Trading Guide Philstocks Research JUSTINO B. CALAYCAY, JR Date : June 29 - July 10, 2020 VP-Head, Research & Traditional Sales +63 (2) 8588-1962 NOW JAPHET LOUIS O. TANTIANGCO Sr. Research Analyst TRADE TP: Php 2.35 +63 (2) 8588-1927 PIPER CHAUCER E. TAN Engagement Officer/Research Associate +63 (2) 8588-1928 KEY MARKET STATS CLAIRE T. ALVIAR Last Traded Price (PHP) 2.06 Research Associate Source: Philstocks Research , PSE +63 (2) 8588-1925 Entry Point (PHP) 2.00 - 2.10
Cutloss Price (PHP) 5% below entry Key Investment Highlights Ground Floor, East Tower PSE Center, Tektite Towers Aims to deploy 5G Fixed Wireless Access network in Potential Upside / Downside (%) 17.50 - 11.90 Ortigas Center, Pasig City NCR and nearby areas over 5 years. 52 wk low and High (PHP) 1.00 - 4.78 PHILIPPINES Businesses’ digitization plans offer opportunities. 20 MA Volume 8.19 M Share price is currently forming a triangle pattern. DISCLAIMER P/E Ratio (x) 438.30 The opinion, views and recommendations P/B Ratio (x) 1.76 YTD Net Foreign Transaction (as of June 26, 2020): contained in this material were prepared by YTD performance (%) -17.27% Php2.85 M the Philstocks Research Team, individually and separately, based on their specific sector assignments, contextual framework, HOME personal judgments, biases and prejudices, time horizons, methods and other factors. BUY TP: Php 9.45 The reader is enjoined to take this into account when perusing and considering the contents of the report as a basis for their stock investment or trading decisions. Furthermore, projection made and presented KEY MARKET STATS in this report may change or be updated in Last Traded Price (PHP) 7.27 between the periods of release. Ergo, the validity of the projections and/or estimates Source: Phiilstocks Console, Trading View Entry Point (PHP) 7.00 mentioned are good as of the date indicated Cutloss Price (PHP) 6.65 Key Investment Highlights and may be changed without immediate notification. Potential Upside / Downside (%) 14.00 Trading range is at P7.00 to P8.00. 52 wk low and High (PHP) 4.25-11.82 This report is primarily intended for Foreigners turned net buyers, ytd. information purposes only and should not be 20 MA Volume 285.30k One of the firms to adapt immediately to the “new nor- considered as an exclusive basis for making P/E Ratio (x) 20.19 mal” and has reported positive 1Q earnings. investment decision. The recommendations contained in this report is not tailored-fit any P/B Ratio (x) 2.15 YTD Net Foreign Transaction (as of June 26, 2020: Php136.32M) particular investor type, situation, or YTD performance (%) -37.54 objective and must not be taken as such. Determining the suitability of an investment remains within the province of the investor. MWIDE Our estimates are based on information we believe to be reliable. Nevertheless, nothing TRADE TP: Php 8.36 in this report shall be construed as an offer of a guarantee of a return of any kind and at any time.
KEY MARKET STATS Rating Definitions: Last Traded Price (PHP) 7.17 BUY - More than 15% upside base on the target price Source: Philstocks Console , Trading View Entry Point (PHP) 6.90 –7.15 in the next 9-12 months Key Investment Highlights Cutloss Price (PHP) 6.00 Positive sentiment on easing restrictions HOLD - 15% or less upside or downside in the next Potential Upside / Downside (%) 16.92- 21.16 9-12 months Short term rally may provide short term gain from vol- 52 wk low and High (PHP) 4.54 - 25.00 ume driven rally SELL - More than 15% downside base on the target price in the next 9-12 months 20 MA Volume 10.18M Risk on-COVID-19 resurgence that may result to halt P/E Ratio (x) 23.07 construction projects may hurt MWIDE TRADE - A potential 10% and above short-term upside base on entry price and selling price. P/B Ratio (x) 1.093 YTD Net Foreign Transaction (as of June 11, 2020) : Php - YTD performance (%) -56.23 820.75Mn
Philstocks Research 2020 1 |Page Now Corporation [PSE:NOW]
Philstocks On-Balance View: TRADE
Short-term Initial target Price: P2.35 Entry Price: P2.00 - P2.10 Cut-loss Point: 5% below entry Research Analyst: Japhet O. Tantiangco PHILSTOCKS ACTION PLAN
Despite lower Q1 and possibly Q2 2020 earnings due to the impact of the ECQ, NOW’s 5 year 5G Fixed Wireless Access Plan for NCR and nearby areas offers bright prospects for the firm coupled with the economy’s move towards digitalization amid the new normal. Risks to NOW’s future however is the expected tightening of competition in the telecommunications industry and a prolonged macroeconomic weakness which could reduce overall demand for the telecommunication services. Currently, its share is forming a triangle pattern. A breakout above the triangle could lead to a continuation of the stock’s rally.
FINANCIAL HIGHLIGHTS
BALANCE SHEET INCOME STATEMENT
In Million Pesos In Million Pesos (Except for Per Q1 2020 Q1 2019 % Change (Except for Per Q1 2020 Q1 2019 % Change Share ) Share) Current Asset 650.86 582.49 11.74% Revenue 47.94 49.88 -3.89% Total Asset 2,204.50 1,933.60 14.01% EBITDA 7.62 11.70 -34.87% Current Liability 337.49 484.48 -30.34% Operating Income 5.72 9.86 -41.99% Total Liability 389.60 535.08 -27.19%
Total Equity 1,814.91 1,398.52 29.77% Net Income 1.81 5.32 -65.98%
BVPS 1.17 0.77 51.95% EPS 0.0012 0.0035 -65.71%
Source: Now Corporation First Quarter of 2020 financial and operating results
4.00
3.50 3.00
2.50 Q1 2019 2.00 1.50 Q1 2020
1.00 0.50
0.00 Current Ratio Asset Turnove r Debt to Asset Debt to Equity Equity Multiplier
10.00%
8.00%
6.00% Q1 2019 4.00% Q1 2020
2.00%
0.00% Operating Margin Net Margin ROA ROE
Source: Now Corporation First Quarter of 2020 financial and operating results (Ratios are based on Q1 2019 and Q1 2020 trailing 12 months data)
Philstocks Research 2020 2 |Page INVESTMENT NARRATIVES
Subsidiary Now Telecom plans to deploy 5G Fixed Wireless Access network in the National Capital Region and areas north and south of it over a period of 5 years. The plan will offer 10 gigabit per second. Capital Expenditure allotted for the plan is about $713 million, most of which will be used to acquire 5G New Radio equipment.
Coronavirus induced new normal compels businesses to pursue digital transformation plans setting up opportunities for the telecommunications industry moving forward.
Shift of activities such as schooling to indoors amid lingering COVID-19 risks also offer opportunities.
TECHNICAL ANALYSIS
NOW is currently in a tightening consolidation, forming a triangle pattern with the trend support and resistance’s convergence point seen at around 2.10. This comes after the stock’s rally from its March 19 bottom close of 1.10.
Aside from the ascending trend support of the triangle pattern, NOW has a support level at 2.00. Meanwhile, its 50-day exponential moving average serves as a dynamic support. On the upside, its hurdle is the 200-day exponential moving average and the descending trend resistance of the triangle pattern. Breaching these two would leave the 2.35 resistance as the next target.
The stock’s On Balance Volume has formed an uptrend implying an accumulation bias.
RISKS
Fierce competition expected as PLDT, Inc. and Globe Telecom, Inc. continue to upgrade their network services in preparation for the upcoming third telecommunication’s player Dito Telecommunity.
Prolonged macroeconomic weakness brought by the COVID-19 spread and its consequent social restrictions which may reduce overall demand for telecommunication services.
The company’s network roll out may get delayed if the country reverts back to stricter quarantine measures.
Philstocks Research 2020 3 |Page AllHome Corp. [PSE:HOME]
Philstocks On-Balance View: TRADE
Initial target Price: P8.00—P9.45 Entry Price: P7.00 Cut loss Price: P6.65 Research Analyst: Claire T. Alviar PHILSTOCKS ACTION PLAN
Trading range is from psychological support of P7.00 to P8.00’s resistance area. Short-term uptrend momentum could continue if RSI (14) stays above 50 level, but be cautious as MACD (12,26,9) shows sell signal already. Set a cut loss point, or 5% -7% below your entry point. Meanwhile, second support is at P6.15. Foreigners were net buyers, ytd. Fundamental-wise, it is one of the companies that has reported positive earnings in the first quarter despite the lockdown measures.
FINANCIAL HIGHLIGHTS
BALANCE SHEET INCOME STATEMENT
In Million Pesos In Million Pesos % 1Q 2020 FY 2019 % Change 1Q 2020 1Q 2019 (Except for EPS) (Except for EPS) CHANGE
Current Asset 8,036 8,124 -1.09% Revenue 3,365.90 2,380.55 41.39%
Total Asset 19,899 19,685 1.09% Gross Expense 668.55 402.42 66.13% Current Liability 2,464 2,465 -0.07% Income before tax 385.90 295.91 30.41% Total Liability 7,214 7,270 -0.77% Net Income 270.22 207.15 30.45% Total Equity 12,685 12,415 2.18% EPS 0.07 10.36 -99.32% BVPS 3.38 3.31 2.11%
Source: PSE edge
*Based on 9M2019 earnings
Source: PSE Edge
Philstocks Research 2020 4 |Page INVESTMENT NARRATIVES
Earnings growth momentum in Q1 remained despite temporarily suspension of construction activities amid lockdown measures. Revenues grew 41%, while net income increased 30%.
In order to adapt to the “new normal”, AllHome build pop-up stores that provide essential home products in Villar Group’s supermarkets and it also launched two Viber Communities, first is the “Shop Online at AllHome” for end users, and the second one is “AllHome builders Shopping-targeting contractors and other related professionals.
Share accumulation of foreigners has started on May, bringing year-to-date net foreign buying to P136.32 million.
The reopening of the economy spurs optimism as construction activities resumed; The growth in retail prices of construction materials in NCR picked up by 1% in May which indicates a comeback of growth after lockdown eased.
Its relationship with the Villar Group allows the company to locate and launch new stores in parallel with the development of the residential and commercial projects of the Villar Group.
TECHNICAL ANALYSIS
First trading range would be from psychological support of P7.00 to P8.00’s resistance. If it falls below support level, second support is at P6.15. On a bright side, we see a continuation of an uptrend if RSI (14) stays above 50 level, second resistance is at P9.45. But be cautious at the same time as MACD (12,26,9) shows SELL signal already. Set a cut loss point, or 5%-7% below your entry price.
RISKS
Another suspension of construction activities risk remains, which could be detrimental to the earnings growth.
Employees are still at risk of being infected by the Covid-19 that might affect operations.
Demand may decline as consumers put essential products first.
The market is highly competitive and the company faces competition from foreign and local retailers.
Philstocks Research 2020 5 |Page Megawide Corporation [PSE:MWIDE]
Philstocks On-Balance View: TRADE
Initial target Price: Php 8.36 Entry Price: Php 6.90 - 7.15 Cut loss Price: Php 6.00 Research Analyst: Piper Chaucer E. Tan PHILSTOCKS ACTION PLAN
Trading MWIDE will be based on swing-trade and entry points based on the Fibonacci retracement together with positive sentiment amid resumption of construction activities as government loosens restriction in order to churn up the economy. This will be a much dominated technical play as for the fundamentals for the company we expect that the earning may not recover for the remainder of the years factors are the recognition of expenses and delays for the projects but betting on the demand for construction to recover due to the clarity of the new normal set-up. Caveat on the news that may shake up construction activities as well as air and land transport which MWIDE derives its revenues into
FINANCIAL HIGHLIGHTS
BALANCE SHEET INCOME STATEMENT
In Million Pesos In Million Pesos Q1 2020 FY 2019 % Change Q1 2020 Q1 2019 % Change (Except for BVPS) (Except for EPS) Current Asset 33,832.65 35,465.66 -4.60% Revenue 5,015.92 3,630.05 38.18% Total Asset 79,671.62 80,764.33 -1.35% Gross Expense 4,707.87 3,181.34 47.98% Current Liability 26,753.81 27,999.99 -4.45% Operating Income 308.05 448.71 -31.35% Total Liability 62,257.45 62,765.81 -0.81% Net Income (after Total Equity 17,414.17 17,998.51 -3.25% 208.87 281.66 -25.84% Tax)
BVPS 4.87 5.02 -2.99% EPS 0.08 0.08 0.00%
Source: Quarterly report (PSE EDGE) Company Disclosures
Source: Quarterly Report, Company Report
Philstocks Research 2020 6 |Page INVESTMENT NARRATIVES
We expect construction activities may recover amid government easing restrictions but we think that the earnings for the company may not recover for the remainder of the year as more recognizable expense and delays for the project may incur more losses for the company
Betting on the recovery from construction maybe justified but this will be a shrug off by the near-term headwinds and to give clarity on how will demand for construction will come into play in the new normal may reflect also the investment sentiment towards construction companies
Easing of land and air travel may recover the earnings from MWIDE.
TECHNICAL ANALYSIS
Investors behavior shows bullishness towards the stock as depicted on the recent rally with volume
Accumulation bias towards MWIDE indicates that the movement of the stocks is supported by volume which has a strong conviction of the movement of BEL share price over the past few days
Fibonacci retracements provide support and resistance guides as well as cutloss point for MWIDE (Php 6.00)
If the price hit the cutloss price this may indicate that the trend may be broken and another trend will be formed.
If the 8.36 strong resistance we expect a breakout thus the stock next resistance any may go up to 10.70.
Recent retracement indicate healthy correction as sellers volume may not have strength to pull the shares down thus buyers are still in control in the rally
RISKS
Delays on the project may incur greater losses of which can add to the increase of its expense
If the demand for construction starts to get dimmer amid crisis and further restrictions for travel and construction activities may also hurt revenues coming from these segments
Cutloss point is set to protect the permanent loss of capital
Philstocks Research 2020 7 |Page