STOCKS 101 | P/E Ratios by Industry (from PSE Data) - End of September 2015

Last August 2015, I released a mid-August Investment Guide tabulating the price-to-earnings (P/E) ratios of some public Philippine companies. It was also on that post linked above where I (somewhat po hehe) thoroughly explained what a P/E ratio is and does.

(I'm making this post extremely short para 'di na po kayo ma-bore hehe. Enjoy and have a good one!)

Today, I am posting an updated list of P/E ratios for several PH companies that are being traded in the market. It can be noted that since the one-day 7.20% loss in August 24, some stocks have managed to recover, while others continued their downward trend.

What I discovered is that almost all companies had their P/E ratios lowered which means, from a value investor and share price-point perspective, some stocks are less expensive (or in another sense, cheaper) than they were in August. So, how do these stocks' P/E ratios fare relative to its competitors in the same sector/category?

1. BANKS AND FINANCIALS

It must be noted, however, here that price-to-book (P/B) ratios are better indicators for banks because they have a lot of assets and liabilities that are constantly valued at market prices.

P/E Relatives

Cheapest: UBP, RCB

2. COMMERCIAL AND INDUSTRIAL

P/E Relatives

Cheapest: EEI, IMI, MWC

Some companies are a bit highly priced like media companies ABS and GMA7 because they know election is just several months ahead. And election means big bucks! ICT, if I remember, had a P/E of 30+. Now, it's nearing the 20-level, which means it has gotten a lot less expensive. PCOR, on the other hand, still possibly suffering from losses has a negative P/E. This may mean that investor currently value the stock at or pay 46 pesos for every 1 peso loss made.

3. CONGLOMERATES

P/E Relatives

Cheapest: FPH

FPH which holds shares in EDC and FGEN, if I am not mistaken, has the lowest P/E ratio in this list. Some PSEi listed companies like GTCAP, A, JGS, LTG, and SM all are priced higher.

4. CONSUMER

P/E Relatives

Cheapest:  DNL

It's a shocker that DNL is currently having a relatively low P/E (and is the cheapest) considering the fact that it was performing well (skyrocketing extraordinarily) in the past several months. It goes to show that the PH market's overall sentiment could not be estimated. Well, JFC and URC are again two of the most priced (or prized haha) jewels in the stock market. They're some of the investors' darlings; I can say; however, do notice their trends (via Wall Street Journal, PSE Edge, Bloomberg, or your online stock brokers' platform), 

Kids (and investors) just love Jollibee and junkfood, I guess hehe.

5. GAMING

P/E Relatives

Cheapest: RWM

The reduced confidence and potential in gaming firms (70% down, yep you're reading that right) in Macau may have had an indirect impact on investor appetite here in the Philippines. To where is the PH gaming industry headed?

6. MINING, POWER, AND TELECOM

P/E Relatives

Cheapest: NIKL (Mining), TEL (Telecom), EDC and FGEN (Power)

We got some extremes in the mining, telecom and power category. On one hand, NIKL is definitely the second cheapest stock in this guide. What has possibly lowered its P/E? Is it China's (a major nickel importer) slowdown? Meanwhile, EDC and FGEN, two power generating firms, are exposing their affordable value as they have the lowest P/E ratios in this power list. TEL, or PLDT, has just gotten a lot more cheap when it neared a 52-week low of 2,240 PHP last September 23.

6. PROPERTY

P/E Relatives

Cheapest: CPG, MEG, VLL

The property category boasts of the widest spectrum with CPG being the cheapest (on a P/E ratio) and real estate giants ALI and SMPH with extremely high P/E ratios. Again, it should be noted that P/E is not the only indicator out there. CPG has a low P/E ratio, but there must be something going on (or probably wala din) which is preventing investors from paying a higher price for that stock. Due diligence should be practiced at all times. Research, research, research. Hehe.

NOTE: 

This guide only shows the strength of P/E ratios relative to one another. (I only mentioned what  are obvious, P/E wise.) 

A low P/E ratio may suggest that at it's current value, it's priced as cheap. But it may also mean that investors aren't just upbeat on it and aren't willing to pay a premium (extra) to own part of the company. On an earnings perspective, a low P/E ratio may indicate that the company has had higher earnings to date which may mean it's a valuable stock for the future, fundamentally, although usually a higher earnings report leads to an increase in the stock price. 

However, earnings aren't just the only representation of a company's financial progress. Is a company piling huge debts? Was it involved in any tragedy? Is it hindered by certain legal processes (judicial proceedings, TROs)? Caveat!

PSEi LIST | Top Gainers and Losers: Blue-chip Stocks First Half Performance (Jan 5 to July 6, 2015)

It's been more than a month since the first half of our and I realized no one has published online anything about the first half performance of the blue chip stocks (performance) composing the Philippine Stock Exchange Composite Index (PSEi). Days ago, I talked about these 30 PSEi stocks and somewhat (whutt hehe) showed the relative size of one to the other.

Now the question is which among these PSEi stocks soared high by the end of first half (July 6)? Which stocks dipped and failed to go up?

The table, in the middle of this post, may give you an idea about the performance (in terms of market price % change) of each stock listed in the PSEi, if ever you started buying last January 5, 2015. Note po that I based the percent changes to that of an investor who bought stocks at the last minutes of the January 5 trading day (closing price).

Which stocks in the PSEi gained the most value?

According to data I collected from the Wall Street Journal for the first half of the year, beginning January 5 until July 6, the top five PSEi gainers were GTCAP, GLO, SMPH, MBT, and MER.

GTCAP is the most remarkable stock which gained 144.16%, which is followed by GLO (37.14%), SMPH (18.67%), MBT (14.39%), and MER (13.41%). So if you bought 100 shares of GTCAP last January 5 and sold it on July 6, your money would have earned 1.44x more than what you had in GTCAP when you bought it (of course, without the commissions and taxes pa, for which your stock broker is surely happy hehe kasi they earned din from your transaction).

However, considering data up to present, in which the trading date of reference is August 14 (the most proximal day to my date of article writing, August 17), the list of top 5 PSEi gainers change.

GTCAP still retained its top spot with gains of 138.53%, followed by GLO (50.63%), LTG (21.36%), SMPH (18.79%), and MER (15.90%), 

Which PSEi stocks lost the most value in the first half of 2015?

The first half of 2015, with reference start date of January 5, saw significant stock value declines in PSEi-indexed firms BLOOM (-28.04%), SMC (-21.05%), EDC (-14.59%), DMC (-14.21%), and PCOR (-12.72%).

Up to August 14, these companies didn't leave the list of top 5 PSEi losers with -39.14%, -26.78%, -21.76%, -23.18%, and -18.45%, respectively. Is it because the 'ghost month' has already started? Is it because of problems hounding the companies (i.e. unable to meet consensus targets, debts, scandals, etc) which leave investors pessimistic? Is it because these stocks' values were just so high it just needed correction? Or is it because these stocks are just being unfairly treated?

That I cannot answer po, as I am just here to share what I know hehe.

Here is the complete list of performance per PSEi stock, which details the gainers and losers for the first half and for the day prior to this 'ghost month' - which I set to August 14, the data of which I also based the companies' % wt contribution in the PSei.

What are the implications of investing in companies included in the PSEi or in any index generally?

Usually, the most actively traded stocks come from the PSEi. However, no one can predict the sentiment of each investor involved in the stock market, unless you're a wizard or a mind reader or Tony Stark haha. 

Nababasa mo po ba kung ano nasa isip ko ngayon? Yep, tama, ice cream kasi ang init haha.

You see in the table beside the essence of monitoring your stocks or having someone (a fund manager, for example) to monitor them, of setting your entry, exit plan and time frame, and of understanding the risks associated with investing in stocks. 

If you are still confused, the time frame here is from Jan 5 to July 6 (first half) or approximately 6 months. Another period talked about here is from Jan 5 to August 14 - the date nearest to this day I write this post. You can set your own investment time frame. 1 year? 5 years? 10 years? And know when to cut loss or stop greed by having an exit plan and when to buy more by having an entry plan. Really, it's up to you.

Entry plan, exit plan ka diyan. Ano ba pinagsasabi ng taong 'to?

Take a look at MBT. Suppose you bought it on January 5 and you didn't sell it on July 6 (because you greedily or not-greedily thought 20% gain is your exit point, or because you didn't check out your COL or BPI Trade account on that day), your gains from MBT would have been reduced to around 4.32%. 

Same is true with losses. Consider SCC. If you bought SCC on January 5 and didn't sell at the end of first half (July 6), your SCC equity value has lost 0.85%. But having no exit point, you thought "ay tataas din yan". You didn't decide a percentage loss comfortable for you, and you let your stock unchecked until August 14. This time, your 0.85% loss dived further into a heavier 8.80% loss.

Oh I see, so pati din sa pagbili ng stocks?

Yep. Check out MPI. If you bought MPI shares last January 5, realized you were losing money (-2.58%), but planned your exit point (cut loss at -8%) and believed that MPI will get back on track, then as of August 14, your loss has transformed into a 7.74% gain!

You see, the stock market is crazily ridiculous! Haha. It can give you a lot of headache or make you smile all day long. Most investment gurus recommend that before you get into the zone of investing, you gotta know what you really want to achieve, and of course, study - fundamental and technical analyses might help.

CAUTION: The stocks have been going down since Monday (or since forever hehe), so please observe due diligence. Study po your prospect stocks. Have a nice day ahead! Hehe.

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P.S. I would really like to apologize to my dear financial analysts and mentors if ever I used my own words (or jargon) in this post for I am yet to learn technical terms hehe.

P.P.S. I also would like to thank everyone who read and appreciated my blog about the 30 Blue Chip Companies of the PSEi. Your recognition (and the lack thereof) inspired me to work harder and write about this. 

P.P.P.S. Andaming tumatakbo sa isip ko 'pag nagsusulat ako; sometimes my hand muscles are unable to catch up with what my mind processes, kaya if ever there are (grammar) errors in this post or if ever I'm wrong at something, please criticize me po. I guess I need an editor or what hehe. Your feedback is helpful for me in order to improve myself as well. :)

P.P.P.S. I think ang mali ko din dito is masyadong maaga (August 17) ko itong ginawa pero masyadong late ko ito ipinost (August 21 18) hahaha.