RP stocks drop on profit-taking

RP stocks drop on profit-taking

By Ian C. Sayson

Bloomberg

THE Philippine stock index lost the most in three weeks. Equitable PCI Bank and Jollibee Foods Corp. led the slide among stocks that has boosted the measure in the past two days to a 10-year high. “Investors are taking a breather,” said James Lago, head of research at Westlink Global Equities in Manila. “A number of stocks have moved sharply ahead of earnings prospects.” Megaworld Corp. advanced after the company said it will build more office space over the next five years for companies that provide outsourced business, including call centers. The Philippine Stock Exchange index lost 45.81, or 1.4 percent, to 3333.56 at the close, the most since January 26. Losers beat gainers 71 to 52 with 45 stocks unchanged in the broader market. The measure, which advanced 4.5 percent in the previous two days to the highest since February 10, 1997, rose 2.7 percent last week. It is up 12 percent this year, the fifth-biggest gainer among Asia’ main stock benchmarks. Equitable PCI Bank, the nation’s third-largest lender by assets, lost P3, or 2.5 percent, to P115, ending a six-day, 23 percent surge. The stock’s 14-day relative-strength index, a moving average based on whether shares rose or fell, climbed to 92 on Thursday, when the shares advanced to the highest ever. A score of more than 70 indicates to some analysts that the stock is poised to fall. Jollibee Foods, the nation’s largest fast-food company, fell P1, or 2.1 percent, to P47, after a two-day, 12-percent climb lifted it to a record Thursday. The stock is trading at 23 times earnings, compared with a valuation of 17 times for the main stock index.  Far from cheap “VALUATIONS are far from cheap,” Garry Evans, HSBC Holdings Plc’s Hong Kong-based equity strategist, said in a report Friday reiterating his “underweight” call on the Philippines. “We would be inclined to become big buyers only if the stock market were cheap.” Ayala Corp., the nation’s third-largest company by market value, fell P1, or 1.5 percent, to P64. Ayala Land Inc., the nation’s most profitable builder, lost 50 centavos, or 2.9 percent, to P16.75. Ayala Corp. is trading at 26 times prospective earnings, compared with 19 percent for the benchmark. Ayala Land is trading at 43 times. “A large number of share-price targets have been breached, which may result in some consolidation with investors taking profit,” said Gilbert Lopez, analyst at the Manila unit of Macquarie Securities Ltd. Some stocks “no longer provide any share-price upside.”  Outperformers SM Prime Holdings Inc., the nation’s largest shopping mall operator, fell 25 centavos, or 2 percent, to P12.25, after advancing 6.4 percent in the previous two days. SM Investments Corp., the nation’s second-largest company by market value, declined P10, or 2.5 percent, to P390, after advancing 3.9 percent in the previous two days. SM Prime and SM Investments are some of the stocks rated “outperform” by Lopez that have already breached his 12-month share price targets, he said. His target for P12.30 for SM Prime and P365 for SM Investments. Separately, Megaworld, a builder of office and residential towers, added 5 centavos, or 1.6 percent, to P3.20, extending a two-day, 19-percent climb. The company said after trading closed Friday that it will build 5.4 million square feet of office space within five years, with as much as half that target completed in two years. Shares worth P6.54 billion pesos were traded Friday, more than double the six-month daily average. Losers beat gainers 71 to 52, with 45 stocks unchanged in the broader market.

 

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