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The information contained herein is based on sources which we believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. This firm and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
Electrifying
by Prince Anthony A. Yeung
Tuesday, July 27, 2010
Meralco
(MER, up 5.03% to P188.00) jolted the main index ( 3,436.59) to a
gain of 22.56 points or 0.6%. Focus was on blue chips as investors
position themselves for the upcoming earnings reports. Meralco was
first as it disclosed that its first half core net income grew by
over 80%, a big reason for the stock's performance today. Other
active main index issues included PLDT (TEL, up 0.25% to P2,436.00),
Metrobank (MBT, up 0.51% to P58.60), and Aboitiz Power (AP, up 2.91%
to P19.80). PLDT and AP will announce their first half earnings next
week while MBT will announce theirs along with other banks soon.
Trading
activity was better today as a total of 651 million shares amounting
to P3 billion changed hands today, just slightly below the average
for the year. Most trades were buying as the main index steadily
climbed as the session wore on. Market breadth was positive as there
were a little bit more advancers than decliners. Investors and
traders are starting to familiarize themselves with the changes as
there was evidently more use of the smaller price fluctuations
compared to yesterday. All sub-indices were higher except for the
Mining sub-index. The market opened late due to a technical problem
but was smooth throughout trading.
Consolidated
revenues of Meralco grew by 35% in the first half as energy sales
grew by 14% to 14,950 Gwh. The increase in core net income was
largely due to the allowed rate hike under the Performance-based
Regulation (PBR). Distribution charges were hiked to P1.4917 this
year after being increased to P1.227 last year. Lower system losses
also contributed positively. After struggling with high system losses
for a long time now, MER was able to push system losses to below the
8.5% cap set by the ERC. Also, the company decided to give out a cash
dividend of P2.50 per share, approximately half of its first half
EPS.
President
Aquino's SONA did not have much of an effect on the local stock
market. With that over and done with, investors now look towards the
next catalyst for the market: 2nd
quarter/1st
half earnings. Some companies such as EDC and MER have already
released their results but majority have not. Next week will bring
about a host of reports from index issues such as PLDT, Globe,
Aboitiz Power, Aboitiz Equity Ventures, and FLI. Banks are also
expected to be among the earliest to release their results although
most do not conduct briefings. Investors are advised to position in
stocks that are seen to release impressive first half results. Which
stocks move in the coming days will reveal just what the market is
expecting in terms of who did well and who did not.
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