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!

STOCKS 101 | P/E Ratios by Industry (from PSE Data) - Middle of August 20

I used the Wall Street Journal online's data thinking that it's more updated than that seen on COL Financial, but I missed checking out on the more direct source of data for P/E ratios - the Philippine Stock Exchange, Inc.

That's why I've created another set of tables of P/E ratios by industry collated and provided by the online PSE portal, as of August 14, 2015, midway to AuGHOST month's end wherein investors may just continue their panic buying and selling.

Most P/E ratios are somewhat similar or near the values produced by The Wall Street Journal. I decided to give data from the PSE itself to achieve balance in reporting P/E ratios. Hope that from what you may have learned in my previous post, you now know a bit how to judge stocks based on P/E ratios.

1. Bank and Financials

Comparing the P/Es of companies in the financial sector, it can be deduced that UBP is cheaper compared to its peers. However, one has to note whether there's a current problem with UBP (probably in its books or loans) or whether investors aren't just as attracted to it as they are attracted to the banking giants BDO and BPI. Or whether UBP already released its earnings report and the higher earnings reported pushed down its P/E. Or other cases. So conduct due diligence; this advise also goes to decisions involving other stocks mentioned in this post.

 2. Commercial and Industrial

Election's fast approaching. Could it be the reason why ABS and GMA7 have relatively high P/E ratios? Or could it be because their earnings didn't meet expectations (if and when they already released their report)?

IMI, based on P/E, is pretty undervalued given the fact that it's operations are international; however, could this also be the reason why this stock is not priced the way it should be? Because the peso is weakening against the dollar?

PCOR, the smallest in the list of 30 blue chip companies, is on a negative P/E value. Recall that oil's price has been hardly managing to go up due to the unexpected surge in supplies internationally. EEI, on another note, is somewhat attractive, but what makes it not so catchy at all?

Again, research, research, research.

 3. Conglomerates

We see here FPH (First Philippine Holdings) which has stakes in power-generating companies EDC (Energy Dev't Corp) and FGEN (First Gen Corp) as an undervalued stock. Are there problems (impending loan payments? etc?) in it or is it just not spotted?

LTG (Lucio Tan Group) has a very high P/E ratio. I don't get it why, but pretty sure one has to view this stock's trajectory. Has its earnings been affected by the Sin Tax Bill? Is it on a rebound?

4. Consumer

One of the most priced sectors is the Consumer sector, wherein average P/E hovers near 25. Most Filipinos love anything locally produced, from JFC's chickenjoy to URC's junk foods, RFM's Selecta milk and EMP's brandy. And who wouldn't love to buy in air-conditioned markets like that of PGOLD and RRHI? As long as there is someone living, these companies will continue earning. But the sector's high value?

 5. Gaming

The gaming industry has lower average P/E compared to the other sectors possibly because of lower earnings reported (MCP took a loss) which lost investors' appetite and a government crackdown on corruption in China scaring gamers in Macau. What other factors may be attributed to this lower P/E despite casino operators getting huge revenues?

6. Mining, Power, Telecom

Businesses focusing on basic needs like texting, electricity, and internet may strive despite stiffer competition. GLO's Globe is overpriced probably because investors were upbeat when the company released it has been gobbling market share and continuously earning higher profit versus its rival PLDT in this telecom duopoly.

7. Property

The property sector has a mix of undervalued and overvalued stocks. There are certain factors that influence these ratios - investor confidence, earnings report, financial stability, market share, occupancy rate, margins, scandals, etc.

Notable companies with high investor confidence are market leaders ALI and SMPH.

MONEY MATTERS: 5 Awesome Tips to Help your Parents in your Finances

Desperate times call for desperate measures. There will come a point in time where, in the middle of your juggling-of-academic-and-social-life stunt, you'll tell yourself "that's enough, I have to do something para mabawasan paghihirap magsumikap ng mga magulang ko for my education."

This came to my mind when one of my parents became unemployed which resulted in our family income plunging 55% - yes and I'm not overestimating here. It was sudden, and it was hard to adjust. I became depressed, at some point, because it was so tough I thought I might not be enrolling in the next semesters. But good thing, I did some actions in advance which helped kept us afloat, even now.

Now, would you have to wait for such tragic thing (as mine) to happen to yours? You wouldn't right?

How can a student, a teenager, or a young adult become less financially dependent of their parents? You may ask, how can I assist my parents in the middle of tuition fee increases, food price hikes, rental rate increments? What students don't know is that they can do A LOT to make life easier both for them and their parents.

Here are five (5) awesome ways I did in order to help my parents lessen the burden, while we were going through the financial black hole that was sucking us out into oblivion. And I'm definitely emphasizing saving here, hehe. 

1. Apply for scholarships. Study hard and smart.

Fact one. College-related and after-college expenses increase every year! Actually, the price for expenses will usually go up as we age! Don't forget that almost everything that has a price tag in it is becoming more expensive! Blame it on inflation. Books become more mahal. Internet shops make you their cash cow. Professors give you projects for additional credits. The list goes on.

One thing you can actually do, especially if you're such a smart *ss (or just an *ss), is to really focus and study hard! It's true there are just brighter students out there who come out of the top of the class, because their well-off parents nurtured them well. Now, here's the gist. If you think you're not that type of genius I've mentioned in the sentence prior this, it's not your fault, but it's your fault if you won't do something about it!

This will always be fact number two! Hardworking, diligent students most oftentimes level with, and in some cases outshine, bright students. I have known people who are definitely smart, but fail classes because they don't attend or fail to submit on time, or don't submit at all. Studying hard and smart is the key to getting a scholarship! 

You want a scholarship? Work hard to get it! :)

2. Save chunks of your allowances.

Admit it ('cause I do). It's hard to save, especially at this moment that iPhones and other smartphones plus other gadgets, add to that the hobbies that we happily immerse ourselves into (studying at tea shops, partying), lure us into spending more. But you have to realize, that even just by saving 50 Php everyday, you can already have money to pay for your books next month.

Here's an additional tip. We talk about chunks. Yes, you will save up, but please don't save up and then end up compromising your health because you're not eating well. You've got to be kidding me! Hilarious!

3. Get a part-time job! And save.

There are a lot of part-time jobs out there. You can become a baby-sitter, a tutor, a call center agent, or perhaps, a bartender at Starbucks! You just need to have the guts and the motivation. If you really want to help your parents, you know doing this is the right thing. And there's nothing wrong with it.

And remember, save up a lot - not too much that you won't have anything left for you to relax and enjoy. The earlier that you save, the earlier you're training yourself to spend less and be thrifty, the bigger the amount that you can chip in to take the burden of college education your parents are currently bearing.

4. Blog and earn! And save!

I started blogging when I was in my late years (nineteen, I think)). And I found out about Google ads during that same period. I have to be honest, it's hard to earn via blogging especially when you aren't that good of a writer whose articles can be easily searched on the web or whose topics are in demand - you know, professional bloggers call this SEO optimization. Mine isn't that optimized, but still I earned, in some way.

And tada! I just got my first paycheck from Google after years. :)) It's slow, but it's better to have earned (and waited for it) than never right? You have to make really good articles (via Blogger), and you have to build around you an audience that could stick with you all through out the year. It's tougher for me, 'cause I blog anonymously. I didn't want to subject my identity to the public, not because what I do is illegal (which isn't), but because I want people to know about my blog/s and not about the author behind the blog. I don't want to be known, but rather, I want my blog be known and share and influence change.

And, don't forget to save! Saving is compulsory if you really want to pay at least part of your tuition (or your daily expenses) or support yourself during the tough times.

5. Invest what you have saved!

Investing can come in a variety of ways. You can invest in a startup (or build one with your trustworthy friends!). You can invest in public companies via COL Financial. If you want to know how to invest in PH companies like Jollibee (JFC) and SM Malls (SM), visit this post. Also, here are reasons why I joined the stock market.

But where should you invest the most? What't the biggest investment? YOU. Invest big-time in yourself! Grow and learn in the best way you can! The world is just so awesome to live in, and it becomes more awesome with people who give out their best shot and invest in themselves!

See. You know, you don't have to wear the hippest brands just to be in. Or be loud about what you do - e.g. posting food trips all the time, going to the malls to buy new clothing for next month. Saving has always been, and always will be, one of the best cool things to do that teenagers and young adults sometimes fail to realize!

P.S. I made this short, given the fact that it will bore you if I post lengthy stuff. Hope this post helped some of you!

p.P.S. If you're interested in reading more life-based money stories, here are some of them:
Two financial lessons I learned from Mama and Papa when I was a kid

5 steps that may help students (actually anyone) become rich (Part 1)

5 steps that may help students (actually anyone) become rich (Part 2)

Stock Market: How to Invest in the Philippines via COL Financial

Do you have a huge amount of savings which you would like to invest in publicly listed Philippine companies? Do you have extra cash and you don't know where to keep it?

Become an investor in the PH stock market. Join Citisec Online Financial (COL Financial). The following infographic lists the steps needed in order for you to invest in the Philippine stock market via COL Financial.

For more information, you may see what I did when it was my first time to open a COL account. Visit how to open an individual investment account with COL Financial to learn more. 

How to Open an Individual Investment Account with COL Financial

Want to venture into stock investment? Join COL Financial; it's one of the best online stock brokers in town. I'm just about to join COL; I have already submitted my documents except for one, my TIN number.

I'm creating a Trading Account; that's for those who'd like to invest a minimum of 25000 Php. For those with a at least 5000 Php in hand, they may opt to take the EIP or Easy Investment Program. The difference would have to be the research tools available for the investor. Trading accounts have better statistical tools and analyses results compared to EIP.

Now, how does one open an individual account with COL Financial? Here are four easy steps you need to know if you want to submit to become a stock owner via COL.

1. First, make sure that you have a TIN number. Get one at your nearest RDO (Regional District Office) but don't forget to bring the right documents (ask your nearest BRI branch to know what are needed, but usually requirements include Barangay Certification and NSO Birth Certificate). I'm still having difficulty getting my TIN number because there's some confusion as to which RDO of BIR I should be going to.

2. Check out the documents needed via this link or by clicking the links below. You'll need the following filled out:

Screenshot from COL Financial website

• Customer Account Information Form
• Online Securities Trading Account
• Signature Cards (2 copies signed) 
• plus a photocopy of any government-issued ID and your billing statement (billing statement stating your name, address and date of statement) NOTE: the billing statement is only needed when you're sending your requirements online
• for foreigners, check out the additional requirements needed

3. Now, once you've completed all these, proceed to the COL Financial Business Center. Its address is 2403B East Tower, Philippine Stock Exchange Center, Exchange Rd. Ortigas Center, Pasig City 1605 Philippines. To get to COL's business center, just ride an MRT and reach Shaw Boulevard Station. 

Then, ask around where you could find San Miguel Corporation's Head Office, it's an awesome green (environment-friendly) building. To get to San Miguel Corp, walk along the sides of SM Megamall. You'll know it's San Mig if, while you're seeing a plant-filled building in front of you, your back's facing SM Megamall.

The Philippine Stock Exchange Center is found at the back of San Miguel Corp's main office so you'll have to roam around the vicinity of the Head Office in a clockwise manner. How can you make sure it's where you're headed? You'll come across the car entrance of San Miguel Corp's headquarters. 

In just a few walks from there, you'll see the PSE Center. Cross the pedestrian lane leading to the road alongside it. Upon reaching PSE Center, just go the the 24th floor and find the business center.

Hope this information helped you open an investment account! Happy investing!

Limitations on foreign investment in PH added

Aquino expands list of foreign investment limitations

MANILA, Philippines - President Benigno Aquino III has expanded the list of investment areas and economic activities that prohibit the participation of foreign investors under the 9th Regular Foreign Investment Negative List. 

The said list enumerates the industries and business activities that are open to Filipino businessmen, and defines the extent of participation of foreign investors in areas allowed by specific laws and the Constitution.

Aquino signed Executive Order No. 98 on October 29, Executive Secretary Paquito Ochoa Jr. said on Friday. The order, which also expands investment opportunities reserved for Filipinos, replaces E.O. 858 that started to take effect in February 2010. 

EO No. 98 takes effect 15 days after its publication in a newspaper of general circulation. 

“There are investments areas or activities which foreign ownership limitations imposed by law were not included in EO 858. Those changes are now reflected in the ‘List A’ of the new presidential directive,” Ochoa said.

Ochoa said among E.O. 98's amendments to E.O. 858 are:

• The foreign ownership and foreign practice limitations imposed under the Real Estate Service Act of the Philippines (Republic Act 9646); 
• The Philippine Respiratory Act (R.A. 10024); 
• The Philippine Psychology Act (R.A. 10029) and 
• The Lending Company Regulation Act of 2007 (R.A. 9474)

Except for R.A. 9474, which allows foreign ownership of up to 49 percent in lending companies, the three other laws limit the practice of non-Filipinos in the areas of real estate and health care such as respiratory therapy and psychology, unless there is a reciprocity arrangement prescribed by a law.

List A of EO No. 98 specifies the areas of economic activity where foreign ownership is prohibited or limited by the Constitution or laws, among them: 

• mass media 
• practice of all professions, cooperatives
• private security agencies
• small-scale mining
• private radio communications network, private recruitment for local or overseas employment 
• advertising
• ownership of private lands, 
• lending companies, 
• financing companies and investment houses regulated by the Securities and Exchange Commission

List B contains economic activities regulated by law such as: 

• small- and medium-scale domestic enterprises
• defense-related industry (i.e., manufacture of firearms, etc.) and 
• businesses that have implications on public health and morals (i.e., gambling, sauna, massage clinics, etc.)

List A may be amended any time to reflect changes brought about by new laws, according to Ochoa. 

List B may be amended not more than once every two years upon the recommendation of the departments concerned and endorsed by the National Economic and Development Authority, or upon NEDA’s own initiative and recommendation, approved by the President and promulgated by a presidential proclamation.

“For now, List B stays while the changes to the negative list covers only List A,” Ochoa said. 

Under the Foreign Investments Act of 1991 (R.A. 7042), foreign investors are allowed to own 100-percent equity in businesses excluded from the negative list.

Article Source: Philippine News Agency, InterAksyon

Tacloban City: A Business Attraction

There will be an influx of business establishments to Tacloban now that it has been declared with public support as a Highly Urbanized City. 

This could be the primary reason why the city government plans to convert the Kanhuraw Convention Center into a one-stop-shop business center. Alongside it, Mayor Alfred Romualdez calls for a “fast-track business transactions to the city hall” by proposing the computerization of its operations.

He also added that some city government offices such as the City Assessor’s Office and the City Treasurer’s Office will have to be transferred to the business center. This means that all transactions related to the renewal of and the application for business permits will be done there.

According to the city mayor, the one-stop-shop will pave way for faster transactions and lesser hassle on part of the investors in applying for business permits. In this way, he concluded, Tacloban will have a business-friendly image.