August 31, 2000 Thursday

Meralco (MER/MERB): Php62.0/65.50.  In lieu of Meralco’s petition for a rate increase, the Energy Regulatory Board (ERB) has set the required public hearing on September 7-8.  ERB’s move to schedule the public hearing has intensified expectations that Meralco’s petition for a distribution rate increase is forthcoming.  MARKET SCAN and PRICE ACTION.  Developmental watch on Meralco pertains to the passage of the Omnibus Power Restructuring Bill (OPRB) and its petition for a rate hike.  Legislators are confident to pass the OPRB before October, a positive development for Meralco’s power sourcing and distribution capacity.  The OPRB passage is expected given the pressure set forth by WB-IMF and on a perceived deliberate effort by legislators to convey lower power fees deemed “politically” beneficial ahead of next year’s local election.  On the rate hike petition,   Meralco has the right for the rate hike since the distribution hike is a first for a long period of time and it is backed by EO473 in Dec. 1998 – which allows Meralco is to segregate and unbundle  power tariffs/dues. There is no clear-cut basis on when they can likely implement a rate hike and it is largely dependent on the frequency on public hearings.  Expect strong consumer resistance but rule-of-thumb on the implementation is usually 2months after which makes December as the likely target.  Major houses has rerated earnings on MER sometime in 1H2000 due to legal delays and ERB’s inaction on its petition.  Impact of a higher rerating is due for Y2001 onwards, especially with the recent strong economic data.
Market rating is expected to be higher from LongTerm Buy to Buy/Outperform.  Price pattern (MERB) is near-term bullish set to breakout (67.0) from a bullish wedge pattern with 79 as its major objective.  Momentum signals are however toppish and warns of a corrective phase with 64/62.50 as immediate price support levels.  Recent 3day price upsurge formed a big white candle marked by a breakout which supports a strong bullish pattern.  With the Elliot wave scenario supporting a 3rdwave run-up for a break of 69.50 with 74 as its minimum wave objective.  (Recommended Trading Action:  Sell on strength towards 67-69.50 for near-term action or above 74 for medium-term hold;  aggressive re-entry starts below 62.50;  in effect of a consolidation with 64 as a firm support, re-entry is suggested as the next upmove is poised towards the 74 level)
 

August 30, 2000 Wednesday

Empire East Land Holdings Inc. (ELI) – Php0.30.  Market talks point to the strong possibility that PNB will grant ELI’s proposal to partially convert its Php800m loan into equity.  MARKET SCAN and PRICE ACTION.  The rumored debt-to-equity conversion is possible given PNB’s new capital hike but such development remains largely speculative. If true, anticipate a deliberate effort for its share price to rise ahead of the price setting of the conversion.  Other noteworthy positive issues on ELI are: a) reasonable decrease in net liabilities from Php7.7b in 1998, Php5.88b in 1999 and to Php5.33 as of 1Q2000;  b) modest profits of Php101.11m in 1H2000, and c) its firm maintenance of peso-based loans (no dollar-denominated loan exposure).  ELI’s market rating ranges from an Avoid to a LongTerm Buy.  Widespread fears on the property sector should not fully account for ELI given the following: CA ratio at 2.98x, DE ratio at 2.76x and a modest positive retained earnings balance of Php2.27b.  Sizeable price appreciation is expected in its Greenhills Garden Square and Xavier Hills project given the proposed redevelopment of Greenhills area.   ELI’s P/BK at 0.17 is significantly below its average 5yr P/Bk rating of 0.90.  Recent 4week price consolidation at 0.28-0.30 on increased volume turnover is positive signifying new entrants.  Trend breakout is pegged at 0.32 weakens the key resistance at 0.37 and points to an upmove trend objective towards 0.42-0.43.  Further consolidation or weakness remains due in absence of any MA divergence and candlestick figure of a long legged doji which is near-term bearish.  Given the mixed momentum signals, we can rely on a bullish Elliot wave scenario of its recent low at 0.28 as a wave2 bottom and its current progress as wave3.  Possible wave3 target is a minimum 0.41 with 0.48 as the next fibonacci target.  (Recommended Trading Action:  ELI is trending on its buy zone despite risks for a retest of 0.28; with 0.24 and 0.28 showing strong price support signals, a buy on weakness is warranted; exit target is 0.39 to 0.48)

August 29, 2000 Tuesday

Petron Corporation (PCOR) – Php1.26.  Congressional supporters of the proposed creation of the National Oil Exchange Council (NOEC) has significantly increased despite bold objections of the Department of Energy.  Petron officials also have expressed “record high” losses recorded in the month of July given the relative underrecovery from the Php2 average increase in the peso-dollar rate for the month.  MARKET SCAN and PRICE ACTION.  The debate on creation of the NOEC as against the company’s proposed change in pricing system based on the Mean of Platts Singapore (MOPS) will drag on.  The MOPS system favors Petron since it will make oil price setting “less politicized”, a major factor for the underrecovery. Petron has reported a net loss of Php677m in 1H2000.  Initial estimates on the proposed NOEC’s impact still remains vague as key aspects of  NOEC’s principle has yet to be finalized.  A clear issue raised by opponents of the NOEC is the unrealistic capacity of the proposed Subic depot to handle nationwide supply.  Subic’s facility can only handle a week of inventory while the major oil retailers have a combined inventory storage capacity for one month oil supply.   Petron’s operating loss and its unresolved underrecovery is keeping investor interest away.  Expect greater interest on Petron if the oil pricing mechanism is resolved which will make earnings outlook more discernable.  Market rating on ranges from a SELL to AVOID.  Petron’s price pattern is bearish, with its record low set at 1.18 last month.  Momentum is bearish but its significant oversold status warns of an impending price surge.  Its 1-month consolidation at 1.20-1.30 provides hints of a sharper price action on the next wave which is likely bullish.  Key resistance remains at 1.30 (price gap to be filled at 1.30-1.32).  Signs of a trend reversal are building up as average trade activity steadily improves within its price consolidation range.  A trend break at 1.30 points to a test of 1.40-1.46 as its immediate target.  Key support remains at its record low at 1.18.  (Recommended Trading Action:  Trading Buy warranted at current levels given the price consolidation on an oversold status despite risk towards key support at 1.18; price exit target is pegged at 1.44-1.52)

August 28, 2000 Monday

APC Group Inc. (APC) – Php0.36.  APC announced that the full transformation of Philcom Money Services, Inc. (PMSI) to an e-commerce and trading company renamed as E-Business Services, Inc. (EBSI).  MARKET SCAN and PRICE ACTION.  EBSI  is one of the few profitable ventures of APC with F1999 revenues of Php50.5m and net profits of Php13.5m.  The conversion of PMSI to EBSI was approved by the Board in December 1999 but key details of its e-financial market services were not explicitly  detailed.  Now,  EBSI’s business will include development and marketing of debt cards and website development.  EBSI will continue its electronic money transfer operations under Western Union Transfer Services.  The transformation is attributed to Western Union’s global move to innovate the delivery of financial services via internet.  Although prospects of the new business plan remains unquantified, investor can draw some confidence on its thrust since its main principal – Western Union, is providing all the e-financial services product development which have been tested overseas.  APC’s transformation of PMSI to EBSI is a highly positive development for APC but neither its prospects nor its profitability can outweigh the huge overhang of losses from its telecom subsidiary – PhilCom Corporation.  Philcom registered a net loss of Php747.5m in F1999 and no significant profit turnaround is expected over the near-term but market watchers have recognized the strategic efforts of Philcom to regroup and to build a new Internet strategy.  Investor interest on APC has been significantly weak as its key business interests or investments (telecommunications, petroleum trading, security and maintenance services, and money services)  offer little-to-none synergy.  APC is rarely gets research coverage, a strong indicator of the market’s lack of interest to follow the company’s development.  With its non profitability, it is widely rated as a Speculative issue and with merely a handful of retail investor following.  APC’s price pattern is bearish with its recent record low set last 8/15 at 0.31.  A technical search for the bottom is however at hand with minor divergence signals among momentum indicators and a confirmation of a possible end of a minor Cwave.  Immediate price resistance is at 0.39 with 0.46/0.56 as the next upmove objective.  Since 0.31 is a distinct psychological price bottom,  a trading buy has been triggered at current levels with a sell objective towards the 0.50-0.56 range.  (Recommended Trading Action:  Buy at current levels even with a risk at  0.31 – for a possible full near term retracement target; exit viewed past 0.46 towards 0.56)

La Tondena Distillers Inc. (LTDI) – Php32.50.  The notable industry recovery of the agri sector to 4% in 2Q and a subsequent word of confidence from the socio-economic policy of a steady agri-sector growth in 2H2000 bodes well for LTDI.  Also, newly-acquired juice manufacturer – Sugarland unveiled its new product sizes under its Ponkana brand.  MARKET SCAN and PRICE ACTION.  Strong economic growth of the agri sector is positive for the largely agri-based consumer population.  However, expect doubts towards a steady recovery of the agri sector given the record high unemployment (particularly in the agricultural/farming sector) and the threat of La Nina for Y2001.  Such lingering concern has moved management to offer smaller packaging (lower cost) for its major products – which now includes its low-end juice products.  Market Rating on LTDI ranges from a MARKET PERFORM to a BUY.  PER rating based on IBES estimates are 12x for FY2000 and 7.4x FY2001 while P/Bk is at a fairly low at 1.76x.  LTDI’s price pattern has been bearish coming from a possible double top at 39.  Momentum is declining but there is no clear  divergence signals for a possible trend reversal.  An Elliot wave scenario risk for an ABC corrective pattern may be in progress with the Cwave set to test the 29-31 level.  Next key support level is pegged at 39.  Key price resistance is viewed at 35 with immediate breakout objective at 38.0.    (Recommended Trading Action:  Buy on weakness close to 31 and more aggressively towards 29; price exit target is pegged at 36-38)
 
 

August 25, 2000 Friday

Meralco (MER/MERB) – MER at Php, MERB at Php62.50.  The government’s privatization program has firmly set the sale of its 14% stake in Meralco by December 2000.   Meralco Chair E. Lopez confirmed that at least three (3) foreign investors are eagerly waiting to participate.  The Lopez Group, Meralco’s controlling shareholder, is likewise ready to increase its stake depending on the government’s preference and conditionalities.  MARKET SCAN and PRICE ACTION.  The highly awaited sale of the government’s block will significantly attract interest on the issue on expectation that the sale price is significantly above current share price.  Added optimism towards the share price rally comes from strong expectations that the government will allow Meralco to increase its distribution fees in order to improve profitability and consequently its sale price.  Although the Lopez Group can further increase its controlling stake, the government prefers to sell its stake to a foreign group.  Such situation will effectively decrease the effective free float which will relatively increase share price volatility potential. Also, we anticipate further share accumulation from the government financial institutions given the likely price rally ahead of the rate hike grant and the privatization.  New purchases are expected from the GFI’s in order to replenish its stock portfolio balance.  Market Rating on MERB is a LONGTERM BUY to a HOLD/MARKET PERFORM.  Risk tag on MERB is based on the political nature of the earnings potential, specifically its rate hike petition.  It is likely that its rating will be upgraded to a Trading Buy given the privatization developments and the rate hike pressure.  Price patterns are relatively bullish on both near-term and medium-term.  Momentum allows further rise with breakout at 62.50 pointing to a test of 65.50-69 with 71-75 as the likely wave extension.  Consolidation phase is considerably long and volatility has significantly declined, hence a sharp price action is expected soon.  Immediate price support at 60/58.5 seems firm and our bullish Ellliotwave scenario points to a possible start of the 3rd minor wave from 57 and possibly towards 75.  (Recommended Trading Action:  BUY at current levels event with risk towards a retest of 60; exit target is 69-75;  Aggressive entry window on a resulting broad bear market is pegged below 57).

Benpres Corporation (BPC) – down Php0.10 at Php3.85.  Business information data filed with the NTC by Benpres’ telecom affiliate – Bayantel stipulates a projected profit loss until Y2002.  Bayantel officials also hints of widening losses in 2H2000 given the decline in DLD/ILD rates to match competition pressures, and on higher churn rate of subscribers.  MARKET SCAN and PRICE ACTION.  Bayantel’s losses are indeed expected to widen further  due to the DLD/ILD rate cut but the resulting increase in its churn rate is worrisome.  Investor sentiment towards BPC have been relatively weak  but this may gradually improve due to the possible rate hike by Meralco and on the renewed fundamental strength of its infrastructure-energy affiliate – First Philippine Holdings.  Market Rating is an AVOID to a SELL given its underlying operating losses.  Preferential interest is recommended towards its specific holding firms namely on Meralco and First Holdings.  PER rating is insignificant due to losses while its estimated Bkvalue of Php5.8-6.25 provides a cheap rating at a 33% discounted seem fundamentally fair based on current prospects.  BPC’s price pattern show no significant trend with a bearish bias.  Momentum offers some upside prospect but its recent price surge on lower volume was not sustained.  Such situation puts a doubt towards a huge price rally on breakout at 4.05.  Trading strategy is recommended until the bullish 3rd wave is more explicit.  Immediate price support is pegged at 3.70/ 3.55.  Retest of 3.55 is open given a cWave risk which should be lower than 3.70.  However, as long as 3.55 holds, a medium-term rally past 4.05 points to a test of 4.65-5.40.  Else, a break of 3.55 points to 3.30 as the next fibonacci downmove target.  (Recommended Trading Action:  Sell on Strength as 4.05 seems a tough resistance so far; re-entry starts below 3.7 with a risk towards 3.55;  Reverse your buy strategy if higher volume on break of 4.05 occurs with 4.65-5.40 as the exit target)

August 24, 2000 Thursday

Philippine Long Distance Telephone Co. (TEL) – up Php15.0 at Php715.  PLDT confirmed ongoing talks with US-based direct-to-home satellite firm EchoStar Communications Corporation for content provision by satellite broadcast.  MARKET SCAN and PRICE ACTION.  PLDT’s likely ties with EchoStar will significantly boost revenue prospects for its internet and multimedia subsidiary – ePLDT.  EchoStar’s delivery by direct broadcast satellite will result to the following: a) an increase in the utilization of PLDT’s satellite facility, b) an enhancement on product delivery to include digital services thru satellite disks, and c) valuable access to EchoStar’s long list of broadcasting content (entertainment, news, sports and international channels such as ABC, CBS, NBC and the Fox Channel).  The content aspect is key to the proposed ties since it will enhance marketability of its product bundling, hence, higher revenue prospects.  Also, PLDT’s launch of its prepaid fixed line and an upcoming prepaid internet service is deemed revenue positive.  Industry watchers expect the following;  a) higher market penetration = increased revenue base, b) increased revenue per unit since prepaid aspect is tantamount to metered calls, c) stronger market dominance since its relatively cheaper rates against mobile phone rates will partly cut cell phone usage, and d) it will expand its market base in preparation for its product bundling offers.  PLDT’s disappointing profitability due to its losing subsidiaries and the steady decline in its ILD/DLD revenues is  largely factored into its price.  Focus of interest remains on its hefty discount to its dcf valuation ranging from Php900 – 1,000/share which makes the stock relatively cheap at current share price level.  Market rating ranges from a LongTerm Buy to a Hold.  Price pattern is bullish on both nearterm and mediumterm.  Minor corrective mode towards 680 is justified but its key impulse wave will test 765-790.  Immediate upmove target/resistance is towards its price gap at 720-735.  Significantly lower price volatility after the past week’s consolidation may result to a sharp price move over the near-term.  Immediate price support is at 685 but 660 is so far tagged as a key trend bottom.  (Recommend Trading Action Summary:  Buy at current levels;  risk for a retest of 685 is open but the key bullish trend warrants further accumulation on price dips; intermediate exit is viewed at 765-790 with 815-840 as a medium-term exit)

Bank of the Philippine Islands – Far East Bank (BPI) – up Php2.5 at Php68.50. BPI announced the SEC’s approval for the increase in its capital stock from Php17.6b to Php29.6b and has set the record date of its 25% stock dividend on September 12 (exdate on September 6).  MARKET SCAN and PRICE ACTION.  No significant fundamental changes have developed:  loan growth remain slack and economic risks is continually keeping interest towards the banking sector relatively weak.  We have decided to include BPI in this update due to an observed favorable stock accumulation for the 25% stock dividend.  Institutional buying have been evident.  Market rating for BPI range from a Long-term BUY to a BUY.  BPI is the preferred issue in the sector given its decent rating:  Y2000PER at 19x, Y2001PER at 16x, P/Bk at 1.8x (vs a 5yr average at 3x).  Indicative merger costs have also been largely discounted into the price and improved efficiency rating will be gradually  realized.  Forward-looking benefit by virtue of increased banking confidence to the industry upon the reopening of Urban Bank will partly favor BPI given its best rating in the sector.  Major price trend is bullish with increasing near-term toppish momentum swing,  Momentum ratings remain a buy with the price upmove objective seen to test 74.50-78.50.  Immediate price resistance at 70.50 but MA signals still justify further extension.  Price support is at 65.0./ 62.0. (Recommended Trading Action Summary:  Accumulate at current levels; since nearterm risk hints of a minor price retracement (towards 62 remains open) , an aggressive reentry is recommended below 65.0; medium-term exit target is 74.50)

August 23, 2000 Wednesday

ABS-CBN Broadcasting Corporation (ABS/ABSP) -: ABSP at 47.50. The Senate electoral committee will review a new legislative bill that will lift the ban on political ads for final amendment on Monday.  MARKET SCAN and PRICE ACTION.  Higher revenue growth prospects are expected once the ban on political ads will be lifted in time for next year’s local elections.  Indications for the passage of the new bill have been encouraging given the number of supporters from both Senate and Lower House.  Comelec will likely set guidelines on the extent of media expenditure.  ABS is likely the prime beneficiary given its dominant 79% market share (ABS survey) in both TV and radio, and the growing popularity of its online site.   Although it is too early to expect a profit upgrade for Y2001, such added revenue source will help curtail profit cuts from the growing capitalization of the company’s technology/development cost.  Consensus rating is a Long Term Buy on ABS.  IBES profit estimate average is an EPS of 2.8 for Y2000 and 3.3 for Y2001.  This translates to a PER rating (ABSP) of 16.9x (Y2000) and 14.4x (Y2001).  Current P/Bk rating at 3.7x is fairly decent.  Price pattern is medium-term bullish while near-term trend is bearish coming from a recent 3week price rally from 44.0 to 50.  Immediate support is at 46 with 44 as a turningpoint support level.  Risk to 44/41.50 remains open given the corrective mode and ABSP’s price history with full correction phases.  Breakout price is pegged at resistance at 50 with 54-57 as its immediate objective. (Recommend Trading Action Summary:  Sell towards 49-50;  On a downturn accumulate below 46 with 44.50 as an aggressive reentry window and an exit target towards 54)

Global Equities Inc. (GEI) – down Php0.03 at Php0.42.  Persistent market rumors on GEI includes 1) a signing agreement within the next few days for the backdoor listing of SSI and STI thru GEI, 2) a planned Nasdaq listing, and 3) a programmed reverse stock split prior to the Nasdaq listing.  MARKET SCAN and PRICE ACTION. GEI disclosed last July 2000 its 3way partnership with Systems Standards, Inc. (SSI) and Systems Technology Institute (STI) via a swap of 60% of GEI to the 100% of SSI/STI (refer to our July 2000 update).  SSI is an IT solutions provider with a recorded asset size of  Php235m and Php14.2m in profits for the first 3months of the year.  STI is one of the country's leading IT school with an asset size of Php514m  and Php65m in net profits for the first 3months of the year.  Initial financial details warrant a second look.  The combined asset size of GEI (Php2.85b) with SSI (Php235.16m) and STI (Php513.887m) amounts to approximately a Php3.6b holding firm.  Based on SSI and STI's equity size of Php470m, the deal equates GEI giving up 60% stake for an effective equity contribution of merely 25.8% of the total or a 132% premium unless otherwise an equity revaluation or capital hikes is due prior to the stockholders approval.   We are therefore looking forward to get further details of the 3way deal, which will likely be released prior to its September 8th stockholders meeting. GEI remains a rated SPECULATIVE buy until further release of financial details.  Broadly taken, IT ventures are really demanding an exhorbitant premium vis-a-vis old economy firms.  Several issues now befall GEI that will attract investor action:  a) entry to the IT category or the new economy, b) new partners are profitable (SSI and STI registered profits of Php14m and Php64m, respectively in the past year) which will negate GEI's current non-profitable property-based operations, and c) valuations are attractive given the significant rise GEI's effective book value. We still cannot dismiss the rumors about the Nasdaq  listing and the reverse stock split but it may seem a logical approach given its equity size and the perceived success of such approach on GLO.  Speculations on GEI's entry to the IT field pushed share prices to a high of Php1.34 early this year which is approximately 2x is original book value.  Global tech stock rationalization resulted to a huge price retracement and GEI’s news release of the 3way merger did not curtail an end to the downfall.  GEI recently bottomed out at 0.29,  a hefty 99% technical price retracement.  Today’s notable fading stage with a marked price open at lower levels triggered a “big black candle” for a nearterm bear pressure.  Its rising momentum phase points to a mediumterm test of breakout price set at 0.50 with 0.69 as its next immediate target.  Upmove extension is seen at 0.85 and a medium-term upmove objective at 1.04.  (Recommended Trading Action Summary:  Buy window starts at 0.38; any momentum recovery opens a trading opportunity to chase the price rally on break of 0.48 with a sell objective towards 0.69-0.85)

August 22, 2000 Tuesday

iVantage Inc. (V) – down Php0.04 at Php1.68.  Market talks of  new company acquisitions have intensified ahead of the special stockholders meeting due next week.  Corporate sources have hinted of a growing interest to acquire two(2) established e-commerce firms but no definitive steps have been initiated.  The rationalization stage among dotcom firms have pushed Management to defer any new acquisitions. Focus of speculation now shifts to iVantage’s likely purchase of a select set of assets/companies of affiliate firm Belle, APC and Sinophil.  MARKET SCAN and PRICE ACTION. The programmed sale of non-core assets of Belle/APC/Sinophil  makes affiliate- iVantage one of the prime discount buyer.  One of the likely asset that will be acquired is a money courier service firm  which is operating profitably and will improve iVantage’s cash flow.  Investor interest on iVantage have been largely parallel to the volatile price trend of technology/e-commerce listed firms.  However, recent history of a price surge prior to the stockholder’s meeting have renewed hopes that a similar situation may occur towards next week’s meeting. The short price history of iVantage as a tech-firm and its relative volatility offers difficulty in attempting to anticipate trend patterns.  Significant results of our review points to a stalling trend on increased volume or trade activity.  Such occurrence suggest of an overhang of huge sell volume awaiting on the next price rally.  Its recent 3day decline and its test of its 15day upchannel bottom has triggered a nearterm sell as its immediate price support at 1.64 may turn weak.  Candlestick signals also seem bearish with a notable “gravestone doji” while volatility tests warns of a increased pressure for a trading band break given its narrowing but steady falling price band.  The speculative nature of the issue marked by volatility and the relatively short price history for estimate basis makes it tough to trade the issue based on current signals.  Key resistance for breakout is at 1.86 with its intermediate objective at 2.02-2.32.  Downmove break of support at 1.64 points to 1.56/1.44 as the next target.  (Recommended Trading Action Summary:  Sell at current levels;  Downmove break of 1.64 warrants a gradual accumulation below 1.56; any renewed upmove still suggest a sell towards 1.86-2.02)

Jollibee Foods Corporation (JFC) – up Php0.25 at Php12.25.  JFC’s pizza chain affiliate – Greenwich Pizza Corporation (GPC) has shown indicative revenue growth recovery for the month of July.  GPC registered a profit decline of 5.5% and 12.1% in 1Q and 2Q, respectively.  Newfound revenue growth is based on its recently launched value meals packages derived from JFC’s product mix.  Such news enhances optimism towards a higher rate of profit growth in 2H2000 after a disappointing 1H2000 profit growth decline at  –3% yoy.  MARKET SCAN and PRICE ACTION.  Profit growth slowdown in Y2000 has been largely discounted into JFC’s price after its 1Q2000 income declined 5%.  Despite JFC’s better 2Q2000 performance marked by a 1.9% profit growth, lower disposable income will likely threaten profit growth recovery and will further test the company’s marketing expertise.   However, current investor focus on JFC goes beyond the profit rating but on the beneficial impact of the new retail trade law. Consensus rating on JFC is a buy given its market leadership and corporate qualities which won the firm a coveted 3rd Most Admired Firm in Asia.  JFC’s PER is 12x in Y2000 and 11.2x for Y20001 while P/Bk is relatively low at 2.2x (vs a 5yr average at 5.7x) which implies a fair rating towards the Php15-16 price level.  JFC’s share price pattern is bullish with a likely a bullish 3rdwave upmove in progress.  JFC is now attempting to break a 10week high at 12.25 which can extend towards 13 over the near-term as momentum signals does not show any trend reversals yet.  An MACD cross-over also confirms the bullish scenario.  Key price turningpoint is set at 12.25, the next resistance is at 13/14 while price support is at 11/10.50.  JFC’s bullish pattern set 2 months ago confirms a medium-term bullish trend with 14 as its next objective.  Expect minor weakness as JFC’s new impulse wave has a strong price retracement history which impart a risk towards 11.0.  (Recommend Trading Action Summary:  Sell towards 14;  Accumulate below 12 with 11 as an aggressive reentry window)
 

August 21, 2000 Monday

Universal Robina Corporation (URC) – The company expects to launch more products from its joint venture and licensing agreements given the conglomerate’s technology adaption.  Insiders hint of an entry in the moulded segment of the chocolates market, new gourmet coffee flavors (under Great Taste brand mix), and new Hunts product lines. Recently, URC announced its more aggressive venture into the bubble gum-candy category with a tie-up with Joyco – a noted world leader in the bubble gum segment with world class brands such as Dunkin, Pim-pom, Ta-ta, Boomer and Trex Brands.  MARKET SCAN and PRICE ACTION.  URC has been usually categorically rated a Long Term Buy on account of low priced strong brands and a healthy balance sheet but its relative value is seldom priced into the issue since its shares are relatively illiquid.  IBES consensus profit estimates reflects a PER at 8.5x (vs a 5yr average at 12x) and a P/Bk at 0.49.  Intermediate concern to URC’s well managed established brands is the recently approved retail trade bill which will allow greater inflow of imported brands.  URC’s price trend is bearish both longterm and near-term and awaiting signals for a trend reversal. Overall technical price scenario is mixed and unlikely for an immediate strong price upmove.  Momentum trend is neutral with continuing bearish bias since its MA trend is declining further.  Technically bullish scenario for a trend reversal comes from its Elliotwave scenario which is on a 3wave downmove.  So far, URC’s support price at 4.85 looks firm but greater confidence from a breakout beyond 5.60 is needed to validate the trend reversal.  Risk on a downmove break of 4.85 offers next support at 4.40 while key objective on an upmove break of 5.60 is 5.90/6.60. (Recommended Trading Action Summary:   Accumulate at current levels with sell objective towards 5.90; Further downmove below 5.10 warrants a keen watch of momentum signals for a possible aggressive reentry within the 4.40-4.85 range)

International Container Terminal Services, Inc. (ICT) .  Management confirmed its interest to bid for the development of Hibeki port in Japan. Internal budget estimates point to a profit forecast of Php150m (EPS = 0.0643) this year.  MARKET SCAN and PRICE ACTION.  The Company’s firm interest and strong chance in winning the Hibeki port, and its relative return to profitability will gradually stir investor interest back into ICT.  However, ICT’s pertinent ratings: Y2000 PER at 16x, DER at 4.3x and a P/Bk at 0.73x does not exactly warrant cheap buy at current price.  The bid for the Hibeki port comes on a set-up stage which will take considerable time (more than a year) to contribute to the parent firm’s bottomline.  Lingering P&L concern includes the ballooning cost of its US$130m convertible bond due to the peso’s steady depreciation. We are however certain that Management is keenly on top of ICT’s predicament and is hereby working aggressively to improve revenue growth sources and to facilitate debt settlement.  Indicative insider buying on its par value (Php1) is apparent.  It is likely that ICT insiders sought assistance from select investor groups to protect its share price in anticipation of the long overdue IPO of its international subsidiary. ICT’s trade price pattern seems to early to validate its recent record low at 0.99 as a key bottom.  No major reversal signals have been triggered.  Moreso, recent thin trade activity adds doubt to 0.99 as a major trend bottom. Bear risk on break of 0.99 will have key support at 0.66.  Immediate key resistance at 1.12 with breakout target to extend towards 1.24-1.38. (Recommended Trading Action Summary: Sell on strength recommended at current levels in absence of  trend reversal signal at 0.99;  re-entry starts below 0.90 on breakdown while an interim trend break of 1.12 warrants a buy with price target exit at 1.24)

August 18, 2000 Friday

First Philippine Holdings (FPH) – Company officials brag of a significant financial turnaround for a positive net cash flow in 2H2000.  MARKET SCAN and PRICE ACTION.  FPH records show a net negative cash flow in 1999 amounting to Php1.93b due to lower borrowings and debt settlements while maintaining its investment program.  The return to a net cash flow can be attributed to the start of operations of the Sta. Rita gas-fired power plant.  FPH’s resulting positive cash flow per share (cfps) will distinctly attract investor interest now that interest rates are pressured to increase in 2H2000-20001.  Favorable developments are upcoming:  a) FPH’s road infrastructure subsidiary – First Philippine Infrastructure Development Corporation (FPIDC) may take active interest in the privatization of PNCC since it is the current operator of the North Luzon Tollways Project, b) Meralco’s rate hike petition is likely to be acted upon in 2H2000, and c) operating income from investments and operating subsidiaries will greatly increase to compensate lower income from switching of Meralco shares.  FPH is not a widely research (covered) corporate stock by brokerage houses due to relative share illiquidity but fundamental strengths warrants a BUY rating.   Hints of insider buying are present although minimal and with no indicative aggressiveness.  Technical outlook on FPH also support a buy rating on FPH.  FPH’s share price record low at 19 last May2000 seems a valid trend bottom and its recent drop from 25 to 19.75 has achieved key fibonacci correction targets.  A price-momentum divergence has been set at 19.75 which imparts a possible wave3 that is in progress.  The bullish Elliot wave scenario points to an immediate test of 23.0 with 27 as its intermediate trend target potential.   (Recommended Trading Action Summary:  Buy  action suggested at current price with risk at 20.25/19.75; near-term upmove trading exit may be set beyond 23 and then reassess possible re-entry if momentum signals warrant a price upswing extension towards 27)

Filinvest Development Corporation (FDC) – Php1.30.  Optimism towards the new implementing guidelines of the retail trade law will partially benefit FDC given its established Festival Supermall.  1H2000 operation streamlining and cost cutting measures have been undertaken according to plan and its balance sheet management has been favorable albeit modest.  Also, firm pursuit of the Estrada administration’s mass housing program which FLI is well positioned to benefit from will translate to improved profitability.  MARKET SCAN and PRICE ACTION.  The economic slump marked by the property sector’s weakness has not been favorable for FDC and investor action has been averse to conglomerates.  New developments in the recently approved retail trade bill and FLI’s strong position for the housing program is net favorable to FDC.  Its leverage status has also improved, albeit slightly, but noteworthy to warrant renewed interest.  Price pattern is bearish for the past two months as its share price fell from 1.76 to 1.24.  At its current price, technical trading interest on FDC is worth a BUY rating.  FDC’s price-momentum signal a divergence which puts it immediate price support at 1.24/1.20 to be firm and a favorable momentum swing has been triggered. Pressure for a price recovery is therefore imminent with immediate resistance at 1.32 seems likely a weak resistance.  A bullish Elliot wave scenario for a waveC may be in progress as the breakout at 1.32 points to a test of 1.76 with 2.02 as its medium-term target.  Erratic price behavior due to illiquidity demands extra patience for the imminent price upswing.  (Recommended Trading Action Summary:  Buy action recommended at current levels despite risk at 1.20; target exit towards 1.70)

August 17, 2000 Thursday

Uniwide Holdings Inc. (UW) – up Php0.02 at Php0.52. Only five more banks are due to sign the rehabilitation program, namely Land Bank, PNB, Allied Bank, East West Bank and ING.  Six banks have inked its approval, these are UCPB, Global, IEXBank, East Asia and BPI.  UW’s prime lots in Las Pinas will be converted to a condominium project to be held by another company whose ownership will be transferred to select banks for dacion en pago.  Afterwhich, the memorandum of understanding with Casino to invest Php3.57b will push through.  MARKET SCAN and PRICE ACTION.  Development interest based on the rehabilitation program and Casino’s expected entry has yet to make a huge impact on price.  Market watchers clearly remain skeptic of any major price turnaround on UW as a sell-off after Casino’s entry may be met by huge sellers long wanting to dispose their shareholdings.  Despite the developmental turnaround, UW’s return to profitability is far-fetched given its negative capitalization.  Any move for a capital hike will also be net negative.  However, UW’s trend is medium-term bullish with prominent near-term risks.  Risk comes from a toppish nearterm momentum with a price-momentum divergence signal now warranting a sell on strength.  A close watch on the issue is necessary given a risk for a retest of 0.43 prior to any price breakout (a waveC of major wave2 is also an ongoing valid scenario).  Most bullish Elliot scenario places the current upmove from its recent low at 0.43 as a wave2 bottom of a wave3 price rally.   Such price pattern supports the speculative nature of the issue.  Signal for re-entry is most preferred if the stock falls below 0.43.  Bandwagon trend on a possible break of 0.54 is also a preferred entry level since the next fibonacci target is 0.81 and 1.02 . (Recommended Trading Action Summary:  sell on strength from current levels; buy on breakout at 0.54 with sell targetzone at 0.81 or better; on weakness, accumulate below 0.43.
 

Ionics Inc. (ION) – unchanged at Php13.50.  Ionics EMS reportedly secured a US$150m contract from the Israeli ECI Telecom.  MARKET SCAN and PRICE ACTION.  Details and order timetable from Israeli ECI Telecom has yet to be reported.  These new contracts sends a strong signal of  manufacturing confidence on Ionics, an aftermath after getting the Philips contract.  Higher revenues and increased profitability has a market consensus rating of BUY on ION.  Trading outlook on its price pattern is however deserving of caution.  A 5wave upmove seems complete from 9 to 14.50 and momentum is declining. Immediate price support at its price gap at 14/13.75 with 12 as its key support.  Bullish extension past 14.50 points to a 15.75/16.0.  Net sideways trend over the next 2weeks can more add to the bearish scenario.  (Recommended Trading Action Summary: Sell on strength at current levels; buy on breakout at 14.50 but take profits after 15.75; aggressive accumulation on weakness starts below 11.50.
 

August 16, 2000 Wednesday

Philippine National Bank (PNB) – up Php2.50 at Php47.50.  News reports cited an ongoing review on PNB by Moody’s Investor Service on possible rating downgrade given the recently fully privatized status which may result to diminished government support.  MARKET SCAN and PRICE ACTION. The PNB President however dismissed any concern on government deposits since the National Government extended its accreditation until year 2003.  The post-privatization scenario and an upcoming rights offering is likely to keep trading interest week for the next few weeks since its board price is lower than the rights offer at Php60.  It is therefore unlikely to expect a strong price rally until after the rights offer is completed.  PNB is one of the least preferred among banking stocks as preference are now into BPI, EBC and MBT.  Momentum is neutral and rising but does not signal any action.  Profitunity signals are deemed fake which means volume activity are low despite price volatility increase which warns of a bullish failure signal.  An ST Filtering signal on PNB’s price pattern warrants continues monitoring for a buy signal.  Immediate price support is at 45 with 41 as the key support.  Immediate resistance is at 49 with 60 as the next breakout objective.

Globe Telecom, Inc. (GLO) – up Php1.50 at Php16.50.  Market rumors persists that pre-paid and post-paid sales for July were larger than company target.  Network glitch the past month have been fixed but NTC has yet to act on its technical report submitted.  Company marketing insiders were reportedly deliberately holding back new mobile phone holders for pre-paid subscribers in order to boost post-paid subscribers were handset discounts are pegged.  Motorola distributors have also significantly reduced its cheaper phone models for the next wave of Globe’s marketing blitz. MARKET SCAN and PRICE ACTION.  Globe’s share price now reached a new 4year high at 16.75 with notable buying from its parent firm (Ayala Corp.) brokerage – BPI Securities.  Today’s record high supports the marketwide favor on GLO, both fundamentally and technically.  Technical indicators given the record high point to a test of its next fibonacci target range at 17.25-18.0. Buy signals is apparent on all momentum and volatility signal.  We however are closely monitoring volume trend as stocks with little volatility in an uptrend can reverse easily if volume consistently falls.  GLO has set its record price on lower than average volume which may warn of the lack or a slowdown on new participants.  Immediate price support is at 16.0/15.0.

Metro Pacific Corporation (MPC). – up Php0.01 at Php0.64. The Company reported a net loss of Php603m and consolidated revenues of Php5.83b for the first six months of the year.  MARKET SCAN and PRICE ACTION.  The 1H2000 reports translates to a 93% drop in 2Q2000 profits at Php30.8m.  MPC’s losses are largely expected by the market given the property sector slump, and losses from its banking and telecom affiliates.  However, we expect extraordinary profits in 2H2000 given the recent sale of its PLDT shares to its parent firm First Pacific.  Investor interest on MPC remains currently weak despite its aggressive bid to develop additional areas in the Ft. Bonifacio.  MPC is rated a Longterm Buy given its cheap valuation (deep discount to est. NAV of 9-10/sh) and its firm program to sell non-property related business.  Trading buy is warranted based on its momentum signals with breakout price at 0.76. Downtrend channel from its high at 0.76 (7/6) is set at 0.72.  Immediate price support is at 0.62 and its price gap at 0.61/0.62.  Risk at key support at 0.58 remains firm as warranted by its price-momentum divergence. Aggressive price entry starts below 0.60.

August 15, 2000 Tuesday

Digital Telecommunications Inc. (DGTL) – unchanged at Php0.68. 1H2000 profit report reflects a measly net income of Php2.34m which is what Chairman J.Gokongwei hinted a few weeks back.  MARKET SCAN and PRICE OUTLOOK.  Digitel’s reported revenues of Php2.22b is on-track towards at 21-25% revenue growth target for this year.  Major setback which has beset the firm since 1999 is its huge depreciation and amortization expense.  This is due to the steady increase in the Company’s depreciable asset base as a result of its continuing investment in telecommunications facilities. Market consensus tags Digitel as an AVOID due to share illiquidity and the relatively better alternative in GLO and TEL. Trading interest however offers otherwise. Digitel’s share price remains oversold with notable momentum divergence signals for a major trend reversal.  So far, its recent record low at 0.64 is notably the key support price or a likely trend bottom.  As such, trading outlook points to a progressive rally.  Minor price resistance is pegged at 0.71/0.73 with the upmove objective at 0.94.
 

August 14, 2000 Monday

SM Prime Holdings, Inc. (SMPH) – down Php0.1 at Php5.2..  SMPH announced last Friday its 1H2000 financial performance highlights:  a) profit up 7.6% at Php1.525b, b) revenues up 12.9% at Php2.88b, c) same store sale at 8% growth, d) interest and other income dropped 25% at Php162.6m.  MARKET SCAN and PRICE OUTLOOK.  SMPH’s resulting 2Q2000 profit and revenue growth  of 5.2% and 11.8% translates to a slowdown from a 10% profit growth and 14% revenue growth in 1Q2000.  Albeit lower than  1Q2000 profit and revenue momentum, such results remains reasonably favorable considering the bombing that significantly reduced consumer traffic in 2Q2000.  SMPH officials attribute the 25% decline in interest income/other income from higher dollar loan servicing given the 4.94% peso depreciation for the past quarter.  Core earnings are however deemed reasonable despite a 7% contribution from its newly opened malls in Iloilo and Manila. Projected earnings for the year will be marginally downgraded although most of the houses have effectively downgraded its full year profit target after the bombing incident in early 2Q2000.  Full-year prospects are therefore unlikely to be reduced significantly based on the 2Q2000 performance.  SMPH remains a rated BUY.  Price chart patterns however calls for a buy on dips.  SMPH’s possible reverse H/S pattern has yet to be fulfilled on an upmove break of 5.60 level onwards to test 6/6.25 level.  Immediate key price support is pegged at 4.90/4.70.  Aggressive re-entry is warranted below 4.90 on a wavecount premise that current price pattern is an impulse of the 3rdwave.

Ayala Corporation (AC) – up Php0.1 at Php6.80.  Ayala Corporation released its 1H2000 performance highlights:  a) profit declined 22.6% at Php2.42b, and b) revenues increased 3.6% at Php17.15b.  MARKET SCAN and PRICE ACTION.  The resulting 2Q2000 performance reflects an improvement in profit (-16%) and revenue (+13%) growth.  However, the net decline is attributed to its banking and property subsidiary with BPI posting a 37% decline profit while Ayala Land Inc.’s 1H2000 performance is expected to marginally lower to flat.  Food subsidiary Purefoods Corporation also posted a 20% decline in profits due to lower prices of flour and chicken. Globe Telecom’s was the best performer with a profit growth of 54%. AC remains a rated buy with its adjusted NAV estimated to be at least Php10/share which currently translates to a cheap 32% discount.  Most of the performance of its key subsidiaries have been largely discounted.  We do not anticipate any major downgrade in its consensus rating which ranges from buy to a long-term buy.  Price action is medium-term bullish with a near-term mixed outlook.  Current near-term trend is a downmove from 7 with its recent low at 6.40 probably part of a 3wave correction pattern.  Momentum signals are mixed but pattern breakout/resistance is pegged at 7.0 with 7.80 as its immediate objective.  Immediate price support at 6.70 seems minor with 6.40 as its key support.  Given the lack of confirmed buy signal at current levels,  trading interest is a buy below 6.60 with a risk at 6.40.

August 11, 2000 Friday

ABS-CBN (ABS/ABSP) – ABS and ABSP were down Php1.0 at Php47.0.  ABS reported that first half profits reached Php1.03b, a 15% increase from Php898.2m the same period the past year.  Revenues for the first hal increased 13.5%.  MARKET SCAN and PRICE ACTION.  The resulting 2Q2000 profit of Php615.78m translates to a favorable 31.3% increase from Php468.78m the same period the past year. The corporate target of  Php4b in revenues by 1H2000 was surpassed as revenues reached Php4.2b, 13.5% higher than Php3.7b the past year. ABS is therefore right on track with its revenue growth target of 16% this year. We however do not expect any major profit target upgrade.  ABS remains a rated BUY.   ABSP’s price pattern is bullish with limited downside.  Near-term risk points to a retest of 46 prior to a strong intrawave3 rally to break 48.50 with 50.50/51 as the minor objective.  Weekly chart momentum signals are however rising which supports a progressive price rally.  Aggressive reentry starts below 46.   Risk is pegged on the price gap set at 45.50/47.   Immediate nearterm breakout trend on price resistance at 48.50.  Recent buy postings were not considerably heavy to warrant a near-term breakout.

Philweb Inc. (WEB) – unchanged at Php0.11.  Philweb announced its 50-50 joint venture with MD Vista Inc of US.  The new venture, Philweb-MD Vista will produce online transnational diagnostic clinic a physician knowledge services program.  The new venture will operate an online diagnostic clinic while it will offer an A-Z web enabled net of services for Philippine physicians.  MARKET SCAN and PRICE ACTION.  Philweb’s new venture is a first for the local market and one of the many strategic joint ventures that will enhance the list of services offered by  its core on-line business.  Philweb’s strained cash flow from the delayed roll-out of its cybercafe operations leaves the firm with no option but simply to accept jointventure partnerships for its new endeavors.  Profit impact of the new venture is due for the long-term horizon which still keeps investors at doubt of when Philweb can be profitable.  WEB remains a rated SPECULATIVE BUY.  Price momentum is rising from oversold status after dropping to 0.0975 (7/31). Near-term price rally objective is 0.14/.0145.  Trade activity remains low which holds back investor interest.  Recent consolidation is however a good technical signal for 0.0975 as an intermediate bottom .  Renewed uptrend  breakout is pegged at 0.125.
 

August 10, 2000 Thursday

PLDT (TEL) – unchanged at Php695.0.  PLDT reported a 93% yoy decline in 2Q2000 profits.  Preliminary reports indicate a net loss (before minority interest) of Php1.0049b  in the first six months.  PLDT also announced it formed e-PLDT which will be its principal vehicle for its e-commerce business.  Significant details of the 2Q financial results will be released in its scheduled investor/analyst briefing late today (highlights will be released in our corporate review tomorrow).  MARKET SCAN and PRICE ACTION.  The significant loss registered by PLDT in 2Q2000 is well within market expectations since the Company already managed to pre-empt the market of the reported  huge losses of its subsidiaries - Piltel and Smart which will be booked this 2Q2000.  Although we eagerly await for more details to be released in today’s company briefing, we expect to significant lower rerating on PLDT.   Its ePLDT affiliate is however expected to gain extra attention as significant partnerships and new ecommerce ventures will undeniably progress rapidly over the next few months.  Today’s absence of a sell-off after the earnings result reflects much of the earnings disappointment is already price into PLDT.  Huge one-off advertising and marketing costs for Smart and Piltel is a long-run strategically positive as focus is to build a subscriber base which will provide business to new convergent business services PLDT plans to offer.  PLDT’s near-term price trend is bullish coming from an oversold status in its recent bottom at 660.  We expect the trend to overextend and fill the next price gap at 720/735 with its medium-term object still bullish towards the 790-815 range.  PLDT remains a rated LONGTERM BUY.  Its existing bullish mode warrants a buy on dips.  Immediate support is pegged at 685/660.  So far, mixed signals reflect a strong support at 660.

August 9, 2000 Wednesday

Digital Telecommunications (DGTL). – up Php0.07 to Php0.70.  The NTC announced it will release its decision on Digitel’s application to be the country’s 7th mobile phone operator within the week.  MARKET SCAN and PRICE ACTION.  Insiders expect NTC to favorably grant Digitel a mobile phone operating license despite pending court petition seeking NTC to suspend new license grants so available frequencies will be made available to existing operators.   Digitel’s financial limitation against an extensive capital requirements to operate a mobile phone system is likely to be settled given a strategic partner and a ready suppliers credit arrangement.  Digitel’s late entry to the highly competitive mobile phone business affirms the Gokongwei’s group interest in the inevitable new economy business.  With NTC’s approval, investor interest will further intensify as Digitel will be more aggressive to get a majority stake in ETPI.  PLDT’s right of first refusal on ETPI will be known before the end of this month  with insiders keen towards PLDT’s move to legally delay its decision.  DGTL’s  is least favored among telecom firms given its financial losses and market   Digitel’s stock is fairly illiquid and given unclear directions for growth, warrants an AVOID.  Speculative interest however is due given the recent developments.  Technical price signals and patterns support a narrow downside risk and a potential reversal for a trading buy.  Price downtrend remains evident given its steady decline from 1.54 last January2000 to a record low 0.64 (July 27th, 2000).  Today’s significant upmove reflects a major reversal trend as it closed price gaps at 0.66-0.68.  Immediate upmove fibonnaci target is 0.73-0.79  with 0.84 as the medium-term objective.  A price-momentum divergence and its oversold momentum status supports the reversal scenario.  Key price support is at 0.64

Filinvest Land Inc. (FLI) – at Php1.66.  FLI reported that 2Q2000 profits amounted to Php173.9m, a 1.7% increase yoy.  New company development includes its first industrial estate project – the 350has Filinvest Technology Park in Calamba, Laguna. MARKET SCAN and PRICE ACTION.  FLI’s reported 2Q performance was largely within market expectations but may cap growing optimism of FLI’s improved market strength.  Such parallel result from 1Q2000 at 2% yoy growth show no significant breakthrough in its middle income and high-end marketing which the market perceive given the downfall of CMP and its affiliate middle income housing projects. Key focus on FLI is its capacity to be one of the prime beneficiary of the government’s mass housing projects.  FLI is a rated BUY.  FLI’s price pattern remains bullish from its recent low at 1.28 with a high at 2.10. Weekly momentum signals points to 1.28 as an intermediate bottom and its recent low at 1.48 as a potential end of its 2nd corrective wave.  An upmove break at 1.74 is a critical point which could lead to 1.84/1.96 as the next upmove target.
 

August 8, 2000 Tuesday

Bank of the Philippine Islands (BPI-FEB) - up Php0.5 at Php63.50.  BPI furnished the PSE its 1H2000 financial performance with 1H2000 profits at Php1.747b.  MARKET SCAN and PRICE ACTION.  Most houses were already aware of BPI's 1H2000 financial results.  Summary highlights are:  a) 2Q2000 profits at Php887m is down 37% yoy, a huge decline from a mere 6% decline in 1Q2000, b) pro-forma merged basis with FEB reflects a 47% decline in 2Q2000 profits.  BPI's disappointing 2Q2000 performance is attributed to added merger costs and loan loss provisions as FEB's loan portfolio is substandard to BPI.  Margins slightly improved in 2Q2000 but revenue growth was slower due to the economic slump. Consensus market rating action points to a further downgrade in Y2000 profits (approximately a 10% to 15% downgrade to around Php4b) as bank officials hint of further loan provisioning to extend in 2H2000.  BPI's share price remains on a steady downtrend from 112 (May 1999) to its recent low at Php60.  Moving averages and momentum signals show no apparent reversals yet but it has reached oversold status.  At BPI's immediate price support at 60 reflects a significant 74% retracement which now warrants a watch for a reversal pattern.  Near-term pullback for a retest of 61 is possible as today's intraday low suppressed the impulse pattern where its past 3day trend reflected an upmove where its intraday low was consecutively higher. Sentiment towards the banking sector remains low but we see no major disappointment on BPI over the medium-term.  As such, it remains likely that its key support at 60 will be firm (next immediate fibonacci downmove target is at 58) with minor downside risk.  Accumulation of BPI is warranted.  Immediate resistance is at 64.50 with the rally likely to extend towards 70.50/75.0 over the medium-term.

Meralco (MER/MERB) - MERB was down Php0.50 at Php61.0.  Meralco confirmed it established a new Php199m subsidiary - e-Meralco Ventures, Inc. which will handle Meralco's possible electronic commerce-related businesses which the company will pursue in the future.  MARKET SCAN and PRICE ACTION (MERB).  Details of e-Meralco Ventures, Inc. has yet to be disseminated but initial market review points to e-Meralco's planned use of its wiring network as a strategic distribution advantage  for its likely partnership with cable firms, etc.  E-Meralco can also be a conduit for Meralco's BtoB and BtoC program plans. Such news is positive as its reflects Meralco's continued search to enhance shareholder value with its strategic investments.  However, underlying disappointment on Meralco is its inability to get a distribution rate hike.  Meralco's recently reported reasonably strong 2Q2000 performance has further enhanced expectations for 2H2000 given the acceptable sales growth and its improved efficiency.  MERB is rated a BUY with its PE rating considerably acceptable at 18x and a P/Ebitda at 5.15.  There are greater possible upside surprises (ie. rate hike grant and the block share sale at higher levels) while downside factors (further delay in rate hike) are well discounted to its share price.   Near-term weakness points to immediate price support at 60/58.50 (risk to close the price gap at 58.0-58.50).  Momentum is neutral but rising which supports a near-term price recovery set from its recent downtrend channel break at 61.  Price recovery is certain over the medium-term to break resistance at 62/65 with 80 as its first objective.
 

August 7, 2000 Monday

Benpres Corporation (BPC) - down Php0.05 at Php3.95.  BPC telecom-affiliate Bayantel is currently negotiating with several international telecom firms for a possible partnership for its mobile phone operations.  Cited by a newspaper as a prime target partner is Telenor International A.S. or Telenor - Norway's biggest phone company which offers telephone services adn as well as install/operates information technology systems.  Telenor also has international
ventures/partnerships in Ireland, Greece, Germany, Austria, Montenegro, Hungary, Russia, Ukraine, Bangladesh and recently in Malaysia.  MARKET SCAN and PRICE ACTION.  BPC's search for a strategic partner is well anticipated given its huge capex requirement estimated around US$700m for its mobile, toll road, power generation and water distribution business.  BPC's debt problem and violation of leverage restrictions has prompted a downgrade in key ratings from most brokerages early this year.  BPC has an outstanding debt of Php12.4b.   This has been evident to its share price which dropped from a high of 9.10 (2/11)to a low at 3.55 (5/24).  The sell-off has reduced effective foreign shareholdings at BPC to 20% from the allowable 40%.  Focus now is on BPC's debt reduction program which is notably one of the prime concerns of BPC's management.  A strategic partner in Bayantel will therefore allow the expansion without BPC incurring additional debt.  Its rumored partner- Telenor is new to the Asian market but has been notably firm in its desire to establish presence.  It has inked ties in Malaysia recently and is one of the rumored partners for TACS in Thailand.  Telenor has taken a 30% stake in Digi.com Bhd in Malaysia for US$207m, an amount which BPC also requires for the mobile phone roll-out.  We do not expect any upgrade in the market rating on BPC due to this development (BPC remains rated a LONG TERM BUY). Trading strategy however warrants an accumulation at current
levels as reversal signals are building-up.  Recent low at 3.85 (a break of key support at 3.90) suggests a bottoming out trend since 3.55 is still the recognized trend bottom.  BPC's corrective pattern on a major impulse wave does
not warrant a full correction (based on BPC's history) which at current level puts BPC on the buy zone.    Immediate price resistance is 4.15/4.40.

BW Resources (BW) - down Php0.10 to Php4.30.  The Securities and Exchange Commission (SEC) is not likely to act on BW's filing for a change in corporate name and business until it satisfactorily submits its financial statements for
FY1999 and the necessary settlement of fines.  MARKET SCAN and PRICE ACTION.  Trade interest on BW never recovered despite its announcement of the change in business and its entry to the new economy.  Overhang is the ongoing investigation of the DOJ whose preliminary comments is due to be released by mid-September. The programmed entry of its new investors worth Php5b being arranged by Penta Capital will be delayed if SEC delays its approval.  BW's intermediate trend (6weeks) is bearish from 7.0 to its recent low at 3.90.  Momentum signals are mixed and trend reversal signals are not yet formidable until a trend break of 4.90 is achieved.  Bullish hopes are pinned on an end of the corrective wave2 at 3.80 and an intermediate 3wave is due to progress with 5.40/6.0 as the immediate target.  However, if BW's price consolidates, there is a growing risk of a downward break of key price support at 3.80 since the bullish scenario warrants that the 3rdwave to be a strong rally.

ABS-CBN (ABS) - ABS and ABSP was up Php3.0 at Php48.50.  Foreign interest on ABS-CBN is gaining ground given its justifiable premium being a major content provider.   ABS recently acquired a majority stake (51%) in PinoyAuctions.com which strongly sends a positive signal where ABS is pursuing active entry in on-line business and it wants a controlling stake.  MARKET SCAN and PRICE ACTION.   ABS is rated among the top buys for new economy play and its dominant stature warrants a premium.  Such theme is expected to gradually take key focus anew after the 2Q2000 corporate earnings reporting season ends.  The various potential for tie-ups is expected to keep ABS busy in building and acquiring other on-line firms. This is expected to enhance its revenue base more than what
its traditional programming revenues provide. A technical price rebound is also due as its recent price drop from 57 to 44 has attained key fibonacci retracement targets.  Next immediate price resistance is at 50.50/52.0 while support is its recently filled price gap at 47.50/47.0.  Risk towards 44.0 remains open but the medium and long-term trend objective towards 57 remains intact.  Selling pressure is expected to increase towards  50.0 which is its current 1-month average transaction price.

August 4, 2000 Friday

SM Prime Holdings Inc. (SMPH).  - up Php0.30 to Php5.40.  Rumors point to a sustained profitability growth in 2Q2000.  SMPH is likely to release its 1H2000 financial performance sometime next week.  MARKET SCAN and PRICE ACTION.  SMPH registered a 10% profit growth in 1Q2000 on the back of a 14% increase in revenues.  The economic slump and the bomb attack in one of its malls fueled expectations that 2Q2000 revenues and profitability will be reduced to near nil.  As such, any signs of profit growth despite dismal in 2Q2000 is deemed positive as it confirms renewed strong consumer traffic in SMPH's malls.  Adding further optimism to SMPH is a newsreport citing the possible entry to the
country of US-based Toy's R Us which will more likely locate with SMPH given its market dominance.  SMPH's is rated a BUY given its defensive posture given its growing leasehold space and its cash flow strength.  Consensus profit growth
estimates show an increase to 16% in 2001 on the back of the contribution of two new malls - SM Manila which was opened last April and SM Pampanga which will be operational by December 2000.  SMPH's price trend is consolidating towards higher levels.  Record drop at 4.05 early this year warrants a bottom and its recent high at 5.60 as the interim wave1.  We suspect wave2 has bottomed-out at 4.70 and current progress is a gradual upmove past resistance at 5.60 onwards to its medium-term objective at 6.25.  Likely price pull-back towards immediate support at 5.10/4.95 is expected and should warrant accumulation.  A price pattern for a reverse H/S is also in progress to support the rally potential.

SPI Technologies. (SPI) - down Php0.10 at Php7.20.  SPI Technologies issued a news release announcing a new outsourcing contract in Europe and another in US by its affiliate - Software Services.  SPI also announced that it is also in the process of finalizing a contract for a business-to-business e-commerce company based in Netherlands for web based application development services.  MARKET SCAN and PRICE ACTION.  The undisclosed client was tagged as a Europe heavyweight and the initial contract is a major breakthrough that will open further stream of projects.  The US contract was rumored to be from Amexco which SPI has yet to confirm.  SPI is a rated BUY.  New investments in the new economy including is call centers,  and the gradual inflow of contracts reflects SPI's competence and strategic business model.  SPI's rate of profit decline is due to end as its new investments slowly contribute to profitability by 20001.  No extraordinary losses from foreign operations have been reported which puts on track its gradual return to register income growth.  Price pattern remains bearish but momentum-price divergence signals attest to its recent low at 6.80 as a likely bottom.  So far, the consolidative pattern from 6.80 still exemplifies a reversal scenario which warrants a buy.  Immediate resistance is at 7.60/7.90 where a likely convincing breakout points to a retest of 8.30/9.80
over the medium-term.

Metro Pacific Corporation (MPC) - up Php0.03 to Php0.63.  MPC's parent firm -The First Pacific Group is further reconsolidating its shares in PLDT.  MPRI will purchase 15.867m shares of PLDT from MPC and Metro Asia Link Holdings Inc. at Php900/ share for a cumulative transaction amount of Php14.28b. MARKET SCAN and PRICE ACTION.  MPC will therefore generate Php8.734b from the transaction.  MPC's renewed cash build-up from the sale of PLDT shares and its divestment from its non-property businesses is deemed positive for its property development
projects.  MPC recently submitted the highest bid for Lot B (8.54has) in Ft. Bonifacio which is intended for hotel, condo, museum, and commercial center development.  MPC's bid was significantly aggressive at Php4.2b and a Php1.076b
cash up front relative to SMIC's bid of Php2.88b and Php520.65m cash up front.  MPC's growing cash horde and the relative price firmness of Ft. Bonifacio lots will partly increase MPC's book value and EV. MPC is definitely cheap relative to its Book Value  and EV but the property slump and the high-end nature of MPC's development projects does not favor well for investors as other non-property sectors are likewise trading at cheaper values.  MPC continues to be rated a LONG TERM BUY.  MPC's recent price trend reflects a bounce from its recent low at 0.58.  Recent two price gaps points to a nearterm bullish trend with an immediate test of price resistance at 0.69/0.71. Trend breakout of 0.73 is likely given the momentum buildup and as long as 0.58 holds over the near-term.  The early wedge pattern break in its price pattern now increases the chance for a progressive buildup of the bullish 3rd wave.

Globe Telecoms (GLO) - unchanged at Php15.0.  Two developments on Globe: 1) the compensation of damages for prepaid subscribers, and 2) rumors of higher than expected 2Qearnings growth.  Globe's 3rd system upgrade for the Nokia system resulted to technical problems which dismayed many prepaid subscribers.  NTC has ordered Globe to review the incident and to compensate irate prepaid subscribers.  Globe is waiting for the Nokia team who is investigating the systems failure and will likely compensate subscribers on prepaid card discounts.  MARKET SCAN and PRICE ACTION.  Growing revenue base and profitability backed by its increasing market share certainly lifted GLO as a market favorite (rated a BUY).  The 3rd systems upgrade failure should translate to minor costs for Globe.  Although corporate insiders were indicating  extraordinary expenses/cost provision of Php270m for the year, market watchers do not think it is due not only for the discounts but on other investments.  Globe reported a remarkable 52% rise in profits in 1Q2000 at Php335m.  Market expects 1H2000 profits to hover around Php720-775m but rumors point to  Php850-890m.  This could further intensify market interest towards GLO but full year profits will be unlikely be rerated higher given the warning of extraordinary losses that will be booked this year. GLO's weekly and near-term
price pattern is bearish.  Risk is viewed in its price gap at 14.25/14.50 with key support at 13.50.  Immediate resistance is at 15.50 with breakout at 16.25.  Potential rally seems unlikely  as consolidation levels show no momentum dip.  Near-term trading tact should be a sell on rally towards 16 and to reassess on a downmove past 14.50.
 
 

August 3, 2000 Thursday
 

Metro Pacific Corporation (MPC) - up Php0.03 to Php0.63.  MPC's parent firm - The First Pacific Group is further reconsolidating its shares in PLDT.  MPRI will purchase 15.867m shares of PLDT from MPC and Metro Asia Link Holdings Inc. at Php900/ share for a cumulative transaction amount of Php14.28b. MARKET SCAN and PRICE ACTION.  MPC will therefore generate Php8.734b from the transaction.  MPC's renewed cash build-up from the sale of PLDT shares and its divestment from its non-property businesses is deemed positive for its property development
projects.  MPC recently submitted the highest bid for Lot B (8.54has) in Ft. Bonifacio which is intended for hotel, condo, museum, and commercial center development.  MPC's bid was significantly aggressive at Php4.2b and a Php1.076b
cash up front relative to SMIC's bid of Php2.88b and Php520.65m cash up front.  MPC's growing cash horde and the relative price firmness of Ft. Bonifacio lots will partly increase MPC's book value and EV. MPC is definitely cheap relative to its BkVal and EV but the property slump and the high-end nature of MPC's development projects does not favor well for investors as other non-property sectors are likewise trading at cheaper values.  MPC continues to be rated a LONG TERM BUY.  MPC's recent price trend reflects a bounce from its recent low at 0.58.  Recent two price gaps points to a nearterm bullish trend with an immediate test of price resistance at 0.69/0.71. Trend breakout of 0.73 is likely given the momentum buildup and as long as 0.58 holds over the near-term.  The early wedge pattern break in its price pattern now increases the chance for a progressive buildup of the bullish 3rd wave.

Globe Telecoms (GLO) - unchanged at Php15.0.  Two developments on Globe: 1) the compensation of damages for prepaid subscribers, and 2) rumors of higher than expected 2Qearnings growth.  Globe's 3rd system upgrade for the Nokia system resulted to technical problems which dismayed many prepaid subscribers.  NTC has ordered Globe to review the incident and to compensate irate prepaid subscribers.  Globe is waiting for the Nokia team who is investigating the systems failure and will likely compensate subscribers on prepaid card discounts.  MARKET SCAN and PRICE ACTION.  Growing revenue base and profitability backed by its increasing market share certainly lifted GLO as a market favorite (rated a BUY).  The 3rd systems upgrade failure should translate to minor costs for Globe.  Although corporate insiders were indicating  extraordinary expenses/cost provision of Php270m for the year, market watchers do not think it is due not only for the discounts but on other investments.  Globe reported a remarkable 52% rise in profits in 1Q2000 at Php335m.  Market expects 1H2000 profits to hover around Php720-775m but rumors point to  Php850-890m.  This could further intensify market interest towards GLO but full year profits will be unlikely be rerated higher given the warning of extraordinary losses that will be booked this year.  GLO's weekly and near-term
price pattern is bearish.  Risk is viewed in its price gap at 14.25/14.50 with key support at 13.50.  Immediate resistance is at 15.50 with breakout at 16.25.  Potential rally seems unlikely  as consolidation levels show no momentum dip.
Near-term trading tact should be a sell on rally towards 16 and to reassess on a downmove past 14.50.

August 2, 2000 Wednesday
 

PLDT (TEL).  Two major developments in PLDT: a) consolidation of ebusiness investments and possible listing in Nasdaq and , b) the sale of  Salim Group's stake in First Pacific.   PLDT announced that it will create a new subsidiary
that will undertake and integrate its internet/ebusiness ventures but noted that it is too premature to affirm its Nasdaq listing.  On the other front, the controlling shareholder of PLDT - First Pacific Group is one of the firms identified for sale by the Indonesian Government.  The Salim Group has to give up control of First Pacific and 107 other companies as it owed the Indonesian government USD5.93b in emergency loans to its financial flagship - PT Bank Central Asia. Potential bidder for the assets includes an investor group close to Salim Group's founding company and the Malaysian government.  MARKET SCAN and PRICE ACTION. The well-admired convergence thrust of PLDT requires the creation
of several subsidiaries that has strategic alliance and support to PLDT.  This is well anticipated and is a prudent way to reorganize assets and investments as what other global telecom players has done.  To cite, huge telecom firm players
such as AT&T and C&W HKt Ltd now has 16 and 15 respective subsidiaries that are listed.  On the long-run, PLDT will gain significant value from the market price premium of the listed ebusiness subsidiary.   On the other hand, PLDT officials see no rationale to comment on the First Pacific sale by the Indonesian government.  It seems too premature to judge the potential partnership realignment or worse - management changes,  once First Pacific changes its
controlling shareholders.  The bearish price trend on PLDT is attributed to reduced profitability, increased leverage and heightened competition. Investor's are expected to move away from the profitability picture and refocus on the
breakup value and market leadership of firms.  PLDT is relatively cheap given a breakup value market estimate between P900-Php975 per share.  PLDT's recent price weakness (low at Php660) may now prompt an upgrade in its rating to a BUY. Fundamental focus over the nearterm will be on Smart's profit turnaround and improved margins from its convergence package.  Bearish trend is intact but reversal signals are progressing with momentum at oversold status.  Risk to 600 remain open as it is the next fibonacci price target after breaking critical support at 690 and setting a new 5yr low at 660.0.   Minor upmove towards the price gaps at 690/735 is possible but the medium term bearish trend continues. A reassessment of the trend may warrant a reversal for a bullish posture if 815 is breached on the next rally.

ATN Holdings (ATN).  ATN informed the PSE and SEC of its ongoing negotiations to acquire control of several new economy firms namely: Transpacific Broadcast Group Inc. (TBGI), Unipage Inc, First Entertainment Network and Data Cast.  Transpacific provides satellite uplink services from the Clark Special Economic Zone and has a valuable legislative franchise to operate telecom services nationwide.  Unipage and First Entertainment are prime entertainment manufacturing / distribution for wireless application while Data Cast offers data transmission on an advanced broadcasting technology. Unipage, First Entertainment and Data Cast are strategic businesses aligned to take advantage of TBGI's telecom franchise.  MARKET SCAN and PRICE ACTION.  ATN's ebusiness ventures could be one of the market's best ebusiness theme and has the potential to be among the country's biggest!  It's highly valued nationwide telecom franchise, its existing satellite uplink operations and its strategic location in CSEZ means: a) a "nationwide" ready market, b) profitable operations / clean balance sheet,   and c) a prime partner of choice among regional ebusiness/telecom players.  Given its franchise, it can easily compete with the big telecom players and subsequently establish several subsidiaries for the different ebusiness services where strategic partnerships will be forged.  It seems to early to judge the success of ATN's business plan and to determine how value will be clearly transfered from the new firms and to ATN. TBGI as a franchise holder is required to be listed and it will take some time before the market will be informed if ATN will acquire TBGI on a prelisting or on post listing.   The planned acquisition is definite since TBGI and ATN surprisingly have the same controlling owners which allows them the luxury of time to assess the financial impact and the market timing of the buy-in .  ATN shares are relatively illiquid with no more than 12% as the effective free float.  Given the stock's relative illiquidity, ATN continues to be rated a SPECULATIVE BUY.
Excluding the relative illquidity, ATN warrants a STRONG BUY.  Foreign telecom and ebusiness players are slowly gaining interest to be a partner in ATN's ebusiness and this may slowly attact stock accumulation.  Momentum indicators are low but rising and a price-momentum divergence signal has been triggered. Immediate price support at 2.90/2.80 with immediate key resistance at 3.50.  A trend breakout at 3.50 points to 4.25/5.20.
 

August 1, 2000 Tuesday

Uniwide Holdings Inc. (UW) Trade Secretary M. Roxas mentioned in his talk with select US businessmen the likely completion of the entry of Casino Guichard-Perrachon as a strategic partner of Uniwide over a month or so.  This adds to the market belief that the rehabilitation program of Uniwide is progressing well for target completion before end-August.  (UW closed Php0.02 lower at Php0.43)

Petron Corporation (PCOR) / First Philippine Holdings Corporation (FPH).  Petron announced the postponement of the construction of its US$1.2b 225mw coke-fired plant in Bataan.  The postponement effectively reduces a sizeable contract from project builder - First Philippine Holdings Corporation.  (PCORwas unchanged at Php1.24 / FPH  was unchanged at Php20.25)

Benpres Corporation (BPC) - down Php0.10 to Php3.90).  Benpres announced its Php600m capex for the network upgrade of SkyVision who offers the ZPDee cable internet. The announcement comes as a follow-up development of its recent jointventure with Yes Television of UK to provide video-on-deman service.  MARKET SCAN and PRICE ACTION.  Investor's favorable review on BPC's e-business ventures are not enough to curtail losses of its telecom affiliate - Bayantel. Focus of disinterest on the stock comes from Bayantel's leverage problem and its firm plans to operate a digital cellular business.  BPC's leverage problem is unlikely to be resolved soon and a wait-and-see is directed towards its search for a strategic partner that will help both on the financial and the technology support of its telecom/e-business ventures. Foreign selling led by CLSA and ABN continues while Merril is the top buyer for the past month.  BPC's strategic investments in FPH and Meralco warrants a LONG TERM BUY on the stock.  However,
old economy plays points to a preferred holding on Meralco and FPH.  However, we see no significant buildup of an ecommerce play for BPC as several other small cap stocks with ebusiness ventures will gain more focus.  Recent price trend still holds a bullish trend from its record low at 3.55 last 5/2000.  Current trend is a bearish wave2 coming from its recent high at 4.65 with key support at 3.80.  No reversal signals for a renewed test of 4.65 is apparent but its recent low at 3.55 seems a firm bottom.  Momentum signals are oversold awaiting divergence signals to confirm a recovery.  Downchannel price pattern will reflect a breakout at 4.0 with 4.30/4.35 as the immediate target.  Trading interest to accumulate for the next primary bull wave has been triggered as wave2 correction has achieved key price support and fibonacci price targets. Current price levels offers a low risk buy.