...the upbeat market

PH stocks rally sharply on reports of good corporate earnings, upbeat markets

By: Doris C. Dumlao
Philippine Daily Inquirer

Monday, July 30th, 2012

 

MANILA, Philippines—Most local stocks rallied sharply on Monday on the back of a good initial stream of local corporate earnings and upbeat global markets.

The main-share Philippine Stock Exchange index gained 58.35 points, or 1.12 percent, to finish at 5,277.90. The market was perked up by the earnings reports of several large-cap stocks alongside growing expectations across global markets of stimuli from the US Federal Reserve and European Central Bank.

All counters were up but the financial, property, holding firm and mining/oil counters boosted the main index the most, each rising by over 1 percent.

Among the day’s out-performers were Pepsi Philippines (+14.98 percent), SM Prime (+4.34 percent) and Ayala Corp. (+4 percent). SM Investments (+1.28 percent) even hit a new record high of P753 per share in intraday trade after SM Prime’s first-half results came in slightly ahead of market expectations.

Shares of BDO also surged by 1.94 percent after first-semester results were on track with the bank’s full-year guidance.

Meralco, Metro Pacific and PLDT shares were likewise up by 1.87 percent, 2.46 percent and 0.22 percent, respectively, after Meralco’s first-semester results prompted an upgrade of the utility firm’s earnings guidance for the full year.

Meanwhile, Pepsi’s shares surged and made it to the list of most actively traded stocks after the beverage firm reported a 436-percent jump in first-semester net profits as sales expanded while softer sugar prices tempered input costs.

Other stocks that contributed to the PSEi’s rise were Metrobank (+1.95 percent), ALI (+0.94 percent), URC (+0.86 percent), AGI (+0.87 percent), Globe (+0.59 percent) and DMCI (+0.88 percent).

GT Capital, Security Bank and Puregold also gained. Security Bank, for its part, estimated a hefty 29 percent growth in lending for the first semester.

On the other hand, shares of Semirara, FPH and Union Bank traded lower.

Union Bank grew its first-semester net profit by 42 percent to P4.07 billion but about 70 percent of the bank’s first-semester bottom line was chalked up during the first quarter. For the second quarter alone, Union Bank’s net profit declined by 43 percent to P1.22 billion year on year as trading gains fell (by 32 percent to P641.3 million) even as net interest income surged (by 16.3 percent to P1.89 billion). This was in line with market expectations of slower treasury gains in the second quarter.

“The market may continue base-building at 5,200. At this level, the market is trading at fair value of 15.5x, based on earnings growth of 19 percent. The rally will resume when the earnings outlook improves and/or price to earnings (ratio) is re-rated higher,” said Peter Raymond Lee, assistant vice president at IGC Securities Inc.