PESO HAS STRONG SUPPORT AT PHP 45.50-46.00

As of 29 January 2014

SUMMARY OF BROKER'S OPINION

Last week, emerging market currencies including the Philippine Peso suffered another vicious beating after the Banco Central de la Republica Argentina pulled out its support on the Argentinian peso, triggering its single biggest day drop against the dollar since the country defaulted on its debt in 2002. The Argentine Peso devalued by 13.2% on Thursday spreading turmoil in neighbouring Brazil, Latin America and across the emerging world. By Friday, the Argentine peso, Turkish lira, Russian ruble and the South African rand were among the worst performers reaching multi-year lows.

Interestingly, the peso showed incipient signs of recovery when it fell by a just a muted 0.7% when other emerging market currencies were falling sharply. In addition to the peso’s muteddrop last week, note that the slope of the peso’s decline is becoming less steep since the May 2013 taper speech of Bernanke (see graph below). In the case of the Philippines, whose fundamentals we believe are firmly intact, we think it is just the unwinding of overweight positions rather than the market placing a negative bet that caused the price volatility.

CONCLUSION: Today, foreign banks are saying that the peso will reach PHP 48.00. A look at the longer-term chart, however, shows that the peso is nearing strong support at the PHP 45.50 to 46 level. If ASEAN markets continue to show resiliency and if China improves, then we may see a rebound in the peso. At this point, we continue to believe that the country in general is better off with a slightly weaker peso than an overly strong peso. We believe that the peso is now at a new trading range between 43 and 46 where we expect it to consolidate for some time.

-The contents posted in this page is courtesy by PinoyInvestor-

Stock in Focus: GMA7 by AB Capital Securities

Broker: AB Capital Securities

Recommendation: SELL

Target Price: 8.32

Target Price issued on: January 27, 2014

SUMMARY OF BROKER'S OPINION: We downgrade GMA Network, Inc. (GMA7) to SELL

with a Target Price of PHP 8.32. Talks of a minority stake acquisition by TEL or SMC prompted valuation multiples of GMA7 to rerate towards 19x 2014 P/E. We think this is unjustified based on current fundamentals, specifically slower growth on recurring advertisements and inability to expand profit margins.

Phil. Long Distance Telephone Co. (TEL) and San Miguel Corp. (SMC) are in talks of acquiring a minority stake in GMA7. The Philippine Daily Inquirer reported a PHP 48 billion transaction value from TEL. Assuming this as enterprise value, we arrive at PHP 8.81-10.16 as GMA7’s per share range. In a separate article, SMC’s Ramon Ang is said to be offering to buy at PHP 10.80 per share. Ang also has a connection with one of the controlling families in GMA7.

GMA7 reported nine month revenues at PHP 9.7 billion compared to PHP 9.3 billion in 9M 2012, growing 4.4% year-on year (y-o-y). However, this only makes up 74% of the full year forecast vs 79% last year.

Net profits were at PHP 1.4 billion compared to PHP 1.59 billion on year-ago levels, down 6% y-o-y. This makes up 86% of full year forecast vs 98% last year.

Recurring advertsing sales in the third quarter declined by 13% to PHP 2.6 billion from PHP 3.1 billion last year. We think this implies that advertisers continue to favor ABS-CBNs' current program offering.

RECOMMENDATION: We place our Target Price at PHP 8.32 after adjusting for 9M results. However, we downgrade rating to SELL given valuation multiples.

GMA7's P/E is at 19x 2014 vs peer median at 14x 2014. Multiples trade at an average of 12x and the current levels reflect excitement on the acquisition rather than the improvement on recurring advertisements and profit margins. We also lower our earnings projection to PHP 1.5 billion for 2013E and maintain 2014F at PHP 1.52 billion. We expect multiples to derate over the coming months given deteriorating fundamentals.

-Contents presented in this page is courtesy by PinoyInvestor-

Stock in Focus: URC by Angping & Associates Securities

Broker: Angping & Associates Securities

Recommendation: HOLD

Target Price: 122.95

Target Price issued on: January 27, 2014

SUMMARY OF BROKER'S OPINION: With its strong free cash-flow and ongoing expansion, URC shareholders that are positioned below market valuations can hold the stock for superior long-term growth. It is not advisable, though, to position in the stock at current prices.

URC achieved its best financial condition in 10 years, with net working capital expanding to its highest level of PHP 18 billion in 2013. Debt-to-equity ratio also improved to its best of 0.31x in FY 2013.

Free cash-flow reached its highest level of PHP 22 billion, while cash dividends paid in 2013 was also URC’s biggest in ten years.

URC’s operating income grew by 31% to PHP 10.28 billion in FY 2013 from PHP 7.85 billion in FY 2012.

In terms of EBITDA, URC’s EBITDA margin improved from 15.76% in FY 2012 to 17.16% in FY 2013.

Following its best year in a decade, URC plans to expand further locally and abroad. URC will spend its highest capex in 10 years of PHP 9 billion. Around PHP 5.73 billion will be used for the installation of new lines to increase capacities in snack foods and grocery products in the Philippines, new plants, beverage and bakery lines in Vietnam and the expansion of biscuits and wafer lines in Thailand. PHP 3 billion will be used for the completion of a bio-ethanol plant, construction

of a power cogeneration plant and for maintenance capex. Around PHP 270 million will be used for farm expansion and handling facilities for the feeds division.

Though still positive, this will reduce free cash-flow significantly and temporarily generate a negative 2014F Return on Invested Capital. 2014 looks promising but will be weighed down by URC’s expansion costs. Revenue growth is seen to be around the same level as with 2013. Costs may be tighter though as the peso has weakened back to August 2010 levels of PHP45:USD1.

RECOMMENDATION: URC is a HOLD. It's Fair Value and Target Price is PHP 122.95 per share. This is based on Discounted Cash Flow valuation taking into account URC's interest-bearing debt.

URC is trading only at a discount to 1x PEG and at a premium to market and fair value. URC is one of the most expensive stocks in our coverage. Though its fundamentals are strong, it is not advisable to position in the stock at current prices. With its strong free cashflow and ongoing expansion, investors that acquired URC below market valuations can hold the stock for superior long term growth.

-The contents presented in this page is courtesy by PinoyInvestor-

JFC: Where are we going?

JFC fell with -3.2% from the previous day. Currently on a downtrend, JFC may hit the 100% Fibonacci retracement anytime soon. If you observe the volume, the number of sellers are really want to dispose this stock. With RSI at 30.96, we can expect that there will a chance that we'll have a reversal as we approach the 147 price of this stock.

Note that there is a gap down near 78.6 fibo. We can assume that we'll experience a gap up to seal it.

Good luck!

Economy: Resilient consumer spending and rebound of exports responsible for strong GDP numbers

Fourth quarter GDP grew by 6.5%, beating consensus growth forecast of 6.0%. This brought full year GDP growth to 7.2%, also above consensus growth forecast of 7.0%. The main driver of growth was resilient consumer spending and the rebound of exports. During the fourth quarter, consumer spending grew by 5.6%, bringing full year growth to 5.6%. 

Meanwhile, exports continued to rebound, growing by 6.2% during the fourth quarter after rising by 16.7% during the third quarter. For the full 
year, exports rose by 2.4% despite suffering from a drop during the first half of 2013.

--The content presented in this page is courtesy by COL financial--
https://ph1.colfinancial.com/ape/Final2/researchcompupdates/Downloads/2014-01-30-PH-A-Economy.pdf

EMP: A leader for long term.

Emperador, Inc:

A leader for the long term

We met with the management of EMP this week and based on our discussions, sales remained robust in 4Q13 despite calamities during the period. They expect more growth this year as they capitalize of its strong brand equity and resumption of industry growth. We have a HOLD rating on EMP with a FV estimate of Php11.33. Despite our positive outlook on the company, we believe the market has priced in much of the positives at this point. Upside risks to our FV estimate are higher than expected revenue growth and margin expansion.

• 4Q13 sales look good. According to Emperador management, sales during the fourth quarter of last year remained robust despite the country being hit by typhoon Yolanda. In fact, sales in Leyte for the month of December reached a new monthly high. While Emperador has not yet disclosed market share figures, it most likely improved further in 4Q13.
• Industry growth to resume this year. Last year, the liquor industry saw sales volume contract due to the price shock brought about by higher sin taxes. Despite the drop in industry wide sales, EMP was able to maintain its sales volume, thereby increasing its market share. This year, EMP’s management expects sales volume of the industry to be back on a growth path. In the past, growth in sales volume averaged 6.5%. With a higher market share and better prospects for the industry, Emperador is set for another record year.
  
• Unfazed by competition. Competitors are trying to take a piece of Emperador Lights’s market share in light of its success. For example, Cosco Capital is trying to break in the brandy market with Excellente Brandy while Tanduay has Compañero Light. Emperador believes it still has the best product in the market and given its strong brand equity and superior product, the barrier to entry will be high for competitors.
  
• Preparing for capacity expansion. Emperador’s local bottling facility is currently running at around 75% capacity, which leaves little room for future growth. Thus, EMP is preparing to expand its local production capacity by 2016. It is earmarking Php4 Bil for expansion which it can easily fund with its cash from its share placement last year wherein it raised Php11.2 Bil.

SHARE DATA

Rating                    HOLD

Ticker                    EMP

Fair Value              11.33

Current Price         11.40

Upside (%)            -0.61

-The content presented in this page is courtesy by COL financial-

https://ph1.colfinancial.com/ape/Final2/ResearchCompUpdates/Downloads/2014-01-30-PH-S-EMP.pdf

127.2% Fibonacci Retracement level hold?

JFC has fallen 4.7% so far this week as it closed at week’s low at 157. When is it going to bounce? From its high of 186.2 per share last November, it dropped to 160.70 after a month. Although it made a bounce, it retraces and continue to fall and is now near the 127.2% Fibonacci Retracement levelfrom the last bounce. This level will be very interesting and worth watching. There is a great chance price will hit here and if we will see a good candlestick pattern, JFC will bounce from here.

Absence of anothe other indicator means it will continue to fall. You may test buy at 155.50 but prepare for your cutloss plan since the next stop is quite far.

Caveat!

AC following an upward channel

AC seems to be creating an upward channel with Bullish Harami Pattern. We saw this pattern on the base of the channel and as we notice the pricemove up after that. We can speculate that this will also happen again this time. Projecting our retracement based on higher highs and higher lows, AC may hit 560 per share on its way up before hitting strong resistance.

RSI or Relative Strength Index is still healthy at 46. Looks like we still have a lot of buyers to push this price up.

Caveat!

BEL broke from Kumo

BEL went up by 6.8% today closing at 5.49 per share. The rally pierced through the 61.8% Fibonacci Retracement level. Current support will be around 5.39 while we are seeing a resistance around 5.59

Based Ichimoku system, today’s movement sends an additional bullish sentiment by way of Kumo break. Note that we already have few weak bullish signals before.

If support at 5.39 will hold then price may continue to go up with little challenge until it hits 5.85 It is also very important to look for other indicators such as candlestick formation. If we will see a shooting star, hanging man or whatever bearish candlestick pattern tomorrow, then its a warning that the bulls are already tired. RSI or Relative Strength Index is now at overbought level.

Plan your trade and trade your plan.

Caveat!

ROXAS HOLDINGS

After ROX rally to as high as 7.5 per share from 2.58, it has retraced and moved sideways at 38.2% Fibonacci Retracement level. This level has been a very important support for ROX so far but there are also forces that makes it difficult for it to rise. Recently we have our Kijun Sen moving in a horizontal line at 5.77 where in the price has been attracted.

For those who would like to get some ROX, you may test buy at this leveldown to the 38.2% line because there is a cup in development. If this willindeed be developed then we will see ROX to hit the 7.50 again.

Downside of this is that we also have a threat of ROX going to 4.89 in case our support will not hold. This 4.89 is the Senkou Span B of our daily cloud and on weekly chart, it is where our Kijun Sen is moving horizontally.

Have your trading plan ready in case you want to get in.

Caveat!

Weak bullish signal on SMPH via Kijun Sen cross

SMPH showed some weak bullish signal via the Kijun Sen cross today as it went up by 1.4% to close at 14.86 per share. The bullishness wasn’t that strong but this is a good development from SMPH knowing that it has been going down. In case it will continue to move up and close above 15.00 then we might see Chikou Span to agree with the bullishness in short term.

e have also noticed that the Kijun Sen line on our weekly chart has started to move at 16.86. RSI or Relative Strength Index is still healthy registeringbelow 50 so there is still move buying to come. Although this might be a big spike, the big red Cloud might be too strong for SMPH to break at this time.

Caveat!

EMP retraced, near support

Using the same channel we put last January 19 when we saw EMP registered two bullish signals from Ichimoku elements, EMP has retraced and may findsupport somewhere near the lower slope up to where 38.2% Fibonacci Retracement level is. Notice also that Kijun Sen has been moving in a horizontal line since we saw it hit the high note.

If there will be a good candlestick formation at this level, then it is good to test buy.

Caveat!

COSCO continue to fall

COSCO has turned sour since we saw it falls to 127.2% Fibonacci Retracement level last January 20. Looks like it is heading for the 161.8%Fibonacci Retracement level.

The Kijun Sen line which moved horizontally last week has bent today following the fall to 7.94 at the close. This suggests that the power of Kijun Sen line to attract price is not anymore there. Better wait at the next support and see if there is a good candlestick formation.

Caveat!

Nosebleed on CPG

CPG continue to fall and is now near the 78.6% Fibonacci Retracementlevel which is around 1.28. Will it hit there? So far we don’t have a bullish reversal candlestick to make us think there will be a reversal at hand. Because of this, the chance of CPG going to the support line is quite high. AllIchimoku elements is in red alert. Would be better if we stay away for awhile and be back when there is a good signal.

Caveat!

Kijun Sen not bending yet for MCP

MCP’s Kijun Sen line has been moving horizontally for quite some time now. Price has been attracted to this line last Jan 9, 2013 (two weeks ago) and this line act as a jumping board but as you notice it seems that there is a resistance at the top that the bulls have a hard time breaking it. If the bulls will get tired trying to break it, this might fall back to 13.18 again. Nonetheless, MCP is still bullish with all Ichimoku elements in green

Caveat!

Tenkan Sen / Kijun Sen Cross on BLOOM

BLOOM has a weak bullish signal via the Tenkan Sen / Kijun Sen Cross today and Kijun Sen is moving horizontally at 9.29. Will this be able to attract the price of BLOOM to move where it is? So far there is no other bullish signal we see on BLOOM but in case price will close above 9.00 per share tomorrow then we will see Chikou Span to agree with the bullish cross. This may create interesting movement on this stock.

Caveat!

Will PSEi be able to continue rising?

PSEi continue its winning streak today adding 30.19 points to close at 6,170.05. Based on our chart, there is no bearish candlestick yet except that it is currently knocking at 50% Fibonacci retracement level. In case this will be broken, then next stop will be around 6289 but it is important to monitor tomorrow’s candlestick since we are at resistance level. Notice that last time it hit the 61.8% Fibonacci retracement level and showed a Shooting Star before it fell hard.

If price will not continue to rise then we will see a creation of new lower high which could mean we haven’t reversed yet.

Weekly chart shows index has meet with the Kijun Sen line which has bent down after moving horizontally.

Caveat!

MPI touching 127.2% Fibonacci Retracement level

MPI touched the 127.2% Fibonacci Retracement level today with a good volume of unserved bids. Will it finally show some bullish bias soon? As of now Ichimoku elements are still telling us that MPI is in bearish mood but a cross from Kijun Sen may happen soon which will give some green light.

On weekly chart, there is an interesting development at 4.87 but that is quite high. Let us focus for now on breaking our immediate resistance. I think it is not yet too late to join the club.

RSI or Relative Strength Index is still healthy at less than 50.

Caveat!

Take 3 for MBT to break current level

MBT finally back at 79 level after falling to 69.90 per share. At this stage, monitor MBT closely since we are at resistance level. Notice that this level has been tested twice but the bulls failed. Good thing this time RSI or Related Strength Index is healthier than the last time it test to break the 79 level. Notice also that Tenkan Sen is crossing the Kijun Sen which is considered a weak bullish signal. Looks like 80 level will be achieved very soon?

Caveat!

SMPH may go to 127.2% Fibonacci Retracement level

SMPH fell today to 14.1 (-0.7%) from the previous close of 14.2. It continues to fall after breaking our support at 14.62. Does it mean we'll see this stock in the 13.29 which is the 127.2% of our Fibonacci Retracement level? 

RSI is at 34 which is very near the Oversold level. Volume is down by 902,300 from yesterday and all Ichimoku indicators are bearish.

It's OK to accumulate this stock if you're long term since it is very cheap now. Make sure to buy or average down during our support level because once the trend will reverse, the reward is BIG.

Good luck! 

ICT keeps falling, may find support at 61.8% Fibonacci Retracement level

ICT has been dropping since it hit 107.30 per share. Today it fell by 3.6% at the closing breaking the 50% Fibonacci Retracement level which serves as the immediate support.

Based in recent history, the 61.8% Fibonacci Retracement level serves as a bouncing board. Will it do the same this time? It is worthy to monitor thisstock when it hit this level or near 93.52 If we will see a good candlestick by there then it would be a good entry point. If not, then wait until it hits anothersupport level, probably at 89 – 90.

RSI or Relative Strength Index has been falling and is now at oversoldlevel.

Caveat!

LTG may retrace but upward trend still intact

Using the same chart when we saw LTG breaking 38.2% Fibonacci Retracement level, it seems that LTG is facing a headwind or resistance near 61.8% Fibonacci Retracement level. If this will retrace, our support at 16.76 down to Senkou Span of the Cloud may be considered as our support. Notice that we have an interesting action at this level before so the bulls and the bears may again fight to win this area.

Since we have our Ichimoku elements in green, we still think that any retrace will be an opportunity to buy.

RSI or Relative Strength Index need to loosen a bit.

Caveat!

NI continue to go up, Kumo Breakout today

NI registered another bullish signal via the Kumo Breakout. This is when price breaks the Kumo or Cloud from below. It also hits the 38.2% Fibonacci Retracement level in the process. I think there is a greater chance NI will continue to rise and hit 2.70 per share before some strong headwinds will cause it to retrace. Nonetheless, as long as all Ichimoku elements are still in green like it is now, then retrace should be a welcome event. This is also to loosen up the RSI which is already at 70+ level.

Caveat!

DNL: Bullish mood on daily chart

We have seen DNL broke the triangle last week as it continue to move up and didn’t confirm the Doji candlestick which could have been the reversal point. Instead of showing bearish sentiment after the Doji, it created a large greencandlestick which convinced us of the bullishness of DNL. It also broke the 78.6% Fibonacci Retracement level in the process. Now that we are near our previous high at 6.91, we may experience some resistance. Another reason why it may retrace is the RSI or Relative Strength Index which is at overbought level. It is higher than the RSI when it hit 6.91 last October 2013

Lastly, we also have a Bearish Meeting Line pattern which suggests that there is a stalemate between the bulls and the bears. If this will be confirmed on the following day then we will see DNL go back and find support near 6.71 If this will not be confirmed then we might see DNL go up with possible target near 7.16

Ichimoku system on daily chart is telling us that DNL is in bullish mood with the latest green signal created by the Kumo breakout last Tuesday. Our weekly chart has only one bullish signal and that is the Kijun Sen Cross. This is considered Neutral Bullish signal because it is done inside the Kumo.

Caveat!

EMP registered two bullish signals from Ichimoku elements

Daily chart of EMP registered a bullish signal by way of Kumo breakout andTenkan Sen / Kijun Sen Cross. This development is a good indicator for EMP which may soon rally for new high. But before that, we are facing with a resistance at 23.6% Fibonacci Retracement level. The break from the upward channel may just be brought by some panic buying on some traders but it is not so convincing but this is not a bad news. In fact it is good news because if it will retrace, we can add more shares. If no retrace will happen then next stop is 12 then 12.50… then 13.44?

But then again, drink moderately.

Caveat!

MPI at 161.8% Fibonacci Retracement, will it bounce?

After it broke the possible double bottom at 4.40 last December and another break from the 127.2% Fibonacci Retracement level after holding for few days, MPI is now at the mercy of the 161.8% Fibonacci Retracement level, which if still broken will bring MPI to the abyss.

Interesting indicators are coming out last Friday. Price action creates a Harami pattern which is a bullish reversal pattern. As what candlesticker.com says “The pattern consists of two candlesticks, in which the first day’s redcandlestick engulfs the following day’s green candlestick. The first one has to be a normal or long red candlestick. Either the body tops or the body bottoms of the two candlesticks may be at the same level, but whatever the case, the green body should be smaller than the previous red body.” This is not a strong reversal pattern so we need a confirmation the following day via a long green candlestick or a gap up.

In addition, RSI or Relative Strength Index which is at oversold level is now pointing up. If we also look at the weekly chart we could see a Falling Wedge formation.

Ichimoku elements on both daily and weekly charts are still in red but there might be a bounce play for MPI. We are still using the same chart we posted last time at Will MPI hit 4.0?

Caveat!

TA still moving upward. New support at 1.76

TA continue to move upward after it hit 1.76 and is currently knocking on the 1.88 or 50% Fibonacci Retracement level. So far we don’t see any bearish candlestick but it is important to monitor this stock tomorrow especially for those who entered late. Notice that we have some actions at this level early November last year before it continue to drop. Thus, we may consider this one as a strong resistance. But since our weekly is sentiment has not been change, any retracement should be an opportunity to buy.

In addition to the strong resistance, RSI or Relative Strength Index is now at 77.8 which means any time soon there will be heavy selling.

Caveat!