Is it A Buying Opportunity For EDC?

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source: http://www.renewbl.com

EDC (Energy Development Corporation) had been one of the heavyweights last year due to the various expansion projects within and outside of the Philippines. 

Recently its price drop again to the 5.50 level brought about by the news from Bacman's non-operation. A report from bworldonline.com says that Bacman is expected to operate this year.

source: http://www.energy.com.ph

With the sudden drop in price, in my personal opinion, it is a good time to enter again EDC. Looking at the price chart the stock is now oversold and on its bounce back to the 6.00 level.

Looking at EDC's latest data from reuters.com, the company is in good shape as far as fundamental are concerned. Its Current ratio still stands at 2.63 while Debt to Equity is at 194 which is still within the industry levels.

source: www.reuters.com

I don't know though until where the price will go down further so the best action to take is to buy small chunks of shares at a price lower than its previous closing price. 

How about you what is your take on EDC's latest price drop? Please share your thoughts in the comment box below.

MERalco: Are the lights brighter?

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source: www.meralco.com.ph

With the recent increase of Manny Pangilinan's First Holdings ownership of Meralco through Beacon Electric Assets Holdings to what direction does Meralco will go?

Once one of the Lopez group's gem, Meralco is the leading power distribution corporation in Philippines. The latest move by the Lopez group to sell most of their subsidiaries to focus on their main business, broadcasting, gave other companies like Manny Pangilinan's MPIC to expand their infrastructure in the Philippines.

The latest movement inside Meralco has been pushing Meralco's market price and it might hit the resistance price of 300 per share. As of last friaday's trading, Meralco's share is at Php 274.00 share.

MVP has been known for his Midas touch and everybody seems to jump in Meralco. 

With the known resistance at 300.00 could we still join the bandwagon and buy MER at 274.00?

Fundamentally, MER is okay with a Current ratio of 1.65 and Debt - Equity of 45.75. Technically with a PE ratio of 26.46, it may seem overvalued already.(Data from http://www.reuters.com/finance/stocks/).

One key development being made by Meralco is the introduction of prepaid electricity use. As mentioned in the Business Mirror, Meralco is in the testing stage if prepaid electricity would be accepted by consumers. This could be a possibility. Such scheme where users can chose how much to pay for their usage is said to be a hit due to the nature of most income earners. Also such scheme will open business just like what prepaid loading stations for cellular use.

With that it could be possible that MER will surpass its 300 level resistance level.

IPO News: SMC Global Power Holdings Corporation

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source: http://www.sanmiguel.com.ph/businesses/

As we already know, Ramon Ang of San Miguel Corporation has been aggressively diversifying to the power sector and the latest is the listing of SMC Global Power Holdings Corporation.

Below is an excerpt of SMC Global Power Holdings Corporation approved listing: 

 source: Manila Bulletin

SEC Approves SMC Global IPO

By JAMES A. LOYOLA

October 1, 2011, 12:34am

MANILA, Philippines — The Securities

and Exchange Commission has approved the registration of the shares of SMC Global Power Holdings Corporation, paving the way for its P36.9-billion initial public offering – the biggest in the country’s history.

SEC documents show, the IPO will help SMC Global to raise fresh funds to finance the expansion of its power generation assets including the investment of P90 million in the next 5 years to build new power plants.

SMC Global Power plans to raise between P12.76 billion and P27.34 billion from a base offer of 290 million to 385 million primary and secondary shares at a maximum price of P71 per share.

Up to 288.75 million will be primary shares and 96.25 million will be secondary shares held by parent firm San Miguel Corporation (SMC).

million to 77 million primary and secondary shares, which will be sold to domestic investors, as well as an over allotment option of 43.50 million to 57.75 million secondary shares.(to read the entire article click here)

At the beginning most analyst are skeptical about SMC. The main reason for this is SMC under Ramon Ang's leadership has become unpredictable with various acquisitions and sell of its  assets and subsidiaries. 

With the above news analyst will probably take another look at how RSA has been transforming SMC from the company known for San Miguel Beer to a new company that is venturing to energy generation through the Initial Public Offering of SMC Global Power Holdings Corporation.

To date SMC Global Power Holdings Corporation has 4 power plants in Luzon under IPPA contract: Sual Power Plant(Pangasinan), Ilijan Power Plant(Batangas),San Roque Power Plant(Pangasinan), and Limay Power Plant(Bataan).

The planned IPO said to be the biggest for the Philippines to date is to expand SMC Global's network of energy generation and other corporate expenditures. 

San Miguel will be well positioned in the energy generation sector with SMC Global's IPO that will help finance expansion projects, with its shareholdings in Meralco for power distribution, and coal mines in the Southern part of the Philippines. These key industries to which San Miguel has been focusing will be the driver for SMC to once more be one of the most sought after corporation in the Philippines.