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

Source: http://www2.pse.com.ph/html/ListedCompanies/pdf/2011/EEI_17Q_Sep2011.pdf

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.

Source:http://www.philstar.com/Article.aspx?articleId=766068&publicationSubCategoryId=

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.

Source: http://www.abs-cbnnews.com/business/01/03/12/p154b-ppp-projects-be-rolled-out-2012

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 4^th 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.

Source: http://www.eei.com.ph/content/corporate%20governance/financial.php, PSE

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

Construction, Infrastructure and Allied Services Companies - 2nd Part

As a continuation of the Part 1 blog I made previously regarding CONSTRUCTION, INFRASTRUCTURE & ALLIED SERVICES, we are going to look further on the list taken from www2.pse.com.ph. I have selected some of the paragraphs taken from www2.pse.com.ph.

MARIWASA SIAM HOLDINGS, INC.

MSCI is primarily engaged in the manufacture and sale of various quality ceramic floor and wall tiles which come in a wide array of colors, shapes, sizes and finishes. Products include vitrified floor tiles, glazed and decorated ceramic wall tiles among others.

As of December 31, 2010, MSCI has 100 distributors nationwide in which about 20% operate exclusively for MSCI. MSCI's major distributors are Cebu Oversea, Centerpoint Builders, Filco, Rai Strong, Rey Marketing, Inc., Wilcon Builders. Website is www.mariwasa.com

Kind of interesting for me but whether most PPPs will use ceramic floor and wall tiles is a question. Moving on to other companies.                   

MEGAWIDE CONSTRUCTION CORP.

I have taken a view on this company already at this blog. See MWIDE for the review I made last year. I’ll check again the prospect if I need to buy.

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION

Last status it is suspended.

PHINMA CORPORATION

The Company’s operating businesses are organized and managed separately according to business activities and has five reportable operating segments as follows: Investment holdings – Property development – Steel –  Educational services – Business Process Outsourcing

Looks diversified for me. Since I am only interested in PPP related activities, I am moving on to other companies.

REPUBLIC CEMENT CORPORATION

Republic Cement Corporation (RCM) was incorporated in May 3, 1955 to primarily engage in the manufacture, development, exploitation and sale of cement, marble and all other kinds and classes of building materials, and the processing or manufacture of materials for any industrial or commercial purposes. RCM's plants are located in Bulacan, Batangas and Rizal.

We’ll take a look further.

SOUTHEAST ASIA CEMENT HOLDINGS, INC.

Southeast Asia Cement Holdings, Inc. (CMT) was established on May 3, 1994 as a holding company. In December 2003, CMT subscribed to 1,548,614,753 common shares of Republic Cement Corporation (RCM). As payment for the said subscription, CMT exchanged its 19,960,995 common shares in FR Cement Corporation (FRCC) and 10,000,000 common shares in Lloyds Richfield Industrial Corporation (LRIC). As a result, FRCC and LRIC ceased to be subsidiaries of CMT. Accordingly, RCM became an associate investee of CMT with an 26.59% interest.

Looks like it has an interest with RCM. We’ll look more closely.

SUPERCITY REALTY DEVELOPMENT CORPORATION

Supercity Realty Development Corporation (SRDC) was incorporated on June 9, 2000 to engage in the business of construction, and related services and activities. SRDC is authorized to act as a contractor or subcontractor for the construction of houses, buildings, roads, bridges and other construction projects for the private sector or the government anywhere in the Philippines.

Since the start of its commercial operations in 2000, SRDC has completed a number of land development and housing projects. The Company's major completed and ongoing projects are located in various project sites, namely, Mabuhay City Subdivision and Jubilation New Binan Subdivision in Laguna, Eastwood Greenview Subdivision, Eastwind Homes, Centella Homes Subdivision in Rizal, and Celebrity Place Walk-up Condominium in Quezon City.

In February 2008, the Board of SRDC decided to wind down the Company's construction business and re-focus its activities into real estate development. However, as of December 31, 2010, SRDC has not yet started any real development projects and thus the Company is still continuously engaged in the business of construction.

Uhum. It’s a small company and with current PPPs underway, I wonder if it will still refocus on real estate rather than construction.  We’ll see.

TKC STEEL CORPORATION

T is currently engaged in business activities that focus on the manufacture and distribution of steel products through its two subsidiaries, namely Treasure Steelworks Corporation (TSC), and Zhangzhou Stronghold Steel Works Co. Ltd (ZZS). TSC manufactures steel billets, which in turn become the raw materials of downstream steel products such as bars, wire rods and sections. ZZS manufactures various types of steel pipes and undertakes the distribution of its products in China and other export markets.

Steel and with the PPPs underway? I'll check.

VULCAN INDUSTRIAL AND MINING CORPORATION

Vulcan Industrial & Mining Corporation (VUL) was incorporated in 1953. VUL, together with its subsidiaries, are engaged in mining and mineral explorations. The Company's primary products are rock aggregates produced at Montalban.

The Company has been participating in oil exploration projects since 1976 and is part of two consortiums that have petroleum contracts.

VUL's wholly-owned subsidiary, Vulcan Materials Corporation (VM), is primarily engaged in the quarrying, crushing and marketing of rock aggregates. VUL also has investments in The Philodrill Corporation, also a listed company, which has diversified investments in oil exploration and production, property development, mining, infrastructure development and financial services.

A diversified company. We’ll see.

After browsing the CONSTRUCTION, INFRASTRUCTURE & ALLIED SERVICES listed in PSE, I have the list below in digging further.

1.    EEI CORPORATION (EEI)

2.    HOLCIM PHILIPPINES, INC. (HLCM)

3.    MEGAWIDE CONSTRUCTION CORP. (MWIDE)

4.    REPUBLIC CEMENT CORPORATION (RCM)

5.    SUPERCITY REALTY DEVELOPMENT CORPORATION (SRDC)

6.    TKC STEEL CORPORATION (T)

7.    VULCAN INDUSTRIAL AND MINING CORPORATION (VUL)