September 28, 2000 Thursday

Philippine Composite Index:  UP  2.59pts  (+0.18%) at 1,441.83

CONTENT SUMMARY

Mixed market despite the peso’s new record low

Net foreign selling continued for the 17th consecutive trade session.

Most actively traded issue– BPI had a net foreign buying

Corporate News:  PNB, Digitel, DMCI, Mondragon, ICTSI and SMC

Corporate Focus:  LTDI (BUY)
 

MARKET HIGHLIGHTS

The market favorably held its ground on a generally mixed investor sentiment with a marginally positive bias coming from indications that global oil prices have eased.   It was surprising to find the market firm (-2.44 pts / +9.75 pts) despite a record low of the peso (Php46.345/USD high before mid-day) from jitters reeling from IMF’s reluctance to accept the government’s higher fiscal deficit.  The market’s relative firmness has now intensified market reassessment that bulk of the ecopolitical concerns may have been largely discounted.

The broad market had 41 gainers against 29 decliners, while index constituents had 10 gainers with 8 decliners.   Sectoral indices were likewise mixed with the property and oil sector inching lower while the others mildly gained. Trade activity slowed further to Php421.6m from Php487.6m yesterday.  Focus of trade interest (most actively traded issues) were on BPI, TEL, MERB, SLC, MBT, FPH and MER which altogether accounted for 61.4% of total market turnover.  TEL and BPI led market activity anew for the second consecutive trading session with 18.4% and 17.2% of total market turnover, respectively.

Foreign participation remained on a net selling for the 17th consecutive trading session, a strong indication that market’s recent resilience to drop further has triggered some domestic buying or repositioning.    Net foreign selling went to TEL, MERB, UCC, FPH, ALI, MBT, PNB, BPC and AC.  Net foreign buying were recorded on  SMCB, MEG, SPI and BPI.

Index gainers were led by CMT (up 8.3%), LC (up 3.6%), LCB (up 3.5%), BPC (up 2.7%), MEG (up 2.4%) and ION (up 1.9%).  LC was up as gold prices gained at least USD3.00 overnight while MEG marginally firmed given its likely joint development participation for the planned SSS tower. Major gainers due to higher gold prices were MA (up 16.7%), PXB (up 16%) and PX (up 13%).   Profit-taking continued on BKD (down 7.7%) after its cash dividend while BELW (down 16%) fell as its warrant life gradually near its termination on October 6th  and its offer for a parallel rights for a new company seems unappealing so far.

PRICE SCAN:

Price gap down was noted for ICT (0.92-0.90).  Price gap up were on FPH (25.50-26.0) and WPI (0.48-0.49)

RECENT DEVELOPMENTS

IMF officials gave a green light for the National Government to infuse the needed capital to bail out Philippine National Bank (PNB) in case the Lucio Tan group fails to fulfill its bid payment within the 30day extension granted.  As such, the National Government may end up owning majority stake at PNB.

Digitel has confirmed its choice of Nortel as its equipment supplier for its cellular phone network.

DMCI Holdings, Inc. (DMC). Cash Dividend (Preferred)
Cash  - P36.00/share
Ex-Cash  - October 4, 2000
Record Date - October 7, 2000
Date Payable - October 7, 2000

Mondragon International Philippines Inc. (MON) issued a clarification to the Exchange that the news article citing the completion of the takeover of Mimosa by PentaCapital is not true.  Although indications on the deal remains positive, no final agreement has been effected.

International Container Terminal Services, Inc. (ICTSI) reported an ongoing “illegal strike” at the Manila International Container Terminal (MICT) which started yesterday – September 27th.  ICTSI officials clarified that the labor dispute was caused by intra-union fighting wherein two factions of the union are claiming to be the legitimate collective bargaining unit.  The faction that is striking has accused ICTSI of refusing to negotiate with them but the Company has yet to ascertain which one is the legitimate faction before commencing negotiations.  ICTSI gave the assurance that all efforts are being exerted to bring the MICT back to normal operations.

San Miguel Corporation (SMC) sent a notice to the Exchange that it denies news reports of  SMC’s partnership with Lucio Tan’s Catering eXchange Inc.  SMC clarified that it is still in the process of evaluating an offer to join Catering eXchange Inc. and SourcePilipinas.com, as client or investor. No agreements have been reached.
 

CORPORATE NEWS/OUTLOOK

La Tondena Distillers, Inc. (LTDI). Php31.0. LTDI’s new juice subsidiary - Sugarland Beverage Corporation (SBC) reported a record performance for its first four months of operations, with net sales exceeding the P1 billion mark as of September 15.  This represents a 39% increase from P749 million made during the same period in 1999. These strong results came on the back of brisk volumes of powdered juice drinks, led by Eight O’Clock Orange Drink Mix and Ponkana.  MARKET SCAN and PRICE ACTION.  LTDI’s report on Sugarland’s performance reflects an improvement as volume growth increased from 30% last July to 39% as of September 15th.  Market rating for LTDI largely remains a BUY, ADD and OUTPERFORM considering its profit/revenue growth, superior valuation, and its valid thematic inclusion to affordability concept stocks. Recent consensus earnings estimate notably increased by 5% for FY2000 and 2% for FY2001 based on the September earnings forecast adjustment of select brokerages.   Consensus rating enhances LTDI’s attractiveness at its PER of 8x and 7.1x respectively for FY2000 and FY2001, a steep discount to its 5yr average PER of 18x.  LTDI’s P/Bk is also at a low 1.7x against its 5yr average of 3.7x.  Recent trade flow review seems encouraging as foreign participation has reversed to a net buying position. LTDI’s recent price trend is declining with a marked 7week downchannel from 35.0.  Momentum indicators remain mixed towards an oversold status.  Volume analysis refers to a squat formation awaiting a breakout since recent volume increase resulted to no headway in price recovery.  Candlestick patterns reflects a recent big white candle which is bullish.  An Elliot wave scenario offers an intermediate bullish trend on a likely end of wave4 or a bottoming-out of waveC.  Immediate price support is pegged a 29/25.50 while price resistance is pegged at 33/35/38.  (Recommended Trading Action: Accumulation zone starts below 30 with minor risk at 29.0; trading exit seen at 33-35 but long term holders can expect a breakout to test 38.0).
 
 

 

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