years. Net income has been growing every year except in Year 2009.

The net income for the 1st quarter is 1.6 billion pesos and it's well on it's pace to break it's previous net income record in Year 2010. Liquidity is not an issue also because the current ratio is 1.96:1 for the 1st quarter of Year 2011. The debt to equity ratio is also good at .53:1. Overall, ALI has huge cash in the coffers and can capitalize on every market opportunity.

Since the company is growing and with it's steady net income and on it's way of achieving it's 10 billion pesos net income target, it might be beneficial to include it in the stock portfolio.

Source:
Ayala.com.ph
Citiseconline.com
Photos courtesy of http://flickrcc.bluemountains.ne/

Public Market vs Stock Market!

My lovely mother is going to the palengke every morning. I remember when I was on vacation last year, she will drag us with the car with our eye booger still stuck into it. Me and my wife would sit into the backside of the car and let our eyes slowly closed off  for five minutes because our house is just a stone throw away from the wet market. My mother will go and buy some fishes, vegetables, meat and fruits. One day, I told my mom, "Ma, I want kare-kare." My loving mother said" There is no beef's tripe here, we need to go to Porac market to buy that one". And off we go, after minutes of driving, we arrived at the Porac market. My mom went immediately to my uncle's stall for some free fruits of course. After a few chatting, we went to the meat area and found the beef tripes. Lunch has been wonderful back home.

Whenever I read broadhseets every morning and stumble upon the business section, I wonder how can I approach the stock market. If the wet market is readily available for the public, why the stock market which is supposedly be a public market is so far fetched from my hands. I do not even know how much is the stockbrokers fee and how can I buy these so called blue-chip companies. I searched the newspapers on how this stock market works but finds nothing. I went to Angeles City hoping that I would bump into a stockbroker. But then again, I have only 10,000 pesos in my pocket and even if I found one stockbroker, I doubt it if he will entertain me with my current money. No, stock market is not for me.It is only for Ayala family, Lopez family, Sy family, Gokongwei family, Tan family, Razon family, and Uychengco family. Stock market is so unreal for me. Besides, I do not know what is this High, Close, Open is all about. Perhaps, just teach me to do the close-open thing for the baby and I will do it. "Close-open, close-open, close-open, beautiful eyes baby." That one is easy for me.

Obviously, stock market is not as spreadout as the wet market. It is not readily available to the masses. If you want to buy PLDT, the common questions is how and where?In fairness to PSE, they are trying to educate the people by going to provinces and teach people about stock market. I just don't know where and when they are conducting the seminars. Unless you are the type who really wants to venture in the stock market, more often than not, you will not know the seminars being conducted by PSE. Whenever I'm in Pampanga, nobody mentions the word stock market to me. According to statistics, 99% of Filipinos invest their money in banks. Only 1% are into stock market. If our population is 90 million, then only 900,000 Filipinos are investing in the stock market. What does this mean, only few Filipinos really understand the stock market. Only few of us are confident in putting our money in it. Why? Because there are no information available in t. Have you watched a soap opera about stock market or a commercial about stock market? Never! Or how about listening to a radio about stock market? We never had it. The only real source of information are the broadsheets like Manila Bulletin, Philippine Star, and Philippine Daily Inquirer. But these newspapers do not tell people how to invest in the stock market. What do they publish? They publish articles, charts, big corporations as if the public at large have a deep interest in the stock market.

Our generation has been blessed with a lot information within reach. It is the Information Age now where everything can be known through the internet. We must use this advantage to learn as much as we can and use those information for our own personal benefits.

Yes, stock market is not readily available before but through persistent research and investigations done through the internet, the information is right there in front of you waiting to be tapped for your own benefit.

Wet market is accessible to the common masses. Stock market is accessible also. We just need to make an extra effort to research about the stock market. In the end, it is how you adjust yourself to the current situation we are in now in order to succeed in life.