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PSEI Valuation, PE Ratios / & the "2020 Starter Portfolio"

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PSEI Valuation, PE Ratios / & the "2020 Starter Portfolio"

"The 2020 Starter Portfolio" combined chart

PSEI-etc ... fr. 2015: 2017: 2018 / 5yr: 2yr: 1yr: 6mo: 10d / 7,370 + GLO:1,889 / BPI-etc: 10d : 6mo: 5yr /

wemuqd0.gif

Components - he mentioned these specific stocks to me, but this is not really "his" portfolio.

I will call it this the "2020 Starter Portfolio":

Sym.  : Company-: 02/21: -High (xx’20): vs.High shsOS: MktCap: Pr/Bk: BkVal: PER : Yield : Div. :
PSEI   : PSEI Index: 7,370 : 9059: (01’18) : -18.7% : 000.M: P00.0B : =====  ==== : 15.0: 1.94% : p143.
GLO.   : Globe Tel. : 1,889 : 2702: (06’15) : -30.3% :133.M: P252.B : 317.% 0,596 : 11.5: 5.04%: p95.2
MBT   : MetroBank 60.85 : 90.53 (01’18) : -32.8% : 4.50B: P274.B : 88.4% 68.83 : 10.2: 1.64%: p99.8
TEL.   : PLDT Inc.  : 1,025 : 3,422 (09’14) : -70.0% : 216.M: P221.B : 202.% 0,508 : 11.9: 7.02%: p72.0
SHLph P.Shell Pet: 28.95 : 79.35 (02’17) : -63.5% : 1.61B: P46.7B : 121.% 23.90 : 20.7: 10.4%: p3.00
Four Stocks ============================= : Aver. : P794.B : 182.% ==== : 13.6 : 6.03% =====

======

CZSPpcHWAAEccTX.jpg

Fritz Ocampo, Chief Investment Officer, Bdo Unibank Inc

Last night, I heard a very interesting Talk by Fritz Ocampo. (Chief Investment Officer, BDO)
Fritz is bullish on the PH economy, and on PH stocks for this year and beyond.
He expects lower rates and more spending to push up growth in 2020, & bring PHP lower.  
In his view, Right now is the time for bargain hunting in Stock Market because of...
two discounts: The "Duterte discount", and some global weakness from CoVid-19.
Du-30’s term will not last much longer, and people with start to look past that soon.
He also thinks the Virus with depress China’s growth rate, not eliminate growth completely.
He expects China's growth rate for 2020 to be cut by roughly half, growing again in 2nd Half.
PH will stand out as the fastest growing economy in the fastest growing part of the World.
At some point, probably soon, international investors will rediscover PH, and the capital
outflows from global investors will reverse to inflows.  PE ratios will rise, and probably
earnings too.  Meantime the Historical support level for PE's just below 15:1 may hold.

If these views are accurate, then the 7,000-7,200 level may be strong support for PSEI.

wF0C3HH.png
CHART - PSEI is now near 15X EPS> "An area very likely to generate a bounce...
Or a strong rally."  Let’s see which.
The PH market fell despite growth, because foreign money moved out. That may reverse soon.

THIS PSEI Chart / All Data - highlights how important is the 7000-7200 Support level

UiE2zEM.gif

DATABANK - PSEI - PE RATIO

The index has a base value of 1022.045 as of February 28, 1990.

Mo.End : PSEI : PEratio : Earns. : Chg. annual :
YrE.’95 : 2,594 : 18.860 : P137.5 : ==========
YrE.’00 : 1,495 : 14.160 : P105.6 : -23.2/-4% pa
YrE.’05 : 2,096 : 15.050 : P139.3 : +31.9/ 5.55%
YrE.’10 : 4,201 : 14.031 : P299.4 : +115./ 15.5%
YrE.’15 : 6,952 : 19.552 : P355.6 : +18.8/ 3.45%
YrE.’16 : 6,841 : 17.371 : P393.8 : +10.7%  p.a.:
YrE.’17 : 8,558 : 21.228 : P403.1 : + 2.36% p.a.:
YrE.’18 : 7,486 : 17.887 : P418.5 : + 3.82%  p.a.:
YrE.’19 : 7,815 : 16.062 : P486.6 : +16.3%  p.a. :
=====
Jan.19 : 8,007 : 19.118 : P418.8 :
Feb.19 : 7,705 : 18.855 : P408.6 :
Mar.19 : 7,921 : 19.404 : P408.2 :
Jun.19 : 8,000 : 18.521 : P431.9 :
Sep.19 : 7,779 : 16.667 : P466.7 :
Dec.19 : 7,815 : 16.062 : P486.6 : +16.3% p.a. :
Jan.20 : 7,201 : 14.737 : P488.6 :
Feb.20 : 7,370e: 15.0 E :  P490E :
=====

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A CLOSE LOOK at Price Earnings Ratios in the Philippines

Let's take a closer look. First of all, i have added a PE Ratio line, to the 10 year chart of PSEI :

wBBk9VU.gif

 The "PER Support Line" - is not exact, but approximately correct in the least year or so.  Approx. 14.5-15x PER

That would be an "Earnings Yield" of maybe 1/15 = 6.66%,  less LT Rates of 4.41% = 2.25% GAP (Buy!)

Current LT RATE:  Last Update: 23 Feb 2020 : source : Philippines 10Y Government Bond had a 4.413% yield.

Compare PE RATIO to: long term Interest rates -

RULE: If/when the Spread hits +2.0% or 0.0% that is a Buy or Sell signal

Mo.End : PSEI : PEratio : Earns. : Chg.,YrOnYr. : EarnY : LT_Rate : Spread :
FYE’95 : 2,594 : 18.860 : P137.5 : ===========: 5.30%:
FYE’00 : 1,495 : 14.160 : P105.6 : -23.2/ -4%pa  : 7.06%:
FYE’05 : 2,096 : 15.050 : P139.3 : +31.9/ 5.55% : 6.64%:
FYE’06 : 2,983 : 14.570 : P204.7 : +46.9% p.a.    : 6.86%: -7.0% E:
FYE’07 : 3,622 : 15.490 : P233.8 : +14.2% p.a.    : 6.46%: -6.70%:= (0.24%): Sell
FYE’08 : 1,873 :   9.420 : P198.8 :  -15.0%  p.a.  : 10.62% -7.25%:=  3.37%  : BUY !!
FYE’09 : 3,053 : 12.589 : P242.5 : +22.0%  p.a.   : 7.94%: -7.88%:=  0.06%  :
FYE’10 : 4,201 : 14.031 : P299.4 : +23.5%  p.a.   : 7.13%: -5.89%:=  1.24%. :
FYE’11 : 4,372 : 15.636 : P279,6 :  - 6.61%  p.a.  : 6.40%: -5.08%:=  1.32%  :
FYE’12 : 5,813 : 17.967 : P323.5 : +15.70% p.a. : 5.57%: -4.15%:=  1.42%  :
FYE’13 : 5,890 : 17.516 : P336.3 : +  3.96% p.a. : 5.71%: -3.60%:=  2.11%. : BUY !
FYE’14 : 7,231 : 19.980 : P361.9 : + 7.61% p.a.  : 5.01%: -3.86%:=  1.15%  :
FYE’15 : 6,952 : 19.552 : P355.6 :  - 1.74% p.a.  : 5.11%: -3.86%:=  1.25%. :
FYE’16 : 6,841 : 17.371 : P393.8 : +10.7%  p.a.  : 5.76%: -4.10%:=  1.66%  : Near Buy?
FYE’17 : 8,558 : 21.228 : P403.1 : + 2.36% p.a.  : 4.71%: -4.63%:= (0.08%): Sell
FYE’18 : 7,486 : 17.887 : P418.5 : + 3.82%  p.a  : 5.59%: -5.70%:= (0.11%):
FYE’19 : 7,815 : 16.062 : P486.6 : +16.3%  p.a.  : 6.23%:
Aver.= :  0,000 : 00000  : ==== 12 period,  Aver. : 6.33%: -5.23%: = 1.10%::
>source: PDS Treasury Reference Rate 2-10 years
> https://www.ceicdata.com/en/indicator/philippines/long-term-interest-rate

Compare to: GDP Growth rates

xx

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PH Stocks can also be compared to other indices in other countries

Best comparison might be: PSEI vs. Hang Seng Index, from HK : fr.2015 / 10yr: 5yr: 2yr: 1yr: 6mo: 10d / xx vs. xx

N3Cm633.gif

PSEI falls well behind US stock indices recently, even when the PHP fell over the period of comparison

PSEI vs. SPY (S&p500 etf) & IWM (Russell 2000, from US : fr.2015 / 10yr: 5yr: 2yr: 1yr: 6mo: 10d / xx vs. xx, yy

uYAL6Co.gif

HOW BIG A VALUATION GAP (SPY over PSEI) before it matters?? (& the Gap will start to close)'

But it can go on growing for a long time, as this 10 year chart shows:

N4BPCB1.gif

PSEI vs Gold, Silver

xx

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The 2020 STARTER Portfolio, a closer look

The "2020 Starter Portfolio":
Sym.  : Company-: 02/21: -High (xx’20): vs.High shsOS: MktCap: Pr/Bk: BkVal: PER : Yield : Div. :
PSEI   : PSEI Index: 7,370 : 9000: (01’18) : -18.1% : 000.M: P00.0B : =====  ==== : 15.0: 1.94% : p143.
GLO.   : Globe Tel. : 1,889 : 2700: (04’15) : -30.0% : 133.M: P252.B : 317.% 0,596 : 11.5: 5.04%: p95.2
MBT   : MetroBank 60.85 : 93.00 (01’18) : -34.6% : 4.50B: P274.B : 88.4% 68.83 : 10.2: 1.64%: p99.8
TEL.   : PLDT Inc.  : 1,025 : 3,470 (10’14) : -70.5% : 216.M: P221.B : 202.% 0,508 : 11.9: 7.02%: p72.0
SHLph P.Shell Pet.: 28.95 : 80.00 (02’17) : -64.8% : 1.61B: P46.7B : 121.% 23.90 : 20.7: 10.4%: p3.00
Four Stocks ============================= : Aver. : P794.B : 182.% ==== : 13.6 : 6.03% =====

Charts showing ALL data ... (per BigCharts)

PSEI Chart / All Data - highlights how important is the current 7000-7200 Support level

UiE2zEM.gif

W could easily get a rally from this 7000-7200 support to a new 12 months high, or even a new all time high. 

The more I look at Charts and PE Ratios, the more I am convinced that this is a very important support level. 

You can see it on the charts.  Like this chart, showing Weekly PSEI since 2004:

suidjIh.gif

xx

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CAUTIONARY COMMENTS  on PH stocks - from a Viber chat

Is the PH Stock Market "Too Small (& too backward) to bother"?

I posted about the concept here on a viber chat, and got some interesting comments from Mr.S, a Hong Kong based investment professional.

Fritz Ocampo:  ... is bullish on the PH economy, and on PH stocks for this year and beyond.
... In his view, Right now is a Good Time for bargain hunting in the PH Stock Market

Mr.S:

This may well happen eventually but the sense I get from international investors at the moment is that PH is too small to bother. MSCI re-weighting is making ph irrelevant from a Benchmark perspective and why would you want to deal with political risk and high uncertainty if that position is only a small fraction of your portfolio. International investors are chasing momentum, new economy names (tech, biotech, Internet, consumer finance etc) ... none of that in PH .. buying BPI? Bleh. ALI? Bleh and even some investors will sell the stock to buy the REIT. Utilities, Telcos.. Bleh. On top of that .. moreover I find some international investors quite cynical.. all stocks are controlled by tycoons and these have all m any private companies as well.. when there is really money to be made, they make sure to make the transaction with one of their unlisted entities.

Dr.B:

Interesting points.  I wonder if the REITs (there are three coming per Fritx) will suck capital out of Index stocks, and depress the index below support of about 14.7 = 7200?

Mr.S:

7% gdp growth and the stock market just mean reverts over years... richer get richer .. many people are making money in PH but not that much for shareholders

Dr.B:

If PSEI earnings continue to grow, I am sure PH stocks will eventually have their day, and rapid earnings growth is bound to be good for PH stocks in the long term. Another reason I am aiming to buy is for the dividends. Fritz told me that the first REIT, if Ayala REIT, may have a dividend yield of about 4.2% -that is LOWER THAN EXPECTED, and many of the stocks I am thinking of buying have Yield above 5%, and PER well below the 15X of the Index.  Investing in some selected stocks with Solid high yields will give me some decent Peso income. while I await the return of foreign investors.

Mr.S:

I hope so. Sorry to be cynical here as well. The problem is very deep. Since post colonial time, the economic elite has always been used to operate in markets that are protected by concessions, licenses, tariffs etc. they were making too much money to bother about innovating. No major PH listed company is innovating. Exports? Beer and fried chicken.. My worry is that at some point the country will let more international competition in and local companies will get run over. The Philippines will keep growing and standards of living rise but not thanks to the same companies.

Dr.B:

That is a very relevant point.  I see that too.  The "influence game" seems so easy, profitable, and habitual for many.  So they think they do not need to worry so much about the Competition game that we see in more developed markets.   Some may have hoped that Du30 would eliminate the old way, but in some ways (Water & TV licenses), it looks worse now.  I will keep this important issue in mind, as I pursue my normal tendency towards stock-picking using fundamental and technical tools... The younger generation may overcome these old habits, if they are given the chance

HOW BIG A GAP (SPY over PSEI) before the relative cheaper valuation in PH matters??

PSEI versus SPY, IWM/ Russell 2000 : fr.2015 / 10yr: 5yr: 2yr: 1yr:

VxpMV1F.jpg

I think it will matter within 2020, and maybe pretty soon.  Though I agree that the launch soon of PH REITS may attract funds away from Index stocks.

Mr.S:

It’s really just one issue.. money is chasing secular growth stories. They chase the disrupters.. not the disrupted. In this game valuation means nothing. If people would look at valuations we would all buy banks and deep value stocks. The PSEI will remain cheap I think. Few large caps in PH pay decent dividend .. at least in international context. The small caps you look at are v illiquid often. Investors are so disinterested of PH that the entire market trades only 100$m a day ... the entire market.. basically what a FB trades in the first 5min of trading in the US. HK traded 12.8bn on Friday. For me that’s the big picture .. so yes it can go up 10-20% because of bottom fishing but it doesn’t really break out because 10-20% these companies are expensive for that they offer.

Dr.B:

Yes,  EASY MONEY can be made when the "wind is at your back", ie the flows are moving in your direction.  I get that.  But I am a VALUATION GUY, and a SUCCESSFUL STOCK PICKER, who is often willing to swim against the tide, because valuation measures (that I sometimes develop myself) may suggest the tide is about the turn.  Or maybe an inflection point is at hand.  Thus, I sold HK properties 5 years ago, to bring money to the Philippines, and invest in MUCH cheaper property here.  And I was buying cheap stocks in HK with decent dividends, like HK10 last year, when people were fleeing the HK market.

When FB crashes, and these other over valued stocks go down,  The PH market has a chance of holding up better.  If you want value, it is best to look for a market like PH that is out of favor, and dive in deep to see if the value is there.  If I get a good secure dividend YIELD while I wait, I may not mind if I am early

Mr.S:

Ok - good luck! But Apart from telco stocks, not aware of a 5% div stock in PSEI30. You will have to dive deep into midcap but you will be almost alone there with retail investors and local instits. These stocks trade so thinly that it can be manipulated easily. Anyone with influence can lift a few offers and the stock is 5-6% higher. These stocks are cheap coz hardly trade.. but if you find some good stories that will unfold within these mid caps you can easily double your money.

Dr.B:

The valuation GAP was in favor of PSEI up to early 2013. but since then it reversed (see charts in panel above). favoring US stocks, and since that Time about 7 years ago, US stocks have outperformed. PSEI stocks have essentially gone sideways since that 2013 peak, but earnings have continued to grow.

LIQUIDITY is an issue, But I am investing in small enough size that I can be more nimble than an institution in moving in and out. In other words, I might have a competitive advantage, BECAUSE of my small investment size.  I can make investments that big institutions cannot, because the liquidity needed for their entry or exit would move the market too much.

For interested parties, here's a List of High Dividend stocks - but it needs updating.  Maybe I will do that here.

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The "2020 Starter Portfolio":

Sym.  : Company : Friday: Mon. -chg.: pct.% -High (xx’20): Fri.vs.H/  Earn. PER-: Div. : Yield :
PSEI   : PSEI Index : 7,370 : 7,187: -183. : -2.48%: 9000 (01’18) : -18.1% : / P490: 15.0: p143  : 1.94% :
TEL.   : PLDT Inc.  : 1,025 : 1,013 - 12.0 : -1.17% : 3,470 (10’14) : -70.5% /  P86.2 : 11.8: p72.0 : 7.11% :
GLO.   : Globe Tel. : 1,889 : 1,891 + 2.0 : +0.11%: 2700: (04’15) : -30.0% / P164. : 11.5: p95.2: 5.04% :
MBT   : MetroBank 60.85 : 59.85 -1.00: -1.64%: 93.00 (01’18) : -34.6% / P5.97 : 10.0: p1.00 : 1.67% :
SHLph P.Shell Pet: 28.95 : 28.10 -0.85: -2.94%: 80.00 (02’17) : -64.8%/ P1.40 : 20.1: p3.00 : 10.7% :

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7000-7200 SUPPORT?  Let's see if it holds. 

I will hold off in doing any buying, as I await the action today, to see if the key support level will hold, after yesterday's 1,000 point drop in the Dow

SPY was down - 3.32% yesterday,  if PSEI drops the same then: 7187 x0.96685= 6,950, a break! 

But I will waiting, without a strong opinion and simply see what happens

(PH markets are closed on Tuesday for a Holiday.)

So another fall in US stocks today, would be highly likely to bring a break of support when PSEI trade reopens

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Relative to Hong Kong indices, PSEI is looking cheaper

PSEI-vs:  HSI, HK:2923 (& HK10) ... from 2016 : 2yr: 1yr: 10d/ PSEI: xx, HSI: xx, Ratio: xc

Tyby4AM.gif

Compare:

Index: Fr.2/21:  02/24 :   chg. : +/-Pct. / 02/25
PSEI :  7,370.  :   7,187. : - 182, - 2.47% /
HSI.   27,309. : 26,821. : - 488, - 1.79% / 26,864 + 42.92, +0.16% so far
R./ps:  r.3.71. :   r.3.73  : r.2.68
SPY  : 333.48 : 322.42 : -11.06, - 3.32% /
R./ps: r4.52% : r.4.49% : r.6.08%
IWM :  162.07: 162.07 : - 5.03, - 3.01% /
EWM: $26.49: $25.18 : - 1.31,  - 4.95% /
====

Hong Kong's HSI is not crumbling today. So maybe PSEI will not crumble tomo

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Shell PH now show an 11% Div. Yield - aims to pay 75%+ of Income

(Chart, added in edit, 2/28/2020)

SHLph-etc .... fr. 2018: w/rdsa: 2019: / SHLph: p26.10, USO: $9.78 (r2.67x), L.RDSA: Gbp17.32 (r-1.51x),
Div:p3.0 / 26.10= 11.49%, PE: 18.67 (p1.40), EarnY: 5.36%

fKMkUbG.gif

SHLph : fr. 9.1.2019: 10d/ p26.00,. LOD: p25.95

ZWABwKI.gif

Pilipinas Shell Q3 income drops

PILIPINAS Shell Petroleum Corp. reported a third-quarter net income of P640.68 million, down 63.4% year-on-year, amid “depressed regional refining margins.”

Net sales during the July to September period reached P52.63 billion, lower by 8.9% compared with the level a year ago, the company’s quarterly report submitted to the stock exchange showed.

In the nine months to September, net income stood at P4.37 billion, lower by 39.2% from P7.2 billion a year earlier. Revenues were flat at P162.3 billion during the period, from P161.9 billion a year ago.

During the period, the company opened 30 new stations across the country. As of end-September, Pilipinas Shell had 1,105 retail sites, of which 46 are solar-powered.

“Pilipinas Shell continues to develop its non-fuels retail segment as it enjoys double-digit growth year-on-year. The company opened 9 Select stores, 5 deli2go stores, and 23 Shell Helix Oil Change+ and Helix Service Centres,” the company said.

Pilipinas Shell

Pilipinas Shell declares cash dividend of P3 per share

PILIPINAS Shell Petroleum Corp. on Tuesday declared cash dividends of P3 per share, representing P4.8 billion or 95% of its audited net income in 2018.

In a disclosure, Pilipinas Shell said this cash dividend exceeded its commitment to a dividend payout of at least 75%. This is also considered to be its highest payout ratio since its initial public offering (IPO) in 2016.

The dividends will be paid on April 30, 2019 to stockholders on record as of April 5, 2019.

“We generated P14.1 billion cash from operations last year, which allows us to not only cover our dividend payments, but also to fund P6 billion worth of capital expenditure this year,” Cesar G. Romero, president and chief executive officer of Pilipinas Shell, said in a statement on Tuesday.

Last year, the company’s return on average capital employed stood at 15%.

“With a healthy balance sheet and gearing of 17%, the Company continues to be well-positioned to fund growth and sustain its attractive dividend policy,” Pilipinas Shell said in a statement.

The listed company is increasing its capital expenditure to P6 billion this year from P4.1 billion in 2018. The higher capital expenditure is aimed to support the expansion plans of its retail business, which would include opening of 50 to 70 new sites, and for projects that will enhance the crude flexibility of the Shell Tabangao Refinery.

Shares in Pilipinas Shell dipped 0.30% or P0.15 to close at P49.65 a piece in the stock exchange on Tuesday.

shell-logo-for-pspc-corporate-video-300x

Pilipinas Shell says Batangas oil refinery operating safely after Taal eruption

PILIPINAS Shell Petroleum Corp. (PSPC) said on Friday that its oil refinery in Batangas province continues to operate safely while its retail stations serve as emergency response sites while Taal Volcano is erupting.

Pilipinas Shell refinery strike up for mediation

REPRESENTATIVES of Pilipinas Shell Petroleum Corporation will meet with the National Conciliation and Mediation Board (NCMB) following a notice of strike filed by employees of the company’s Tabangao Plant.
 

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LEVITATING?  Are SM co's "Propped up" somehow?

SM group companies little impacted by the downturn, thus far.  But they have extremely high PE Ratios.

How is this managed?

SM / SM Investment (Holding Co.) ... All-data : P 987 PE: 27.04, Y: 0.92%, EarnY: 3.70% - 4.38%= (0.68%) spread

ATxjx7T.gif

SMPH / SM Prime Hldgs ... All-data: Log:  P 39.05, PE: 31.01, Y: 0.90%, EarnY: 3.22% - 4.38%= (1.16%) Spread

cKHZUpN.gif

(Compare with, for example):

PSEI index ... All-data: Last: 6,968 @ 2/27/20, PE (p490 eps): 14.22, Y (p143): 2.05%, EarnY: 7.03% - 4.38%= +2.65%

Z0ioHRp.gif

BPI / Bank of the Philippine Islands ... All-data / 2/27/20: P 80.00, PE: 12.83, Y:2.25%, EarnY: 7.79% - 4.38%= +3.41%

q8eeFv1.gif

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Earnings : "10% Profits growth now looks optimistic" for 2020

The market seems to be expecting less E in the PE-Ratio, & lower Earnings Yield

Earnings Yield calculations

- assuming Historical Earnings of P490 per each unit of PSEI Index
Level: P490: EarnY: - 4.40% (est LT rate)
6800: 13.88: 7.20%: 2.80%
6600: 13.47: 7.42%: 2.98%
6500: 13.27: 7.54%: 3.14%

REDUCED EARNINGS expectations may already be hitting PH stocks

Some Are Preparing for Philippine Bear Market as Stocks Sink

As viral scare mounts, some prepare for Philippine stock bear market

Virus fears are hounding the Philippines even as it had only three cases so far. Now the nation’s benchmark gauge is about 3% away from entering a bear market. With Wednesday’s sell-off, its year-to-date loss has mounted to almost 12%, the world’s worst performance after Lebanon and Thailand, which entered bear territory on Monday.

Philippine shares were already hit by President Rodrigo Duterte’s verbal attacks on some of the nation’s biggest business groups for contracts he alleged were disadvantageous to the public. Still, before the outbreak, analysts and investors came into 2020 with an optimistic outlook. The nation’s biggest money manager, BDO Unibank Inc., and First Metro Investment were among those that anticipated a double-digit gain for the nation’s equity index this year, thanks to accelerating economic and earnings growth. But with the coronavirus, things have changed.

“It’s unthinkable earnings won’t take a hit,” Cruz said, adding that 10% profit growth this year for Philippine companies could be“optimistic” because the outbreak has affected supply chains and consumer behavior. “There will be a big dent in first-quarter earnings that will extend into the next three months.”

He expects rallies to be short-lived as risk-off sentiment has yet to peak since infections are still growing globally. “The next stage from here will be talks and fears of a recession” once the virus hit becomes apparent on the economies affected, he said.

And the effect will extend beyond the tourism and consumer sectors, he warns. A slowdown in manufacturing would slow demand for loans and electricity, creating a “domino effect” on other industries and the economy, according to Cruz. That’s why he favors stocks where he sees a more muted impact, such as lenders and developers including Bank of the Philippine Islands, Security Bank Corp., Metropolitan Bank & Trust Co. and Ayala Land Inc.*

> More: https://ph.news.yahoo.com/some-are-preparing-for-philippine-bear-market-as-stocks-sink-022336836.html

*Websites: BPI: XXX: MTB: ALI:

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INTRADAY DAY CLOSE-up - on Friday, Feb, 28th

BPI-etc: 10d : 6mo: 5yr / Last: p78.10 / PSEI- 6,816: 1.15%
7qLOWmB.gif

5yr / Last: p78.10 / PSEI- 6,816: 1.15%

Gk0H08w.gif

Symb.: Midday %PSEI : Chg. : - Pct.- / YrLow : Diff.%  : Yield : PE-Rat.: Earns: EarnY
Psei.   : 6,816 : 100.%: - 151.  : - 2.17% / 6,812 : +0.06% : 2.10%: 13.910: p490: 7.19%: (div.p143)
BPI     : 78.10 : 1.15%: - 1.90  : - 2.38%/ 77.25 : +1.10% : 2.30%: 12.527: p6.23: 7.98%:
GLO.   : 1,801 : 26.4%: -29.10 : - 1.58% / 1,755 : +2.62% : 5.29%: 10.999: p164.: 9.09%
TEL.    : 987.5 : 14.5%: -12.00 : - 1.20% / 978.5 : +0.92% : 7.29%: 11.456: p86.2: 8.73%
SHLph: 26.00 : 0.38%: - 0.70 :  - 2.62% / 25.95 : +0.19% : 11.5%: 18.602: p1.40: 5.38%
MBT    : 56.80 : 0.83%: - 0.45 :  - 0.79% / 56.00 : +1.42% : 1.76%:   9.527: p5.96: 10.5%
=====

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Lower opening on Monday morning

CHART showing GLO vs PSEI, on 6700 support : update/ xx: w/TEL:

7Dj6qUB.gif

==

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STILL WAITING - as PSEI support at 6700 is taken out

Banks under-pressure - Lowest levels since 2012, for MBT & BPI

PSEI vs- BPI, MBT, BDO,... 6mo : Last: P68.50 -8.05%/ 6364 -6.00% : 1.08%. LOD: 68.00,  6362 (1.069%)

X6e06NO.gif

xx

x

PSEI -vs-Banks
Sym.: Company: Monday -chg.: %chg: PER-: Yield :
PSEI : PSEI Index  6,312.: -458, -6.76% :
BDO : BDO Unibk 131.00 -10.50, -7.42% : 13.0: 0.92% :
MBT : MetroBank P47.50 -5.50, -10.4% : 7.96: 2.11% :
BPI   : Bk.Phil.Isl.  P67.00 -7.50, -10.1% : 10.5: 2.69% :
Secb: Security Bk: 132.80 -15.2, -10.3% : 9.91: 2.26% :
UBP : Union BkPh: P57.25 -0.25, -0.43%: 4.97: 6.11% :
RCB : Rizal CmlBk: P19.00 -0.80, -4.04%: 6.83: 2.35% :

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A Closer look at UBP / Union Bank

"UnionBank’s corporate vision is to become one of the top three universal banks in the Philippines, not in terms of asset size or branch network, but in terms of metrics under financial value to stakeholders, operational excellence, customer franchise/share of wallet, unique customer experience, and delivering superior and innovative products and services. It is grounded on its purpose to co-create innovations for a better world.Throughout its 36 years of existence, UnionBank has always been quick to embrace innovation, embedding technology in its way-of-doing-business and leveraging it in making strides to empower its customers.UnionBank is clearly a leader in Philippine digital banking. Most notably, the Bank was the first among its peers to start the first bank website; pioneer online banking in the country and launch the country’s first electronic savings account, among many other firsts.Through the years, the Bank has won numerous awards in key areas of Banking and Finance including “Most Innovative Bank of the Year” from The European’s Global Banking and Finance Awards; “Digital Bank of the Year - Philippines”... "

UBP versus-BDO, BPI, MTB (& PSEI) .... update : Last: Php 57, PER: 4.97, Yield: 6.15%

RdZhQwL.gif

Sym.: Company: Monday -chg.: %chg: PER-: Yield :
PSEI : PSEI Index    6,312.: -458, -6.76% :
BDO : BDO Unibk  131.00 -10.5, -7.42% : 13.0: 0.92% :
MBT : MetroBank P47.50 -5.50, -10.4% : 7.96: 2.11% :
BPI   : Bk.Phil.Isl.   P67.00 -7.50, -10.1%.: 10.5: 2.69% :
UBP : Union BkPh P57.25 -0.25, -0.43% : 4.97: 6.11% :

Year : Earning : Divs.Pd: ShsOS: Div/sh. / E.P.S.= (Pct.Pd)
2016: 10,066M : 1,587.M: 1060M : P1.50 / P9.50 = (15.8%)
2017:   8,411M : 2,011.M: 1060M : P1.90 / P7.95 = (23.9%)
2018:   7,316M : 2,011.M: 1098M : P1.83 / P6.66 = (27.5%)

UBP looks undervalued… at below P80.
“Fair Value”: @104%BV: P83.2, @8.9 PE: P75.7

Last : P56.00 : P80Est: 70.0%: P8.5E: r6.59:
Year: YePrice: BkVal.: Pr/BV: E.P.S. : PE-R: EarnY: Yield: Div.s (%Eps)
2007: P25.22 : P25.99: 97.0%: P2.97: 8.49:
2008: P12.61 : P25.60: 49.3%: P1.96: 6.43:
2009: P21.70 : P29.65: 73.2%: P4.10: 5.29:
2010: P35.14 : P34.00: 103.%: P5.06: 6.94:
2011: P38.72 : P40.07: 96.6%: P6.26: 6.19:
2012: P66.11 : P44.73: 148.%: P7.39: 8.95:
2013: P73.91 : P42.51: 96.6%: P8.53: 8.66: 11.5%: 2.87%: 2.12 (24.9%)
2014: P66.65 : P52.76: 126.%: P7.94: 8.39: 11.9%: 4.00%: 2.67 (33.6%)
2015: P57.05 : P56.21: 102.%: P5.68: 10.0: 9.95%: 3.68%: 2.10 (37.0%)
2016: P74.60 : P63.30: 118.%: P9.50: 7.85: 12.7%: 2.01%: 1.50 (15.8%)
2017: P86.65 : P69.25: 125.%: P7.95: 10.8: 9.17%: 2.19%: 1.90 (23.9%)
2018: P63.95 : P82.34: 77.7%: P6.66: 9.54: 10.4%: 2.86%: 1.90 (28.5%)
’19 E: P57.20 : P80est.: 71.5%: P8.5E: r6.59: 15%e 6.12%: 1.90 > '20: 3.50 (41%.E)
==== Average Pr./BV:> 104.%: === >  8.90:
3xQs: QtEnd :
 ‘ 18 : P67.00 : P81.0: 82.7%: P 5.50: 9.14: xx
 ‘ 19 : P59.05 : P79.3: 74.5%: P 7.00: 6.33: xx

> 6% Bonds, Senior Notes, due 2022: Issued May 2019 : 3-yrs. Php 5.8 Billion

 

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UBP Dividends

Unon-Bank-Dividend-Rate-1-1.png?w=878&ss

As you can see in the picture above, the stock was steadily increasing the dividend rate from 2010 to 2014, however, it suddenly dropped by almost half in 2015. This was probably due to the stock dividend given in 2014 along with its regular dividends which caused dilution of shares. 

Sometimes it is necessary for companies to dilute their shares by giving stock dividends so as to increase the attractiveness of the stock. Just like what happened with Union Bank, the stock price increased continuously until it looked so expensive that they decided to dilute it in 2014. 

The Dividend Rate above translates directly to the yields shown below in figure 3. We mentioned earlier that the dividend rate is building up momentum since its decline in 2015. As you might have noticed, the yield has been steadily increasing from 2015 to 2020 which confirms its dividend growth momentum post-dilution.

> https://chilllinvest.com/unionbank-of-the-philippines-2020-dividends

STOCKHOLDERS SHARES %
1 ABOITIZ EQUITY VENTURES, INC. 511,581,606 42.02%
2 PCD NOMINEE CORPORATION 209,581,282 17.21%
3 THE INSULAR LIFE ASSURANCE CO., LTD. 198,274,191 16.28%
4 SOCIAL SECURITY SYSTEM 153,464,480 12.60%

 

Top 4 = 42.0% +17.2% +16.3% = 86.1%

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Original "2020 Starter Portfolio":

Sym.  : Company-: 02/21: -High (xx’20): vs.High shsOS: MktCap: Pr/Bk: BkVal: PER : Yield : Div. :
PSEI   : PSEI Index: 7,370 : 9059: (01’18) : -18.7% : 000.M: P00.0B : =====  ==== : 15.0: 1.94% : p143.
GLO.   : Globe Tel. : 1,889 : 2702: (06’15) : -30.3% :133.M: P252.B : 317.% 0,596 : 11.5: 5.04%: p95.2
MBT   : MetroBank 60.85 : 90.53 (01’18) : -32.8% : 4.50B: P274.B : 88.4% 68.83 : 10.2: 1.64%: p99.8
TEL.   : PLDT Inc.  : 1,025 : 3,422 (09’14) : -70.0% : 216.M: P221.B : 202.% 0,508 : 11.9: 7.02%: p72.0
SHLph P.Shell Pet: 28.95 : 79.35 (02’17) : -63.5% : 1.61B: P46.7B : 121.% 23.90 : 20.7: 10.4%: p3.00
Four Stocks ============================= : Aver. : P794.B : 182.% ==== : 13.6 : 6.03% =====

AS UPDATED today

Sym.  : Company-: 02/21: -High (xx’20): vs.High shsOS: MktCap: Pr/Bk: BkVal: PER : Yield : Div. :
PSEI Index: 5,335 : 9059: (01’18) : -41.1% : 000.M: P=====  ==== : 10.9: 2.68% : p143.
GLO.   : Globe Tel. : 1,920 : 2702: (06’15) : -29.0% :133.M: 322.% 0,596 : 11.7: 4.96%: p95.2
MBT   : MetroBank 43.50 : 90.53 (01’18) : -32.8% : 4.50B: 63.2% 68.83 : 6.97: 2.30%: p99.8
TEL.   : PLDT Inc.  : 980.0 : 3,422 (09’14) : -71.4% : 216.M: 193.% 0,508 : 9.42: 7.65%: p72.0
SHLph P.Shell Pet: 20.75 : 79.35 (02’17) : -73.9% : 1.61B: 86.8% 23.90 : 14.8: 14.5%: p3.00
Four Stocks ============================= : Aver. : 166.% ==== : 10.7 : 7.35% =====

INVEST $100K each at 12/2019,  vs. value other days:

Sym.  : 12/27: #ofSh: 01.31, =000’s: 02.21, =000’s : 03/16, =000’s :
PSEI   :  7,815.:  12.8 : 7,201., 92.17k: 7,370., 94.34k: 5,335.. 68.28k:
Chg.vs   :start: ====: =====. -7.86%: ====.: - 5.66%: =====: -31.7% :
GLO.   : 2,020.: 49.5 : 1,890., 93.56k: 1,889., 93.51k: 1,920.: 95.04k :
MBT   : 66.30: 1508: 57.35,  86.48k: 60.85, 91.76k: 43.50 : 65.60k :
TEL.   : 988.0: 101.2: 996.0: 100.8k: 1,025., 103.7k:  980.0, 99.18k :
SHLph 32.80: 3049.: 29.95: 91.32k:  28.95, 88.27k: 20.75 : 63.27k :
=========: p100k : 4aver. : 93.04k: ==== : 94.31k:  ==== : 80.77k :
Chg.vs   :start: ==== ====: - 6.96% : ====: - 5.69%: ===== : -19.2% :
==

 

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WATCHLIST: Start#1 v.2
Stock: Last: Change -Pct. : LoDay : YrHigh: dLvH
PSEI  : 4360 -    975, -18.3%: 4039.:  8420.: -52.0%
BDO. : 90.15 -19.85, -18.1%: 75.00: 161.80: -xx
BPI.   : 54.90 -P7.40, -11.9%: 48.00: 100.50: -xx
MBT. : 39.15  -P4.35, -10.0%: 32.90: 72.88: -xx
TEL.   : P900 -80.50, -8.21%: 805.0: 1373.: -xx
GLO.  : 1,821  -99.00, -5.16%: 1590.: 2308.: -xx
SHLph: 19.22 -P1.53, -7.37%: 19.00: 51.25: -xx
=====

WATCHLIST: #2-Prop v.2.2
Stock: Last: Change -Pct. : LoDay : YrHigh: dLvH
PSEI  : 4360 -    975, -18.3%: 4039.:  8420.: -52.0%
Smph: 90.15 -19.85, -18.1%: 75.00: 161.8: -53.7%
ALI -  : 24.30 -P4.50, -15.6%: 19.44: 53.85: -63.9%
MEG : P2.35 -P0.34, -12.6%: P2.00: P6.54: -69.4%
AGI - : P6.23 -P1.79, -22.3%: P6.01: 16.50: -63.6%
DMC : P3.49 -P0.73, -17.3%: P3.40: 12.54: -72.9%
LAND: P0.65 -P0.05, -7.14%: P0.65: P0.89: -27.0%
=====

 

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PSEI Rally ending possibly -

PSEI -Monthly: Weekly: 3yr: Nov'18: Daily ... 6,439 @ Jun. 10th, 2020

PSEI-starter ... fr. 2015 2017 / 5yr: 2yr: 1yr: 6mo: 10d / 7,370 + GLO:1,889 / BPI-etc: 10d : 6mo: 5yr /

image.png

Intelligent Investing

Why I don’t think the stock market rally is sustainable

The stock market has been very strong lately, rising by a total of 969 points or 17.6 percent in the past eight trading days to close at 6,465.13 last Friday.

The market’s strong performance was fueled by numerous factors. First, there is optimism that the worst is over as the Philippine economy is slowly reopening after several months of lockdown. Although there is still a lot of bad news, the market is forward looking which means it is more focused on the brighter future rather than the bleak past.

. . .  I have not changed my view that the Philippine economy will go through a “U” and not a “V” shaped recovery. In fact, recent developments further strengthen my view that the economy will go through a slow recovery. For example, last Friday, the government announced that the unemployment rate jumped to a record high of 17.7 percent in April. Although this number will most likely improve in the next few months as businesses reopen, I am 100 percent sure it won’t return to its April 2019 level of 5.1 percent given the store closures and layoffs announced by the likes of Jollibee, BPI and Victoria Court.

Moreover, valuations today are already expensive. When I first wrote about why I was cautious about the stock market’s rally a few weeks ago, the PSEi was still at 5,500. At that level, I said the stock market was cheap compared to its historical average but still had room to go down based on past bear market bottoms. However, at 6,500, the PSEi is already expensive as it is trading at 17.6X 2020 P/E, which is a premium to its 10-year historical average P/E of 17.3X.

If you don’t think property developers can justify increasing the prices of their properties for sale because of the COVID-19 pandemic, then you should understand why I don’t think stocks can justify trading at above average valuations...

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PSEI vs- BPI, MBT, BDO,... 6mo : Last: P68.50 -8.05%/ 6364 -6.00% : 1.08%. LOD: 68.00,  6362 (1.069%)

CThRIQP.gif

WATCHLIST: Start#1 v.2 > v3 to be updated
Stock: Last: Change -Pct. : LoDay : YrHigh: dLvH
PSEI  : 4360 -    975, -18.3%: 4039.:  8420.: -52.0%
BDO. : 90.15 -19.85, -18.1%: 75.00: 161.80: -xx
BPI.   : 54.90 -P7.40, -11.9%: 48.00: 100.50: -xx
MBT. : 39.15  -P4.35, -10.0%: 32.90: 72.88: -xx
TEL.   : P900 -80.50, -8.21%: 805.0: 1373.: -xx
GLO.  : 1,821  -99.00, -5.16%: 1590.: 2308.: -xx
SHLph: 19.22 -P1.53, -7.37%: 19.00: 51.25: -xx
=====

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COMPARISON: Look at this.... 

The rise in US markets has been helping globally, including the PSEI

PSEI versus SPY, IWM/ Russell 2000 : fr.2015 : Nov.2018 / 10yr: 5yr: 2yr: 1yr:

zAKp8ck.gif

PSEI was running ahead of US markets, and is now lagging behind, especially behind SPY

: : Nov.2018 / 10yr: 5yr: 2yr: 1yr:

4iN3obU.gif

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CYCLES Call: "SELL stocks!"

"I think it will go all the way down. A low in 2022."

Charles Nenner is a former doctor who loved markets and switched from medicine to work as a technical analyst at Goldman Sachs. He has used his cycles to make a series of good calls on markets.  Recently, he and his clients sold US stocks they bought on the drop. He is also Bearish on Bonds and is bullish on Gold/ Charles Nenner on USAwatchdog >

Renowned geopolitical and financial cycle expert Charles Nenner sees, “A reversal in rates long term, and they are headed up. . . . Rates are going to rise.”  

(He also has spoken with Doctor friends who think there might be a second series outbreak of Coronavirus before year end, The immune system might only work for 3-6 months.. Then, another outbreak.)

On gold and silver, Nenner says his next price targets are “$2,500 per ounce on gold and $20.50 on silver . . . And prices can go much higher in the next few years . . . . Until 2026 in the gold market, there is going to be a bull market.”

On President Trump getting re-elected, Nenner says, “For the last 130 years, once the cycle on interest rates turns up, the party in the White House continues to be re-elected.  Isn’t that interesting?  Don’t ask me why.   So, it looks like (Trump) he’s going to be the next President based on that cycle.”

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PSEI may be set for another DIVE after a failed test of Resistance at 6,000.

PSEI... 5yr: 2yr: 1yr: 6mo: 10d / Last: 5,911 -0.48%

OclMd6c.gif

5yr:

gb9RpJx.gif

==

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FOOD RELATED STOCKS - valuations versus PSEI

PSEI-etc. / 10yr: fr. 9.30.2010: 5yr: 2yr: 1yr: Ytd: 10d/

from 9.30.19: YTD: 3.30.20: 10d/ 5,932: URC:136.4 (2.3%), JFC:143.8 (2.4%), SMC:100.0 (1.7%)

KgdLhZs.gif

from 9.30.2010:

VQTQP1G.gif

===

Sym.  : Company Name— : Price : BkVal: %BV: PE-R: Yield : Div. :  yr -L.: yr-H.: %range: (10.09/2020)
FOOD: Alliance Sel. Foods : P0.64: P0.68: 94.1%: -n/a : 0.00%: 0.00:  P0.44: P0.73: 69.0% :
GSMI : Ginebra San Miquel: 46.65: 25.36: 184.%: 7.03 : 2.14%: 1.00:  P25.0: P52.0: 80.2% :
JFC   : Jollibee Foods Corp: 143.8: 47.94: 300.%: -n/a : 1.37%: 2.00:  P91.1: P236.: 36.3% :
LFM. : Liberty Flour Mills.   : 35.05: 18.02: 195.%: 35.1 : 2.28%: 0.80:  P27.1: P75.0: 16.8% : Illiquid
PIP.   : Pepsi Cola Products: P1.70: P2.48: 68,5%: -n/a : 2.59%: 0.04:  P1.20: P2.22:  49.0% :
RCI.  : Roxas and Company: P1.19: P4.01: 29.7%: 15.0 : 0.00%: 0.00:  P1.10: P2.29: 7.56% :
RFM. : RFM Corp.                 : P4.90: P3.51: 140.%: 13.4 : 4.33%: 0.21:  P4.00: P5.51: 59.6% :
ROX. : Roxas Holdings.       : P1.82: P5.92: 30.7%:  -n/a : 0.00%: 0.00:  P1.28: P2.36: 50.0% :
SFI.   : Swift Foods Inc.        : 0.105: 0.081: 130.%: 2.09 : 0.00%: 0.00:  P0.10: 0.161: 8.20% :
SMC : San Miguel Corp.      : 100.0: 139.8: 71.5%:  -n/a : 1.40%: 1.40:  P72.5: 174.0: 27.1% :
TFHI : Top Frontier Inv Hdg : 121.0: 488.0: 24.8%: - n/a : 0.00%: 0.00:  117.0: 230.0: 3.54% : owns SMC shares
URC : Universal Robina Cp. : 136.4: 40.81: 334.%: -n/a : 2.31%: 3.15:  P82.0: 163.4: 66.8% :
VITA : Vitarich Corp.             : P0.74: P0.54: 137.%: 6.53 : 0.00%: 0.00: P0.63: P1.35: 15.2% ::
====
12co: Food companies.       : ==== : BkVal.: %BV: Ave. : 1.37%: ===== ========= :+36.4% : w/o TFHI
3cos: JFC, SMC, URC ave.  : 126.7: 76.18: 166.%: Ave.: 1.69%: 2.14:  P81.9: 191.1:+45.2% : 3CoreFoods
PSEI: Philippines Stock Idx : 5,932: 3,969: 149.%: 13.3 : 2.06%: 122.:  4,039: 8,217:+45.3% : Earns P447 :
PSE : Philippine Stock Exch: 156.8: 52.80: 297.%: 22.7 : 5.61%: 8.80: 132.0: 179.5:+52.2% : Earns P6.90 :
====

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