PSE Points to Ponder

Someone has said that in deal making, if you are a buyer pretend to be a seller and if you are a seller pretend to be a buyer. After  Business World has reported  that the Philippine Competition Commission (PCC) green-lit DMC Urban Property Developers, Inc.’s acquisition of Smart Towers, the Makati-based office building assets of PLDT Inc. ( TEL ), another news outfit the Philippine Star/PhilStar Global has r eported that MVP Group’s PLDT is vying for Lopez owned Sky Cable . Business World and the Philippine Star are units of Hastings Holdings, Inc. and according to the disclosure in the Business World report, Hastings Holdings, Inc. – a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls. Hastings is a wholly-owned subsidiary of MediaQuest and holds all the print-related investments of MediaQuest, including equity interests in the three leading newspapers: The Philip...

Someone has said that in deal making, if you are a buyer pretend to be a seller and if you are a seller pretend to be a buyer. After Business World has reported that the Philippine Competition Commission (PCC) green-lit DMC Urban Property Developers, Inc.’s acquisition of Smart Towers, the Makati-based office building assets of PLDT Inc. ( TEL ), another news outfit the Philippine Star/PhilStar Global has r eported that MVP Group’s PLDT is vying for Lopez owned Sky Cable . Business World and the Philippine Star are units of Hastings Holdings, Inc. and according to the disclosure in the Business World report, Hastings Holdings, Inc. – a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls. Hastings is a wholly-owned subsidiary of MediaQuest and holds all the print-related investments of MediaQuest, including equity interests in the three leading newspapers: The Philippine S...

Eusebio H. Tanco is the principal controlling stockholder of STI Education Systems Holdings, Inc. ( STI ). He directly owns around 12.7% of STI’s outstanding common shares as of June 30, 2020. STI has a fiscal year ending on March 31 of every year. For the fiscal year 2019 to 2020 STI has not yet been able to file its 17-A report or the annual report. According to STI the preparation of the Financial Statements (“FS”), and timely completion of the statutory audit of the Company’s Consolidated and Parent Company FS have been greatly affected by the travel and quarantine restrictions imposed by the IATF. The STI network of schools are located nationwide and most of these locations are placed under quarantine, suspension of business operations, and other safety and quarantine protocols imposed by both local and national government authorities and the Company in response to COVID 19 pandemic . Prior to the implementation of the quarantines, STI was able to file its 3Q results for the fis...

As of the end of first half of 2020, Filinvest Land, Inc. ( FLI ) has debts becoming due in the current period of 9.3 Billion Pesos while cash is only at 3.9 Billion Pesos. As with everyone else, FLI ‘s revenue is down for the first half of 2020. FLI’s revenue from real estate sales went down by 46% but rental revenues held up. Mall rentals may have been significantly affected by COVID-19 pandemi c restrictions but office leasing remained strong. FLI earned around 3 Billion Pesos in the first half of 2020 from office rentals. The office rentals is expected to be the main cash generator for FLI in these times. In the first half of 2020 FLI generated cash from operations of 0.9 Billion Pesos only. Although FLI has an inventory of real estate units for sale of around 65.8 Billion Pesos of 1H 2020, we can not expect for sales of real estate units to be buoyant during these times. Judging of the first half results of FLI, real estate sales have come to a standstill. Thus, ...

PLDT Inc. ( TEL ) is under heavy pressure to (1.) invest in fiber broadband and 5G wireless networks and (2.) still reduce leverage and (3.) distributes dividend to shareholders, the “ triple threat position. “ No less that the President of the Philippines on its State of the Nation Address had called on TEL and Globe Telecom, Inc. ( GLO ) to improve their services. The President was telling the telcos that it is just a matter of capital infusion and that the telcos have to look for it to fund service improvements. As of June 30, 2020 TEL’s debt had increased 22% to 235.3 Billion Pesos from the end of December 31, 2019 of 192.6 Billion Pesos. The already elevated debt level gives TEL less flexibility to raise capital through debts. Judging by the results of the 1H 2020, cash generations from operations will just be enough to fund capital expenditures of 70 Billion Pesos if TEL will stick to its plan of spending around 70 Billion Pesos for capital expenditures on n...

We have earlier commented that the COVID-19 pandemic had a significant adverse impact on the operations and finances of DMCI Holdings, Inc. ( DMC ) during the first half of 2020 (1H 2020) which resulted to a weaker financial footing for DMC as of end of 1H 2020 . The weakness in the results of DMC sent it shares plummeting to a low of 3.40 a share almost revisiting the 3.10 a share low at the height of the sell down in March 2020. The Consunji’s took advantage of the weakness in the share price of DMC, accumulating DMC shares along the way. We have commented earlier that the Consunji’s private holding company, DFC Holdings, Inc., had accumulated a total of 55,425,100 DMC shares as of the end of August 2020 . It appears now that DFC Holdings is not yet done accumulating DMC shares. For the first two weeks of September 2020, DFC Holdings bought 3,892,000 DMC shares. The Consunji’s accumulation of DMC shares signals that they have the operational and financial expertis...

First Gen Corporation ( FGEN ) is currently investigating the condition of the generator of its 414MW San Gabriel Combined Cycle Power Plant following a trip. The initial investigation, which is being carried out by specialists from Siemens Power Operations Inc., indicates that there is an electrical fault in the generator, and pending completion of the inspection, the plant has been declared as unavailable for dispatch. First NatGas Power Corp. (FNPC) is the project company and operator of the 420 MW San Gabriel natural gas-fired power flex plant. FNPC is a wholly owned subsidiary of AlliedGen Power Corp. (AGPC) which is in turn a wholly-owned subsidiary of FGEN. As of end of 1H 2020, San Gabriel Combined Cycle Power Plant contributes US$97.3 Million to the revenues of FGEN. In March 2018, FNPC was awarded a six-year Power Supply Agreement (PSA) by Meralco for 414 MW of San Gabriel’s baseload capacity after undergoing a Competitive Selection Process (CSP). The sale of electricity t...

In April 2020 at the height of the community quarantine , Shang Properties, Inc. ( SHNG ) distributed a cash dividend of 0.11250 a share. Based on the preceding years, SHNG also distributes dividend every September at a rate of .07 a share. This year SHNG’s second round of dividend amounted to 0.044 a share. In all, the total for 2020 SHNG cash dividend will be 0.1565 a share. With SHNG market valuation slumping, SHNG now yields 5.75%. A very attractive yield for dividend investors. In the first half of 2020, SHNG was able to earn a net income of 700 Million Pesos, understandably that would be down as compared to the same period in 2019. At the height of the community quarantine, SHNG was able to generate cash from operation of 541 Million Pesos. SHNG even was able to pare down debt with its own cash balance. In these times, SHNG’s primary source of cash generation will be the office space rentals from the Enterprise Center, an office building located at Ayala Avenue co...

SSI Group, Inc. ( SSI ) is a specialty retailer in luxury, bridge, casual, fast fashion, footwear, accessories and luggage. COVID-19 pandemic mitigating measures shrunk SSI’s 1H 2020 sales by 49% as compared to 1H 2019. The decline in sales resulted to a net loss of 476 Million Pesos for SSI. SSI’s gross profit margin remained healthy at around 46%. Despite the healthy profit margin, SSI resulted to a net loss because of its massive opex (operating expenses). Agile companies adopts to emerging circumstances. They are flexible in their cost structures. They can ramp up in times of surging demand and can scale down their costs fast in times of downturn. SSI’s 1H 2020 operating expenditures show that their is an increase in the depreciation and amortization of about 541 Million Pesos. That is 130% larger than the 1H 2019 depreciation and amortization. Depreciation and amortization are non-cash expenses. SSI would have generated cash from operations of around 610 M...

A. Soriano Corporation popularly known as Anscor ( ANS ) is an investment holding company with a hedge fund like operation with almost half of its assets in a trade portfolio (fair value through profit and loss investments/FVPL) which amounted to around 11 Billion Pesos as of December 31, 2019. The market turmoil brought about by the COVID-19 pandemic shed 1.2 Billion Pesos of market value from its trading portfolio. The market turmoil is an opportunity to snap up undervalued assets to those investment holding companies with sufficient liquidity. ANS is caught with no enough liquidity, thus, it is not poised to take advantage of the depressed valuations of assets brought about by effects of the pandemic. It is good that ANS is not leveraged and therefore is not under pressure to liquidate its portfolio at depressed valuations. It liquidated only about 700 Million Pesos of its portfolio at most likely break-even price to raise cash to support its dividend distribution in March 2020. ...

DFC Holdings, Inc. is one of the private holding company of the Consunji family’s investment in the listed DMCI Holdings Inc. ( DMC ). The other being the DACON Corporation. DACON Corporation and DFC Holdings, Inc. are the principal stockholders of DMC, holding 51.51% and 17.92% of the outstanding shares of DMC as of end of 2019, respectively. DFC Holdings, Inc.’s 17.92% holdings in DMC as of December 31, 2019 is equivalent to 2,379,799,910 shares. COVID-19 pandemic restrictions severely impacted most of the operations of DMC weakening its finances triggering the market to lower the valuation of DMC. DMC dip to a 52-week low of 3.10 a share. The dip in the share price of DMC gave DFC Holdings, Inc. the opportunity to snap up DMC shares. All throughout 2020, DFC Holdings, Inc. bought a total of 55,425,100 DMC shares to increase its holdings to 2,435,225,010 shares as of end of August 2020. For August 2020 alone DFC Holdings bought 13,485,000 DMC shares costing it 50...

DMCI Holdings, Inc. and subsidiaries ( DMC ) reported a consolidated net income of 3.1 Billion Pesos for the first half of 2020 (1H 2020). Although it reported a net income of 3.1 Billion Pesos it did not generate cash from operations. Worse is that its capital expenditures for the period required 3.2 Billion Pesos. The cash burn for 1H 2020 of DMC was around 6.9 Billion Pesos reducing its cash balance to just 14.7 Billion Pesos at the end of 1H 2020. The 14.7 Billion Pesos cash balance looks massive but if you look at the debts due in the next 12 months of 16.3 Billion Pesos it would be worrisome. It is worrisome because there is no significant cash coming from operations. Its biggest hope is its biggest unit Semirara Mining and Power Corporation ( SCC ) which has the biggest potential to generate cash from operations but its situation also looks bleak. SCC has a cash balance as of end of 1H 2020 of 3.8 Billion Pesos but the debts due in the next 12-month period is at 8.2 Billion ...

We r eported earlier that the SM heir has transferred 30 Million SM shares to a company he controls. It appears now that Henry “Big Boy” Sr Jr. transferred 35,367,989 SM shares which were previously directly registered in his name to his stock broker account at BDO Securities Corporation. Of the 35,367,989 SM shares transferred to his brokerage account, 30 Million shares went into a corporation that he controls. That transfer had a gross value of around 26.2 Billion Pesos. Of the remaining 5,367,989 SM shares, 4,750,000 were dumped into the open market during the period August 3 to August 28, 2020. And the remaining shares may have been disposed in the early days of September. The massive sell-off may have caused the SM shares to dip to as low as 810 as of September 4, 2020. Is he done selling SM shares? Please take note that as of August 31, 2020, Henry “Big Boy” Sr Jr. still has 9,915,181 SM shares in his brokerage account. That would be equivalent t...

PLC’s present market valuation yields a cash dividend rate of around 16% but that dividend distribution yield is based on last year’s net income and cash generation. For the first half of 2020 (1H 2020) when PLC faced the full brunt of the COVID-19 pandemic restrictions, it managed not to lose cash to operations. PLC generated a small cash from operations of 122.8 Million Pesos despite suffering a net loss of 27.1 Million Pesos. That would be a testament to the durability of PLC’s business model. Now that Manila casinos are allowed by the gaming regulator PAGCOR to operate at 30% capacity, it can now be assured that PLC will not bleed cash during these times and its cash balance of 2.1 Billion Pesos is protected. It also helps that PLC is debt free. For next year’s dividend, PLC can distribute some of its 2.1 Billion Pesos cash balance but PLC could also be prudent and not distribute cash dividends at all. The issue of PLC is the speed of the country to ge...

In a two (2) year period Tesla ( TSLA ) has risen more than 700%. TSLA has now a market capitalization of around US$464 Billion. The rise of Tesla tell us that there is a global shift towards vehicle electrification. TSLA’s market valuation is the envy of all car makers. In their bid to improve their market valuations, car makers will copy TSLA and make prominent in their line-up electric motor vehicles. There is a growing trend of vehicle electrification and that trend is gaining traction due to the rise in valuation of TSLA. Market now believes electrification is the future. Vehicle electrification needs a lot of copper wirings. Prices of copper, a metal used in wiring, have surged to a two-year highs as producers struggle to keep up with strong demand in China. But the longer-term prospects of copper is in global electrification, including the shift toward electric vehicles. That means copper is considered a green metal and big mining companies want more of it in their po...