Is CPG a Blue Chip Company?

"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

¹ http://showbizandstyle.inquirer.net/lifestyle/lifestyle/view/20090814-220178/World-class-finds-at-new-high-end-mall

¹ http://www.mb.com.ph/articles/203834/eastwood-city-cyberpark-maintains-strong-growth-projections

² http://www.pse.com.ph/stockMarket/marketInfo-marketActivity.html?tab=1

Century Property Group (CPG)

I was supposed to do dig some info about CPG when I saw the charts the other day. Last Tuesday, it went up to 1.80 and I thought I will be left behind. Today, the price is 1.69 and is just a notch lower than my buying price of 1.68.

Let’s take a look about the general info of CPG.

GENERAL INFO

Century Properties Group, Inc. (CPG), formerly East Asia Power Resources Corporation, was incorporated on March 23, 1975 as Northwest Holdings and Resources Corporation. In September 26, 2011, the Board of CPG approved the change in the Company's corporate name to its present name, as well as the change in its primary business purpose from power generation to that of a holding company and real estate business.

Century Properties Inc. (CPT) is the parent company of CPG. On September 2011, the Board of CPI approved the subscription of shares of CPI's subsidiaries to CPG in order for CPG to be engaged in the real estate industry.

The Company undertakes real estate projects and developments through its subsidiaries, namely: 1) Century Communities Corporation; 2) Century Properties Management, Inc.; 3) Century City Development Corporation; and 4) Century Limitless Corporation. CPG has built over 22 buildings and 720 homes, with a 100% completion rate of all its projects. CPG currently has four projects under development including Century City in Makati; Azure Urban Residences in Paranaque City; Aqua Residences in Mandaluyong City and Canyon Ranch in Cavite.

Source:www2pse.com.ph

PERSONAL CALCULATION

Earnings per share (EPS): As of Oct 2011, EPS is .202 . Averaging for the year 2011, EPS would be .24.

Price/Earnings Ratio: Price ÷ EPS

Price/Earnings Ratio: 1.7 ÷ .24 = 7.19 times.

If everything else equal, it is a good buy considering the fact they expect sales to top at 20 billion sales in year 2012.

http://www.century-properties.com/investor-relations2/#quarterly-reports

CITISECONLINE'S RESEARCH

Coincidentally, Citiseconline published its research about CPG last Tuesday, thus it lessen my burden of digging further and I just compare my notes against them.

According to Citiseconline, Century Properties is targeting a net income of Php2 Bil this year to be driven by higher sales and project completions. At the current price of Php1.69, CPG shares are trading at 7.56X FY12E P/E. This is lower than the industry average of 13.82X. Taking out ALI, which traditionally trades at a premium to other developers, the industry average is 9.92X, which is still higher than CPG’s current valuation.

I would like to note that most of CPG's properties are high-end type and more than 50% of their clients are overseas based.

LATEST NEWS

Century Properties collaborates with MissoniHome

The fun and colorful design aesthetic of Italian knitwear brand Missoni will now be replicated in the 52-storey Acqua Livingstone residential building being developed by Century Properties Group Inc.

This is the first condominium designed by MissoniHome in the world.

http://www.abs-cbnnews.com/business/03/08/12/century-properties-collaborates-missonihome

Century Properties eyes hotel development

Century Properties Group (CPG) is considering venturing into hotel development as it seeks to further expand its revenue stream.

CPG managing director Marco Antonio said the company is studying the possibility of diversifying into other segments of the market to build up its recurring income portfolio.

“We hope to grow recurring income base to more than 10 percent of the portfolio. With opportunities in the pending real estate investment trust law, it may serve as an impetus for us to create a recurring income stream,” Antonio said.

http://www.abs-cbnnews.com/business/03/04/12/century-properties-eyes-hotel-development

Century Properties eyes OFWs, Chinese, Singaporeans for Acqua Livingstone

Century Properties Group Inc. is building a 52-story development along Pasig River designed by Italian Missoni Home for P3.5 billion, the company said in a press conference over the weekend.

Called Acqua Livingstone, the development with a view of the Makati and Taguig skylines will be marketed mostly to overseas Filipino workers and foreigners.

“It is the first residential building in the world that will bear the creative and colorful mark of Missoni Home,” said Marco Antonio, Century Properties’ project head and managing director. “It is not available elsewhere, except in Missoni-branded hotels in Edinburgh, Scotland and Kuwait,” he noted.

http://www.gmanetwork.com/news/story/249610/economy/business/century-properties-eyes-ofws-chinese-singaporeans-for-acqua-livingstone

CPGI and parent Century Properties sell shares to Netherlands-based APG

Century Properties Group Inc. (CPGI) and parent Century Properties Inc. (CPI) are selling 868, 316,042 CPGI shares to Netherlands-based APG Strategic Real Estate Pool N.V., CPGI said in a statement Tuesday to the Philippine Stock Exchange.
CPI is the seller of the shares in the deal.

In January 2011, CPI issued convertible bonds to APG, but APG decided to enter into a purchase agreement for CPI to buy the convertible bonds from APG.

http://www.gmanetwork.com/news/story/248806/economy/companies/cpgi-and-parent-century-properties-sell-shares-to-netherlands-based-apg

TECHNICAL ANALYSIS

The main reason why i checked CPG's info is because of it's technical data. Looking at the chart, the trendline touches at four points which is a good indication that buying at 1.68 is a good call as long as 1.68 doesn't break. Past few days volume has increased also igniting some interest from investors as well as traders.

Whenever CPG touches the 1.8 price it is always going down thus that price serves as its resistance. 

Stock Market Strategy and Technical Analysis

I just received an e-mail from Apple Grace asking so many things about stock market. While I cannot asnwer all of the questions in one article because explaining the answers would require a lot of detailed pages and it may confuse you rather than enlightened. 

Here you go.

I came across your blog and i really hope you can help me "test the stock market waters".

 I have been working outside the country since 2007 and i just started to save a little for myself on august 2011. I have signed up with citiseconline under EIP Program. This is long term investing,right? Somehow, I understand how it works. However, I want to be "risky" and try trading but then, i am scared to begin.

Yung takot na namamayani pgdating sa pagsuong sa lugar na hindi natin kabisado ay normal lamang. Actually, karamihan sa atin ay natatakot lumabas sa ating mga comfort zone kung kayat nawawala ang oportunidad na dumarating sa atin. Kapag dumating ang oportunidad sa iyo, huwag mo nang bitiwan o pakawalan dahil hindi na ito babalik pa.

Sa stock market ganoon din ang proseso. Karamihan sa atin ay natatakot na maging risky dahil baka maubos lamang ang perang ating pinaghirapan.Kaya’t ang advise sa atin ay maging longterm investor para hindi ka na magisip pa kung bababa o tataas ang stock market. Bili ka lang ng blue chip companies then, hintayin mo na ang retirement at siguradong lalaki iyon at kasya sa iyong planong around the world travel kapag may edad ka na.

Ako naman, ang aking strategy sa stock market ay diversified strategy. Minsan, bumibili ako ng stocks kapag pababa ng pababa tulad ng nangyari sa Megaworld(MEG) last December 2011 dahil lang sa isang theory na crowded na ang property business.Well, sa ngayon balik siya sa dati at siyempre kumikita ako.(contrarian investor)

Pangalawa, binili ko rin yung Century Properties (CPG) stocks kahit bago lamang siya dahil nakabili kami ng aking asawa ng munting bahay mula sa kanila. I know how their marketing works and their property portfolios. So I bought it even though it is a very risky move on my part and that I may very well lose all my money with them. Kakalista lamang niya sa stock market last year through backdoor listing and nobody knows how it will perform in the near future since there are no financial statements yet. (Guerilla investor and taking risk).

Pangatlo, may stock ako sa FPH which is masyadong mabagal ang takbo. Ito naman yung stocks ko na mura as far as P/E ratio is concerned. Also ito yung stock ko na pangmatagalan dahil matatag ito, yung business which is energy and power is very defensive and not cyclical. Dividends are good also. (value investor).

 I will not set aside my EIP. I will trade small amounts while maintaining my EIP investments. I just do not know how it works. I do not know even how to project stocks, I do not know how to anticipate if it will fall down or plunge deeper or somehow, if it can recover.

Kung mahilig kang magbasa ng balita sa internet tungkol sa stock market, marami kang mababasa kung tataas o hindi ang stock market. Nagkalat ang mga kumpare at kumare ni Madam Auring.Maraming nanghuhula kung tataas ba o hindi ang stock market.

Technical analysis will help if a stock market will go down or up but it is not absolute.NOBODY can predict if a stock market will go down or up otherwise, siya na ang pinakamayamang tao sa Pilipinas dahil pwede siyang mangutang sa bangko, buy the stock and then sell at a profit kung sigurado siya na tataas ang stock market.

Fundamental analysis also is a guide in predicting the stock market. Macroeconomic factors like OFW remittances, consumer spending, interest rates, inflation, PPP, business environment, political settings and regulations will all affect in one way or another the stock market. Ang ating bansa maganda ang fundamentals kung kayat madaming mga foreigners ang nagiinvest sa atin. Tingnan mo ang ating stock market, it is the best perfoming stock market in the world sa taong ito. We need to give the credit where it is due.

Basically, what i understand is that, you will buy stocks then you will sell it if it goes up. Anticipation is what i do not understand. Will you help me? Also, can you suggest companies that i can buy stocks from that are not so risky? Trading is very risky while investing is not. Investing is synonymous to the adage "slowly but surely". But I wanna try trading. I hope you can help me understand the basic fundamentals of trading and how can I trade with minimal risk as a first timer.

Ok. My favorite technical analsysis that I used are MACD and RSI. Madaming technical analysis ang gamit ng mga traders pero itong dalawang ito ang kadalasang ginagamit sa pagaanalisa ng trend sa stock market. Halimbawa, yung RSI, kapag 30 or below na ito ibig sabihin, oversold na ito. Tingnan mo yung RSI chart sa baba, naging less than 30 ito kung kaya bili na ako rito tapos benta after a few days. Kapag nakita ko ito, binibili ko yung stock dahil sooner babalik din ito sa kanyang dating range. Kapag 70 or more naman ito, overbought na, kapag nakita ko ito, antabay na ako sa preso nito araw-araw. Habang tumataas pa, hindi ko muna ibebenta pero oras na bumaba ito, sell na.

Sa MACD naman, ang titingnan ko ay yung kulay blue.Kapag yung kulay blue ay pumaitaas sa kulay yellow(Minsan red yan), magandang senyales yan. Ibig sabihin antabay ka na kung tataas pa ito. Kapag yung kulay yellow naman ang pumaitaas sa kulay red na linya, medyo maging alerto ka na dahil baka bumaba na ang presyo ng stock mo.

Alam kong hindi ko nasagot lahat ng katanungan mo. Pipilitin kong ipaliwanag sa pinakasimpleng pamamaraan ang mga technical analysis sa itaas sa blog na ito. O kaya naman ay pumunta ka sa OFW Investor para sa iba pang katanungan.