MCP ready to seal the gap?

MCP closed its price yesterday with 3.02% gain. As you can see on the daily chart below, it found a new support at 11.51 which is the 127% of the Fibo line. The next resistance will be at 12.02 which is the 100% of the Fibo line.

Take note in the chart below that there's a gap (box) that needs to be filled. Will it happen this week or next week? 

RSI or Relative Strength Index is valued at 34.57 which is still good and far form overbought. 

Caveat.

EMP to break the 12 resistance?

EMP - bounce from the 23.6% Fibonacci support. Inverted hammer was formed after that and was confirmed on the next day via solid green candlestick.

Volume is gradually increasing.

Current resistance is 12 and the newly found support is 11.76.

RSI or Relative Strength Index is  53.

Caveat!

Market Talk (AP, AEV, RCB, MBT, PBB)

Economy: Central bank keeps policy rate, hikes SDA rate. Yesterday the monetary board of the central bank decided to keep the policy rate at 3.5% as we hoped they would do. According to the formal statement, the monetary board believes future inflation is likely to stay within the target of 3-5% in 2014 and 2-4% for 2015. However, the interest rate on special deposit accounts was raised 25bps to 2.25%. The modest adjustment in interest rate is to counter risks to price and financial stability arising from ample liquidity. Note that April M3 growth of 32.1% YoY was still robust, but slower than March’s 34.7% rise, Indeed, M3 growth has been slowing since January when it reached 37.3%, the fastest growth since the central bank started to limit access to the SDA facility in July 2013. We believe the impact of the SDA rate hike will be minimal given the modest size. While the amount in the facility will probably not rise significantly as access has become more selective, it may slow the exit of SDA funds.

Utilities: AP buys 100% stake of LiMA Utilities Corp. Aboitiz Power Corp (AP – HOLD) disclosed it acquired 100% stake in LiMa Utilities Corp (LUC), an electricity distribution utility operating in LiMA Technology Center, Batangas. AP bought 8m common shares of LUC from affiliate LiMA Land Inc, a wholly-owned subsidiary of Aboitiz Land Inc, at a price of PHP166.2083/sh or a total consideration of HP1.33b. Aboitiz Land is a wholly-owned subsidiary of AP’s parent, Aboitiz Equity Ventures Inc (AEV – SELL).The acquisition is in line with the company’s strategy of expanding its EnerZone brand.

Banks: RCB raises PHP7b in Basel III Tier 2 notes. Rizal Commercial Banking Corp (RCB – BUY) has raised PHP7b worth of Basel IIIcompliant Tier 2 notes yesterday, higher by PHP2b from original target. It closed the public offering one day ahead of its 20 June deadline due to oversubscription. Issuance of the note will be on 27 June and will have a tenor of 10 years and 3 months. Coupon rate is 5.375%, 142bps over the 10-year PDST-F government benchmark rate of 3.95% and similar to the rate fetched by second largest bank Metrobank (MBT HOLD) for its PHP16b Tier 2 notes raised early this year. As of end-March, RCB reported a Basel III Tier 1 ratio of 10.72% and CAR of 11.31%. We estimate the new issuance could boost CAR by 2pps to 13.3%.

Banks: PBB buys a rural bank. Philippine Business Bank (PBB – BUY) will purchase 100% of Rural Bank of Kawit for a total consideration of PHP15m. PBB will pay in cash as it had PHP590m at end-March. Based on latest data as of end-2012, Rural Bank of Kawit had assets worth PHP367m (0.8% of PBB), loans of PHP168m (0.5%), deposits of PHP315m (0.8%) and capital of PHP35m (0.5%). It has one branch in Kawit, Cavite and net income of PHP572,352. Gross income in 2012 reached PHP15.4m with operating costs of PHP14.8m, leading to a high cost-to-income ratio of 96.1%. Bulk of lending stems from agrarian reform (21% of total), and real estate, renting and business services loans (20%). It registered end-2012 ROE of 2%, NIM of 5%, CAR of 9.86%. In terms of asset quality, it has gross NPL of PHP65m, equivalent to NPL ratio of 35%. This will increase PBB’s NPL by 8% to PHP876m and will slightly raise NPL ratio to 2.6% from 2.5%. Due to its small scale of operations, any impact on PBB’s financials will be minimal. The main incentive for PBB is the potential branch licenses the central bank can grant, in line with the SPRB Plus program that aims to strengthen the country’s rural banks.

- ATR Securities

Market Talk (EW, MEG)

Banks: EW to offer up to PHP5b Tier 2. East West Banking Corp (EW – HOLD) yesterday started to offer up to PHP5b worth of unsecured subordinated Tier 2 notes. The offer period will run until 27 June, with issue date set on 4 July. The notes will have a term of 10 years and 6 months, with redemption option after five years and five months. Proceeds will be used to strengthen EW’s capital to support its growth plans. This could boost capital adequacy ratio by 2pps to an estimated 20% at end 2014. 

Property: MEG allots PHP230b capex for the next five years. Megaworld Corp (MEG-BUY) is planning PHP230b in capex for the next five years to develop townships, build real estate projects and acquire additional land bank across the country. The company plans to launch 10 residential projects and six office projects each year. MEG is aiming to have 1m square meters of office space in the next five years. 

- ATR

SINO's hammer was confirmed

SINO closed yesterday with 10.71% gain. Its price closed above the 38.2% Fibonacci resistance at 1.15 which is good. Notice that the volume on the daily chart below is also increasing which is also good because more buyers are coming. 

Let's see if SINO will be able to pass the next resistance at 1.34 today.

RSI or Relative Strength Index is in overbought at 76.54.

Caveat!

Did DAVIN hit the 4.56 resistance?

Yesterday DAVIN showed a strong opening at 4 and closed with a 20.27% gain. It's highest price reached the 261.8% resistance but was not able to closed above it. Observe on the daily chart below, the RSI (Relative Strength Index) also touched the resistance slope (purple line) which indicates a sell signal. Also its current value is in overbought at 81.18. Take note that DAVIN leave a huge gap below and can attract the price to seal that gap.

Let's see what will happen today.

Caveat!

HOUSE ready to take off again?

HOUSE bounced from the 78.6% Fibonacci level  (7.98 pesos). Last candlestick seen last Friday showed a bullish sign. Will this be enough to break the last resistance at 8.77 pesos and go forward to reach 9 pesos?

RSI or Relative Strength Index is 64 which is far from overbought and has more room to go just like what it did when it reached it's highest RSI value at 80.72.

So far, overall trend of this stock is still in bullish mood.

Caveat!

Can BEL fill the gap next week?

BEL closed last Friday with 2.64% gain from it's previous price. Observe the candlestick pattern on the daily chart below, it is called Bullish Harami pattern. 

According to Investopedia, "bullish harami indicates that the falling trend (bearish trend) may be reversing, it signals that it's a good time to enter into a long position. The smaller the second (white) candlestick, the more likely the reversal.".  

This pattern was also supported with the RSI that bounced from the green trend line below. (see the green arrow).

Take note also that there's a gap the needs to be filled. (see the white square)

Caveat!

Market Talk (ANS, SCC, ELI, MEG, GTCAP)

Conglomerates: ANS 1Q profit surge on trading gains. A. Soriano Corp’s (ANS) 1Q14 profits surprise, jumping 94% YoY to PHP1.09b, accounting for 85% of our full-year estimate. Trading gains, mostly on sale of investments, reached PHP987m, up 120%. Maintain HOLD with increased TP to PHP7.76 factoring in higher end-1Q14 investment portfolio balance. Details on page 3. 

Mining: SCC receives summons on civil complaint by contractor. Semirara Mining Corp (SCC – Under review) disclosed yesterday it received a summons based on a civil complaint filed by Bauer Foundation Philippines Inc against the company and two of its officers with respect to the drill and grout of 122 holes at 150 meters each for stabilization measures along the Panian fault in the Panian pit. Damages requested is PHP507.1m broken down into PHP7m actual damage, PHP500m exemplary damages and PHP100,000 on cost of litigation. According to SCC the outlook is favorable as Bauer was not able to deliver on deadline and forced SCC to complete the project themselves. We expect a long civil case which will be reflected in a contingent liability of PHP507m. An adverse decision would be appealed to lower exemplary damages as the PHP500m demanded is inappropriate to the actual damage claimed of PHP7m. 

Property: ELI finalized deal on Pasig property. Empire East Land Holdings Inc (ELI-Not rated), a unit of Megaworld Corp (MEG-BUY), is finalizing a deal to take over a 23-hectare abandoned factory in Pasig City. ELI plans to develop this property as a mixed-use development to be called Empire East City as part of its PHP25b planned expansion. In addition, ELI’s president Anthony Charlemagne Yu said the company’s revenues could grow 10-20% and net profits by 15-30% this year. 

Consumer durables: Vehicle sales up in May. Vehicle sales in May jumped 23.6% YoY and 8.3% QoQ to 19,598 units. Passenger car sales climbed 44.3% to 7,507 units while commercial vehicles went up 13.4% to 12,091 units. In 5M13, total vehicle sales expanded 22.4% to 89,335 units. Passenger cars rose 35.3% to 32,331 units while commercial vehicles grew 16.1% to 57,004 units. Toyota Motor Philippines, a subsidiary of GT Capital Holdings (GTCAP – HOLD), remains the market leader with 44.4% market share on sales of 40,062 units. The Chamber of Automotive Manufacturers of the Philippines Inc (CAMPI) sold 181,283 units in 2013 while the Association of Vehicle Importers and Distributors sold 31,999 units, leading to combined auto sales of 211,558 units, higher than the 210,000 target. This year CAMPI is looking at industry sales of 230,000 units. 

- ATR

LTG to bounce next week.

LTG may bounce next week based on the daily chart below. 

Notice the RSI is on the support trendline and the bounce can lead to 15.14 as the first resistance which is tested many times. 

Notice the Kijun-sen line and the 50% Fibo level are sync in 16.44 which will also attract LTG's current price. 

Caveat.

Market Talk (FLI, SMPH, MER, EDC, AP, MPI)

Property: Cebu treasurer mulls charging FLI interest. Cebu City treasurer Diwa Cuevas wants to collect interest from Filinvest Land Inc (FLI- BUY) for the late payment of PHP800m that is the government’s share in the joint venture project at the South Road Properties. Monthlyinterest would amount to PHP16m for a total of PHP32m for two months.

Property: SMPH files case against DOTC and LRTA. SM Prime Holdings Inc (SMPH-Under review) filed a case before the Pasay City regional trial court against the Department of Transportation and Communication (DOTC) and Light Rail Transit Authority (LRTA) for an apparent breach of contract. The case seeks an injunction that prevents DOTC and LRTA from transferring the location of the proposed common station to Trinoma Mall (owned by Ayala Land Inc, ALI-BUY) instead of SM North EDSA. The common station will interconnect LRT1, MRT3 and MRT7 and this was in the terms of the memorandum of agreement between SMPH and LRTA.

Utilities: MER signs two power supply agreements. As reported by Business Mirror, Manila Electric Co (MER – HOLD) signed two separate power supply agreements (PSAs) with Philippine Power and Development Co (PPDC) and Montalban Methane Power Corp (MMPC). The PSA with PPDC was signed on 15 May for capacity of up to 1,051 kW at PHP5.0056/kWH. PPDC owns and operates three run-of-river hydropower plants in Laguna, namely the 448-kW Palakpakin, 75-kW Calibato and 528-kW Balugbog. Meanwhile, the PSA with MMPC, signed on 16 May, covers the purchase of 8,190 kW at a price of PHP5.50/kWh. MMPC owns and operates the 15-MW methane power plant in Rizal. The PSAs with PPDC and MMPC are valid for five and two years, respectively.

Utilities: 10 companies signify interest on Mindanao geothermal IPPAs. As reported by Manila Standard Today, 10 companies submitted letters of interest to the Power Sector Assets and Liabilities Management Corp (PSALM) for the bidding of the independent power purchase agreement (IPPA) of the Mt Apo 1 and 2 (2x54.2 MW) geothermal power plants. The IPPA pertains only to the management of the output of the two plants, currently at 390 GWh for unit 1 and 398 GWh for unit 2, but ownership and operation remains with Energy Development Corp (EDC – BUY). Out of the 10 bidders, two are  foreign owned while eight are Filipino-owned entities. No names were provided by PSALM but EDC and Aboitiz Power Corp (AP – HOLD) earlier expressed interest in participating. PSALM will hold a pre-bid conference on 26 June.

Banks: BSP eases banking hours. The Philippine central bank (BSP) will now allow local banks to extend or change their banking hours without prior regulatory approval. The liberalization rule is in line with the BSP’s thrust of empowering financial consumers, which is essential to fostering the stability of the financial system. Banks need only to send a written notice to the BSP for any changes in operating schedule. At present, banks are required to open for a minimum of six hours a day, five days a week, except during holidays. The new framework also allows banks to render full banking services during their extended operating hours.

Conglomerates: MPTC increases stake in MNTC. Metro Pacific Tollways Corp (MPTC), a subsidiary of Metro Pacific Investments Corp. (MPI- Under review) will increase its ownership in Manila North Tollways Corp (MNTC) to 75% after a share purchase deal with Egis, the company’s French partner in MNTC. MPTC agreed to buy an additional 4.6% in MNTC for a total cost of PHP1.7b.

Will TA continue to rise tomorrow?

TA rising slowly each day which bounced from the 38.2% Fibonacci level (2.39). If you observe the Volume int the below, you can see that it also increasing each day. Does this sound bullish? I guess so. Slowly but surely...

Relative Strength Index or RSI is 61.09, so there's still room before it will become overbought.

Caveat.

EMP closed above the 38.2% Fibonacci line

EMP closed today with a 2.26% gain from the previous closing price. The price closed above the 38.2% Fibonacci line which is a good sign because this line may act as a new support. If you observe on the daily chart below, you will see that there's a threat from the Kijun-sen line and 50% Fibonacci line because this is the last time that EMP went down after hitting these levels. You may want to unload some of your shares or take profits on these area depending on the momentum.

RSI or Relative Strength Index is 50.55 which is still far from overbought.