Get Wealthy In


Eliminating the “swing votes”. Philex’s CEO Walter Brown and Vice chairman Roberto Ongpin,
together with DBP, have agreed to sell a combined 452Mil shares or 9.24% of Philex to the First
Pacific Group for Php9.5Bil or Php21.00/sh. This effectively increased Fist Pacific’s stake in Philex
to 40%.
Expecting a correction in share prices. We expect this development to trigger a sharp
correction in Philex’s share price. The likelihood that there will continue to be a battle for control
is now very small given that the next biggest shareholder is SSS with a 22% stake. Any party who
would like to challenge First Pacific will have to acquire more than 18% of Philex in the open
market. This should prove to be a very difficult feat. We also do not expect any tender offer to
take place. First Pacific acquired its shares over a span of more than one year. Moreover, although
it is the biggest shareholder, it does not own more than 50% of the company. Finally, Philex’s
valuation is very expensive. Based on our estimates, Philex’s fair value is only Php6.90/sh, only a
third of the price paid by First Pacific.
Reiterating SELL rating. We have a SELL rating on PX given the stock’s unattractive valuation.
Although the recent rally in copper and gold price has improved Philex’s earnings outlook and
the viability of the Boyongan Project, the stock’s current valuation can not be justified.
Entry credit: CitisecOnline.com
Make your christmas a fulfilled one. Need of a business christmas gift? You better think right now!

The Philippine Stock Exchange (PSE) approved in August 2009 rules to exempt certain stocks from the price trading band or the limit in the increases or decreases of stock prices within the day.

Trading band: Max 50% price increase; max 40% price decrease

Stocks traded on the PSE currently have a limit of 50% in terms of price increases (price ceiling) and 40% in price decreases (price floor). This trading band is supposedly installed to protect investors from price volatility.

With the August 26 memorandum, the PSE agreed to lift the trading band in the following scenarios:

1. When trading resumes for securities that have been suspended for a period of one year or more;
2. When the Exchange determines that: (a) there has been an event or occurrence that may cause the price of the security to change drastically; or (b) the application of the trading band on the price may render impractical the trading of the security upon prior notice by the Exchange as may be warranted under the circumstances.

Stockbrokers see a benefit to the trading band exemption primarily with regard to the first scenario because, according to them, a stock suspended for more than a year will have to catch up with its fair market value upon resumption of trading.

Read more at pinoymoneytalk.com

Big time stock market veterans might be on the verge of bid war in acquiring shares of ownership with Philex Mining (PX). Be expecting the two big group who are suspected to be responsible on Meralco’s (MER) sudden boom in price value for the past months will continue to do some bidding business!

To quote a post from pinoymoneytalk.com”

In just one week, the price of PX has ballooned by 36%, closing today (August 11) at P10.75.

Look at the recent 3 trading days’ price increase of PX:

* August 7: Closed at P9.00; up 13.9% from previous trading day
* August 10: Closed at P9.90; up 10.0%
* August 11: Closed at P10.75; up 8.6%

Are you interested in buying PX now? Buy at 10.50 or below. Target to sell at 12. But hold to buy at 9 just in case it goes south. Note, PX is quite into the bullish trend and our current market is not yet so BULLISH yet. So how much more if it is? Profit! This is just my view, if you take it, it’s up to you. Happy trading!

This is an excerpt on the news published by www.gmanews.tv regarding President GMA’s undeclared wealth in houses and in stocks.

Few profitable firms

The president, according to SEC records updated as of October 2008, still has business and financial connections in at least five entities: Optima Research & Consultancy Agency, Inc., incorporator as of Sept 15, 1980; L.T.A. Realty Corp., incorporator, as of Sept. 28, 1992; EVA Development Corp., incorporator/board member, as of May 18, 1993; Circulo Pampangueno of Guam, Inc., board member, as of Sept. 29, 1997; and Centrist Democrat International Asia-Pacific, Inc., stockholder, incorporator, board member, as of July 24, 2005.

The First Gentleman, by the SEC’s records, still has business interests and financial connections in at least nine entities: Trans Realty Co., Inc., incorporator, as of Oct. 8, 1980; Raco-Trading Philippines, Inc., incorporator, as of Oct. 9, 1980; L.T.A. Realty Corp., incorporator, as of June 28, 1982; Aviatica Travel & Management Corp., incorporator, as of July 22, 1987; Eva Development Corp., incorporator, board member, as of May 18, 1993; Philippine Blooming Trade and Development Corp., incorporator, as of Sept. 5, 1995; and Pacific Mint International Corp., incorporator, board member, as of May 15, 1997.

The First Gentleman is also connected with three foundations: Ateneo Law Class ’72 Foundation, Inc., board member, as of March 14, 1996; Kaibigan ni Gloria Macapagal Arroyo Foundation, board member, as of May 17, 1999; and First Gentleman Foundation, Inc., incorporator, as of May 28, 2002.

All these firms are not listed in the SALNs that Arroyo filed from 2001 to 2008. But since most are not particularly big or profitable, they could not have served as sources of the First Couple’s additional cash or equity shares.

Could she forget that she owns a couple of shares on the above-mentioned companies? These are all speculations for now until further investigation proves it. Now, do you find investing in stock market as one of the profitable way to earn big (think of dividends)? Let’s start and make also our own way to stock market investment.

I have never profited from my office – GMA

Philstar.com – Tuesday, August 11Send IM Story Print
MANILA, Philippines – President Arroyo maintained yesterday that she has never and will never use her position for personal profit even as she strongly denied manipulating her statements of assets, liabilities and net worth (SALN) that showed her net worth doubling in the last eight years.

Her lawyer, Romulo Macalintal, said the President vehemently denied “any report or speculation alleging defect or her non-compliance with the law in filing her SALN.”

A report from the Philippine Center for Investigative Journalism (PCIJ) said that based on her SALNs, Mrs. Arroyo’s declared net worth more than doubled from P66.8 million in 2001 to P143.54 million in 2008, or bigger than the combined growth in declared wealth of her three immediate predecessors, including former President Joseph Estrada, who was convicted for plunder.

“The President reiterates that she has never used and will never use or take advantage of her position for personal profit as she had declared in her State of the Nation Address and as expected of her by the people,” Macalintal told a news conference at the Palace that was also attended by First Gentleman Jose Miguel Arroyo’s lawyer, Ruy Rondain.

He said he spoke over the phone with the President who was in Ilocos Norte yesterday and received instruction that he speak for her on the matter. She did not sound upset, he said.

He said Mrs. Arroyo prepared and signed her SALN under oath to the best of her knowledge and in full compliance with the Constitution.

“She honestly believes that she has been very transparent on her assets and liabilities and she has nothing to hide,” Macalintal said.

He said the report insinuating irregularities in the preparation of her SALN “is most unfair and uncalled for.”

He said the report “would accuse the President’s SALN as somewhat irregular just because she reported an amount bigger or higher than her predecessors.”

“We do not know what standard used by the reporter in coming up with her analysis. It is as if that if you reported a big asset, this must be investigated; if small, it’s okay and there should be no more investigation,” Macalintal said.

He said Mrs. Arroyo is inviting anyone to question before the Office of the Ombudsman, where the SALNs are filed, “if he or she has any evidence that the President violated or did not comply with the constitutional requirements in the filing of such disclosure documents.”

He said the President filed her SALNs in good faith and without any intention to deceive anyone.

“Those who alleged otherwise should come up with evidence to prove their uncalled for or self-serving accusations instead of being speculative or judgmental on the matter,” he said.

Macalintal and Rondain said if there were any vagueness in the SALNs, the Office of the Ombudsman should have already pointed out the matter to the First Couple.

Rondain also criticized the article’s use of the term “token compliance” to describe the First Couple’s handling of the requirements of the law.

“Under the law, there’s no such thing as token compliance. Either you comply with the law, with the requirements or you don’t comply. Either you’re alive or dead,” Rondain said.

On the issue of the alleged non-disclosure of the First Couple’s business in the stock market, he said the data is open and available in the records of the Philippine Stock Exchange.

“My feeling is that if the PCIJ has any evidence, it would be better if they bring it out. Because the report is just full of insinuations,” Rondain said.

“It’s a clear indication that democracy is in action in the Philippines and nobody is prevented from making this report but of course the President expects the report to have evidence and not based on speculations,” Macalintal said.

A lot of explaining to do

Senators said the president has a lot of explaining to do regarding the allegations in the PCIJ report.

Senate Minority Leader Aquilino Pimentel Jr. said every public official should account for the wealth he has acquired as stated in the Constitution and the Anti-Graft and Corrupt Practices Act.

Sen. Manuel Roxas II said the Office of the Ombudsman should be the one to look into accountability of a public officials but it was unfortunate that the anti-graft body was sitting on many scandals involving the Arroyo government.

“Of course it will raise eyebrows and the people will wait for an explanation on how it happened because she has no other businesses that can be the source of (her additional wealth),” Roxas said.

Senate President Juan Ponce Enrile said it would be wise to check the income taxes filed by Mrs. Arroyo.

Enrile said the figures must be justified. “I’m a lawyer, I know how to handle that,” he said.

Roxas said if the President and her financial advisers would say she earned from her shares of stocks, it would be good to check the rates at the time she said she made money out of them.

Sen. Francis Escudero said he had not seen the SALNs of the President but that her salary was considerably low.

Moreover, he said, there is always conflict of interest when a president ventures into a business.

“There is also a worldwide crisis not only in the Philippines, so you wonder why her wealth grew much bigger considering ordinary interest rates, ordinary return on investments on any business that one gets into,” Escudero said.

“I hope she will put that in her SALNs, the explanations of where her wealth came from and that she must be transparent along with the public officials,” Escudero said.

Escudero said it’s doubtful that the wealth had been acquired legally by the President and that her lawyers’ defense should be examined in detail.

Confirmation

The United Opposition (UNO) said it is seriously concerned over reports of “exponential growth” in the wealth of President Arroyo and her family during her term, which exceeded the growth in the wealth of all the three presidents before her, spokesman Ernesto Maceda said yesterday.

“The PCIJ report confirms what people have long known. Arroyo has flouted the rules on accountability and transparency in government and has made a bad example for the million and a half other civil servants running the government,” Maceda said.

“Now we know why she has made token compliance to the requirement of regularly stating a public official’s assets. It’s because she has much to hide. In her eight years in office, Arroyo’s declared net worth more than doubled, from P66.8 million in 2001 to P143.54 million in 2008. The increase of P76.74 million represents a growth rate of 114 percent.” Maceda said quoting the PCIJ report.

Maceda said the PCIJ report showed that the late President Corazon C. Aquino’s declared net worth grew by only 4.8 percent from 1989 to 1992.

He said, by comparison, Fidel V. Ramos’ rose by 34.2 percent from 1992 to 1998, and Joseph ‘Erap’ Ejercito Estrada’s, by 7.2 percent from 1998 to 1999.

If various allowances are thrown in, Mrs. Arroyo’s monthly pay would total P100,000 at most or P1.2 million a year before tax. Yet even then, this represents only 10 percent of the P10.97-million average annual increase in Mrs. Arroyo’s net worth since 2001.

The president’s SALNs, however, offer few clues to explain the big difference, or whether she has other lawful sources of income.

PCIJ said that since 2001, the president has apparently taken the path of “token compliance” instead of going for full disclosure in form and substance of her assets and liabilities, in accordance with the Constitution. As a result, her SALNs in the last eight years have been remarkably full of gaps in data.

Allies come to GMA’s defense

Mrs. Arroyo’s allies at the House of Representatives defended her from insinuations that she had enriched herself during her eight years in office.

Isabela Rep. Rodolfo Albano III saw nothing wrong in Mrs. Arroyo’s net worth since her wealth came from legitimate sources.

“Baka nga interes lang ng pera iyan sa bangko o kaya sa stocks, shares and other investments,” he said.

“Critics are trying to throw everything because they have no more legitimate issues to raise. It is very clear that politics is behind everything.”

Camiguin Rep. Pedro Romualdo said the report on Mrs. Arroyo’s wealth is incomplete.

“It should have included details about the increase on President Arroyo’s net worth,” he said.

Romualdo said being an economist, Mrs. Arroyo had made some good significant investments that earned dividends.

“It seems that the battle among newspapers to boost its circulations is to report negative stories,” he said.

“How about good news? What happened to the positive gains of this administration? Do these good stories and positive achievements of the administration have been given enough space and prominence?” — with Aurea Calica , Jose Rodel Clapano, Delon Porcalla, Jess Diaz – By Paolo Romero (Philstar News Service, www.philstar.com)

Entry Credit: http://ph.news.yahoo.com

Rise and fall of Meralco: Your questions answered
PHILEQUITY CORNER By Valentino Sy (The Philippine Star) Updated August 03, 2009 12:00 AM

We have received many queries on the recent price action of Meralco. Many are still befuddled on the steep rise and the equally sharp fall of its stock price. Last week, market watchers have been asking why Meralco shares have gone up to a closing price of P205 per share. They commented that at P205 per share it was already overpriced.

However, after Meralco reached P302.50 per share this week, the same people are questioning why it dropped when in fact it closed at P229 per share, which is 12 percent higher than the previous week’s close.

Because of the many queries of our readers and investors, we are changing the format of our column today to a question and answer (Q&A) type.

1) Why did Meralco’s share price zoom to astronomical levels these past few weeks?

In our article Turf Wars (see July 13, 2009 issue of The Philippine Star), we said that Meralco’s price action continues to defy gravity because the battle for control, given the limited free float circulating, is exerting upward pressure on the share price.

We mentioned the possible scenarios:

a) That the PLDT Group or the SMC group may be buying in the market to get a majority stake,

b) That fund managers sympathetic to either side may be accumulating

c) That a risk arbitrageur may be gobbling up the free float with the intention of selling the shares to the highest bidder

d) That maybe all of them are doing the buying at the same time.

Note that buying in the market is less costly than for one party to buy the other out which would trigger a tender offer for all the shares.

2) Why did it reach a staggering level of P302.50 per share?

It appeared that the race to own 50-percent stake + one share was decided by “photo finish”. Therefore that last one or two percent — which matter the most — commanded a huge premium. Buying two percent of the company at P300 per share to gain control is actually cheap.

Morover, many fail to realize that the bulk of the stakes of PLDT Group and SMC Group are priced at P90 per share (in SMC’s case it is even less because it is payable in three years).Thus, even if the winning bidder paid P300 per share for the last two percent, the average cost would just be a little over P90 per share.

3) Why did the Meralco drop sharply after reaching P300 per share?

To the experienced eye or seasoned investors, the block of shares that was crossed at P300 per share last Wednesday was a clear signal that the game was over. It was clear at that instance that one party sold and that the other party bought the deciding block.

It did not really matter which party won. It was apparent that when the fight for control was over, the demand for the shares and the buying frenzy would no longer continue.

4) Why is that block of shares traded on Wednesday a game-changer?

It was a game-changer because that block of shares represents nearly two percent of Meralco. Therefore it meant minus two percent for one side and plus two percent for the other side – a swing of around four percent.

5) So, who eventually got control of Meralco?

A quick look at the PSE quotation report last Wednesday showed a net foreign buying of P2.03 billion. A foreign broker known to be used by the PLDT Group and foreign funds sympathetic to PLDT crossed 6.7 million shares last Wednesday. Meanwhile, a local broker which represented one of the local funds sympathetic to the SMC Group crossed six million shares.

Apparently the funds that are allies to SMC Group flipped and sold to the highest bidder. Obviously, the PLDT Group now owns the majority of Meralco.

6) Why is getting control of Meralco important for PLDT?

The PLDT group sees real synergies between Meralco and PLDT. The company mentioned eight specific areas where they can work together, namely: powerline broadband, fiber optic backbone network, electric power poles, easements and rights of way, prepaid electricity service, business offices, ICT or data center, bill statement printing & enveloping and access to subscriber base.

Moreover, losing Meralco at this point, when it has already invested billions of pesos, would be disastrous for PLDT. In fact, PLDT’s share price has lagged the market during the battle for control of Meralco but when it was clear that PLDT maintained control, the stock price went up.

7) What do we do now with Meralco?

For those who have a short-term perspective, especially the punters, the answer was clear. If the fight for control is over, they have no choice but to sell.

For those with a long-term view, PLDT Group’s entry in Meralco brings many opportunities. Manny Pangilinan’s track record of turning companies around, cost-cutting and creating synergies to optimise profits and enhance shareholder value is definitely a positive for the stock. MVP has proven this in PLDT with its shareholder value and stock price steadily increasing since he has taken over.

While Meralco’s stock price has gone up too fast too soon, the company has a strong franchise, a good business model and sound fundamentals.

Is the turf war over?

As far as the fight for control of Meralco is concerned, the game is over. But in other battle turfs, the war would probably continue as both parties are involved in telecommunications, infrastructure and other businesses in the Philippines.

Lessons learned

The meteoric rise in the share price of Meralco and the sharp drop afterwards provide valuable lessons for investors.

1) One important lesson is that you should do your own research rather than following without thought what your brokers are doing. In Meralco’s case, most brokerage houses had recommended a SELL on Meralco when it first reached P90 per share. Their recommendation may have been based on fundamentals, not considering the battle for control.

But if you did your homework and realized that there was a battle for control and limited free float circulating, you would have known that the rich valuations were justified.

In the same manner, when the race to get majority is over, you should recognize that valuations will revert back to fundamentals.

2) Another lesson is that you should follow strictly your investment profile. If you are a short-term trader, you should be alert and nimble because while profit potential is high, volatility at the turn will be wild.

If you are a retail punter, it is important to do your homework rather than following blindly what bigger brokers or investors are doing. In this case, the block sale of Meralco may have triggered an immediate change in view from these investors. Instead of being buyers, they may have become sellers.

Finally, if you are a long-term investor, you should buy when the price is being offered at a bargain or as Warren Buffet and Benjamin Graham put it “you should buy when the price of a stock offers a huge margin of safety.”