PSE Points to Ponder

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...

MM is now trading at 3 times its IPO price of 1.00 a share. It is just two months since the IPO but its shares is already 3 times the IPO price and this is despite the fact that the IPO proceeds has not yet been fully used. Clearly the market has priced in the future prospect of the MM business. Groceries and convenience stores are capital intensive and low margin businesses and those are the businesses of MM. Established player in this industry are PGOLD , MRSGI , SM , RRHI , and SEVN . The proceeds of the IPO once deployed maybe will be able to add a handful to a dozen operating stores. The additional stores will only produced marginal income for MM. The key revenue actually for MM is the franchise fee. The margin for that is almost a 100% percent. But for now that revenue is still a footnote in the other operating income. The COVID-19 pandemic if we take note of the events around us is battering strong the small and medium enterprises all over the country. Banks are tighten...

Cemex Holdings Philippines Inc. ( CHP ) in a press release has disclosed that it had reached an agreement to amend its debt covenant with BDO. The debt agreement amendment was meant to defer the compliance of certain financial covenants until June 30, 2021. It could be surmised from that disclosure that had the financial covenants not been amended CHP may have not complied that certain covenant. The COVID-19 pandemic may have worsen its operating and financial performance making it difficult to stay with the financial covenant with BDO. The stock rights offering at 1.54 per share have raised additional capital of 12.8 Billion Pesos to CHP but 7.9 Billion of the new capital raised were used to pay the parent CEMEX. It can be noted from CHP’s latest presentation that no additional funding from CEMEX was highlighted. Despite all the negatives, CHP has seen gradual rise. With the fundamentals so bad – negative free cash flows of 1.9 Billion Pesos and debt covenant amendme...

Just January of this year (2020) SMPH hit a high of 43.35, now it is at 29. It is down some 33%. It shed almost a third of its high. The COVID-19 pandemic exposes the qualities of every company listed in the stock exchange. The pandemic highlighted SMPH as a money printing machine. With the economy mostly shuttered, SMPH was still able to generate 10.4 Billion Pesos of net income and 9.4 Billion Pesos of cash flows from operations. Although, it is facing a 43.8 Billion Pesos of current debts payable within the next 12 months. There is no doubt that SMPH will be able to refinance the same given its still strong cash flow generation despite all the pandemic restrictions. To illustrate its financial strength, SMPH can generate revenue and cash flows of at least 60 Billion Pesos in the succeeding periods without even spending a single peso for capital expenditures to conserve cash. At the end of June 2020 it has available inventory units of 12,000 units that could easily translate t...