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Note: To understand the Stocks Update, first read Bos Ebook, My Maid Invests in the Stock Market.
Click here www.TrulyRichClub.com to download now.
Happy investing!
Bo Sanchez
Last August 1, 2015, COL Financial Group, Inc. held its annual mid-year market briefing in the Meralco Theatre.
The theme of the briefing was Shifting Gears Tempering Growth Expectations. Here are some of the key points I
took from the fundamental presentation.
The presentation began with an introduction of its key messages. These are:
1. The Philippine Stock Market Index (PSEi) continues to be on track towards hitting 10,000.
2. The pace towards 10,000 will slow down due to numerous speed bumps.
3. Through good stock picking, there is still opportunity to generate good returns.
Thus, the stock market is shifting gears. Initially we had a good start this year, what happened? What has
changed?
This affects us because foreign fund managers would put the Philippines
in an investment basket together with Thailand and Indonesia. So if they
need to sell their positions in Thailand and Indonesia, they would have to
sell their positions in the Philippines as well.
l There is a growth in preference for the Japanese and Chinese stock markets. Although they dont
seem to be as attractive anymore after being sold-off and there seems to be consensus view that
the Chinese economy is not as strong.
l Concerns of contagion precipitated by the possible Greek default. However it did not push
through.
The bad news is, the market might take some time before it is able to recover. This means the market
may go sideways for a while. Here are some reasons for the more subdued outlook:
l Flat net interest margin from banks
l Optimistic outlook on gaming stocks did not materialize due to delay in operations
l Below than expected 1st quarter results for consumer companies as well as more intense
competition among themselves
l Delay in operations also in power generation companies
Hence, COL Researchs PSEi Earnings Per Share (EPS) Growth Forecast for 2015 has been reduced
from 15 percent down to 4 percent. Next year, it is expected to be at 10 percent. Furthermore, because of
the reasons mentioned above, COL Research has reduced its 2015 year-end PSEi index target from 8,300
to 7,950.
In comparison to our peers, Indonesia and Thailand, their markets continue to deteriorate because of:
l Indonesia
l Weak exports
l We have a strong current account position (dollars that come in less dollars that come
out). The ideal scenario is for a country to have more dollars than it needs to pay off. This
strength in current account position minimizes the threat of a sharp hike and significant peso
weakness. This strong current account position at 4.4 percent is driven by:
Healthy OFW remittances with +5.4 percent January to May
Continuous growth of BPO revenues with +18.7 percent in 2014 and +12.2 percent
projected this 2015.
l Government finances remain healthy with Budget to GDP only 1.1 percent and Government to GDP
at 45 percent. The governments concern is not the ability to spend but rather the deployment.
l Government spending is picking up after a slow start this year with Growth in Government
Expenditures and Capital Outlay increase by 9.2 percent and 28.5 percent respectively last
May.
l Investment spending is also picking up along with high capacity utilization of the manufacturing
sector. This justifies more future investments for expansion from companies.
l There is growing pipeline of PPP projects with $12.1 billion worth of projects in the bidding
stage, and this will boost economic growth and increase productivity.
l Liquidity conditions remain to be favorable for stocks, making stocks the asset of choice for
investors.
l Less risk of contagion from a Greek default (which did not take place)
l No signs of a bear market
Ill discuss more in detail the other good news in our next Stocks Update issue. I hope these market briefing
Happy investing!
P.S. If you would like to hear me live, I conduct free seminars every Friday at the COL Financial Training
Center teaching the basics of long-term investing in the Stock Market. You may sign-up for these seminars
at www.colfinancial.com.
I also give powerful talks on various engaging and practical topics every Sunday at Feast ATC in Cinema
2 of Alabang Town Center. The Mass starts at 9AM and The Feast kicks-off at 10M. Come by. Its for free!
Here are our SAM Tables (as of August 19, 2015 closing).
STOCK Current Price Buy Below Price Target Price Action to Take
AC 771.00 762.60 877.00 Stop buying
CEB 90.30 124.80 156.00 Continue Buying
EEI 9.15 10.00 12.50 Stop buying for now
FGEN 24.40 28.56 35.70 Continue Buying
FLI 1.93 1.94 2.42 Continue Buying
GTCAP 1,290.00 1,278.26 1470.00 Stop Buying
MBT 84.90 88.70 102.00 Stop buying for now
MEG 4.35 4.54 5.67 Continue Buying
MER 291.40 239.20 299.00 Stop Buying for now
SMPH 20.00 22.00 25.30 Continue Buying
URC 192.00 198.26 228.00 Stop Buying for now
Mike Vias is an Investment Trainer of COL Financial Group, Inc. He is a Certified Securities Representative
and Certified Investment Solicitor.
ESTIMATED
STOCK TIME PRICE ESTIMATED
STOCKS TIME
SYMBOL RECOMMENDED RANGE RETURN
HELD
D&L Industries DNL February 2013 to April 2014 14 Months P6.45 to P10.00 44%
PLDT TEL June 2013 to April 2014 10 Months P2,902.00 to P3,260.00 16%
Banco De Oro BDO April 2013 to August 2014 16 Months P89.60 to P93.00 24%
Meralco MER January 2013 to April 2013 3 Months P268.00 to P377.00 28.05%
First Phlippine
FPH June 2011 to June 2013 25 Months P63.18 to P95.20 32.92%
Holdings
JG Summit Holdings JGS February 12 to October 2013 18 Months P25.75 to P43.50 39.96%
D&L Industries DNL February 2013 to April 2014 14 Months P6.45 to P10.00 44%
P2,902.00 to
PLDT TEL June 2013 to April 2014 10 Months 16%
P3,260.00
Banco De Oro BDO April 2013 to August 2014 16 Months P89.60 to P93.00 24%
(Disclaimer: Past performance doesnt guarantee that youll have the exact same results in the future. After all, your
earnings all depend on the markets performance.)