Weekly Notes May 31, 2021
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Weekly Notes Monday, May 31, 2021 WEEKLY MARKET STATS Reference: Japhet Louis O. Tantiangco INDEX VALUE PTS PCT YTD % PSEI 6,674.51 475.26 7.67% -6.52% Fruitas Holdings, Inc. [PSE: FRUIT] ALL 4,047.48 204.75 5.33% -5.27% FIN 1,417.63 45.16 3.29% -2.07% TRADE STP: Php 1.45 - Php 1.47 IND 8,989.64 411.52 4.80% -4.30% HDG 6,728.41 583.87 9.50% -8.51% PRO 3,273.72 272.79 9.09% -10.66% SVC 1,510.84 57.15 3.93% -0.21% M&O 9,416.64 105.41 1.13% -1.17% FRUIT through its subsidiary aims to acquire certain assets of Balai Pandesal Corporation ASIAN MARKETS (AS OF MAY 28, 2021) Last week, FRUIT managed to get past its 10-day and 50-day exponential moving average INDEX VALUE PTS PCT YTD % (EMA). Currently, it is being hindered by its 200-day EMA from climbing further. Nikkei 225 29,149.41 831.58 2.94% 6.21% Hang Seng 29,124.41 665.97 2.34% 6.95% OUR VIEW FOR THE WEEK Shanghai 3,600.78 114.22 3.28% 3.68% KOSPI 3,188.73 32.31 1.02% 10.97% HCM 1320.46 36.53 2.85% 19.62% SET 1,581.98 29.54 1.90% 9.15% STI 3,178.50 60.61 1.94% 11.77% KLCI 1,594.44 32.27 2.07% -2.01% Trade cautiously this week as the market may take cues from our COVID-19 situation, latest quar- antine measures, and developments on the Bayanihan 3 Bill. Investors are expected to monitor our JCI 5,848.62 75.50 1.31% -2.18% COVID-19 situation amid the recent spike in cases. A continuation of this surge may temper hopes INTERNALS towards the further easing of quarantine measures in the country, and may even raise worries over TOTAL VALUE 59,804,776,713.96 FOREIGN BUYING 32,356,758,993.62 a retightening of restrictions. This in turn is seen to negatively affect the market. In connection to our COVID-19 situation, investors are expected to watch out for the government’s decision on the quar- AVE VALUE 11,960,955,342.79 FOREIGN SELLING 39,562,834,243.32 antine measures of the country after May 31, 2021. In particular, investors will be watching out for BLOCK 10,029,749,967.40 NET FOREIGN (7,206,075,249.70) the decision with respect to the National Capital Region Plus which houses the top contributing region to our economy. Developments on the Bayanihan to Arise as One (Bayanihan 3) Bill are also expected to be monitored as it is set up for a 3rd and final reading at the House of Representatives. Further progress on the passage of the bill may spur market optimism. Setbacks on the passage however are expected to lead to the contrary. The market may also take cues from the upcoming economic data this week including the IHS Mar- kit Philippines Manufacturing PMI, and inflation data, both of which are for May 2021. Chartwise, the PSEi’s immediate support now is seen at the 6,600 level followed by the 200-day exponential moving average which closed last week at 6,584.98. Its immediate resistance on the other hand is seen at the 6,900 level. OTHER MARKET SNAPSHOTS Brent Crude $69.01 3.49% WTI Crude $66.66 4.37% Gold $1,903.60 1.16% Source: TradingView Silver $28.06 1.48% MARKET WRAP Copper $467.18 3.61% US$:Php 47.81 -0.29% The local market rallied last week by 7.67% on the back of optimism towards the local economy. This US 10 Yr Yield 1.58% 1.58% (May 21, 2021) comes amid the approval on 2nd reading of both the Bayanihan to Arise as One Bill, and the Resolu- tion of Both Houses No. 2 which seeks to ease restrictions on foreign investments. S&P Global Rat- ings’ affirmation of the country’s BBB+ credit rating also helped in last week’s positive sentiment. Philstocks Research 2021 1 |Page Trading was lively with net value turnover averaging P9.96 billion per day, above the preceding week’s average of P5.07 billion and the year-to-date average of P8.11 billion. Foreigners were still Philstocks Research net sellers however with last week’s net outflows amounting to P7.21 billion. All sectors advanced led by the Conglomerates surging 9.50% w/w. JAPHET LOUIS O. TANTIANGCO JG Summit Holdings, Inc. [PSE: JGS] led the index members jumping 17.81% w/w to P58.20. First Senior Supervisor—Research Gen Corporation [PSE: FGEN] lost the most, falling 4.01%% w/w to P28.70. +63 (2) 8588-1927 MARKET NEWS CLAIRE T. ALVIAR Senior Research and Engagement Officer S&P Global Ratings maintains the Philippines’ BBB+ credit rating together with a stable +63 (2) 8588-1925 outlook on the back of expectations of a robust economic recovery which will help the country’s fiscal position improve. The credit rating institution pointed to the country’s vaccination program, COVID-19 virus containment, strong external position, and fiscal and infrastructure reforms Ground Floor, East Tower as factors for the recovery. (BusinessWorld) PSE Center, Tektite Towers With the aforementioned credit rating and outlook, the Philippines may borrow offshore at relatively Ortigas Center, Pasig City PHILIPPINES lower rates. This can allow our government to raise funds more easily which in turn can be used for fiscal programs that can provide support to our economic recovery. Also, the maintained credit rating and outlook may raise foreign investors confidence towards the local economy. This may then lead to DISCLAIMER more foreign investments in the country. The opinion, views and recommendations Growth in retail prices of construction materials in the NCR increased in April at 1.3% y/y, contained in this material were prepared by against 1.2% growth in March from the report of PSA. This was driven by logistical bottlenecks the Philstocks Research Team, individually compounded by modest demand from public and private sector. (BusinessWorld) and separately, based on their specific sector assignments, contextual framework, According to Moody’s Investors Service, the Philippine banks are the most exposed to physical climate personal judgments, biases and prejudices, risk in the Asia-Pacific region. (BusinessWorld) time horizons, methods and other factors. The reader is enjoined to take this into The Bangko Sentral ng Pilipinas is keeping an eye on the rising global oil prices as it may account when perusing and considering the result to second round effects which may push inflation higher. (BusinessWorld) contents of the report as a basis for their stock investment or trading decisions. Furthermore, projection made and presented in this report may change or be updated in between the periods of release. Ergo, the COMPANY NEWS validity of the projections and/or estimates mentioned are good as of the date indicated Trade Fruitas Holdings, Inc. [PSE: FRUIT] and may be changed without immediate Short Term Target Price: P1.45 - P1.47 notification. This report is primarily intended for FRUIT has entered into an agreement wherein it’s subsidiary will acquire the trademark, recipes, information purposes only and should not be certain equipment, inventory, and other technical knowledge of Balai Pandesal. The transaction is considered as an exclusive basis for making aimed to be done by no later than June 30, 2021. Once completed, FRUIT will have five franchised investment decision. The recommendations Balai Pandesal Stores, all of which are in Metro Manila. (PSE Edge) contained in this report is not tailored-fit any particular investor type, situation, or Last week, FRUIT was able to get past its 10-day and 50-day exponential moving average (EMA). objective and must not be taken as such. These are now seen as minor support lines for the stock. Meanwhile, FRUIT is being hindered by its Determining the suitability of an investment 200-day EMA from climbing further. Breaching and sustaining position above the 200-day EMA may remains within the province of the investor. Our estimates are based on information we allow FRUIT to advance towards its 1.45 - 1.47 resistance range. If FRUIT manages to get past this, believe to be reliable. Nevertheless, nothing its next resistance is seen at the 1.60 - 1.63 range. If FRUIT falls below its 10-day and 50-day EMA in this report shall be construed as an offer however, its next support is seen at the 1.30 level. of a guarantee of a return of any kind and at any time. From February 3, 2021 to date, FRUIT’s on balance volume has been somehow showing an accumulation bias. Meanwhile, its MACD line is already moving upwards and has just crossed above the signal line implying upward momentum. These indications are seen to give FRUIT a bullish bias in Rating Definitions: its trading at least in the short run. BUY - More than 15% upside base on the target price The planned acquisition, once done, will expand FRUIT’s capacity as well as its range of products in the next 9-12 months offered to customers. These in turn may help its financial performance recover this 2021. HOLD - 15% or less upside or downside in the next Remember to set a cut loss point 5% below your acquisition. 9-12 months SELL - More than 15% downside base on the target price in the next 9-12 months TRADE - A potential 10% and above short-term upside base on entry price and selling price.