Business Overview
The company was originally organized for oil and gas exploration in 1992 under the name iVantage Corporation. By October 2000, the primary purpose of the firm has been changed to financial holdings and investments, including but not limited to IT companies and related ventures.
In June 2006, the Corporation divested its shareholdings in International Exchange Bank, its single largest investment at that time. The iBank sale generated Php2.9B. The Corporation decided to invest its Php2.9B war chest in portfolio of equity and fixed income securities. For this purpose, the Company hired its current President in October 2006 along with a team of finance professionals. The current team is also tasked to further professionalize management of the Vantage Group of Companies.
In June 2006, the Corporation divested its shareholdings in International Exchange Bank, its single largest investment at that time. The iBank sale generated Php2.9B. The Corporation decided to invest its Php2.9B war chest in portfolio of equity and fixed income securities. For this purpose, the Company hired its current President in October 2006 along with a team of finance professionals. The current team is also tasked to further professionalize management of the Vantage Group of Companies.
Major Subsidiaries
1.) E-Business Services, Inc (100%)
- engaged in the fund transfer and remittance services, both domestic and abroad. E-Business has an existing Representation Agreement with Western Union Financial Services, Inc. (top 3 among its direct agents) covering its fund transfer and remittance services for 7 years (Sept 2007 to Aug 2014). Subsidiary, eBiz Financial handles the financing business.
2.) iCurrencies, Inc. (100%)
- organized primarily to engage in the business of buying and selling foreign currencies. However in 2001, a new circular issued by the Central Bank required for additional documentation including a minimum paid-up capital of Php50 Million. iCurrencies decided to stop its business as a Foreign Exchange Corporation (FxCorps) due to the regulatory changes. In the meantime, iCurrencies is sustained by income on its investments and interest income on its funds.
3.) Philequity Management, Inc - PEMI (51%)
- an Asset Management company with about Php3B in assets under management at end of 2008.
4.) Unlaunched Funds as of Dec 2012 (100%)
- Philequity Balanced Fund, Inc
- Philequity Foreign Currency Fixed Income, Inc
- Philequity Dividend Yield Fund, Inc
5.) Yehey!
- engaged in the business of internet online related products relating to database search engine, such as, but not limited to , conceptualizing, designing, illustrating, processing, and editing web sites. From a pioneering web portal in the late 90's, Yehey has grown into a leading digital on-line marketing solutions provider in the country. To support its growth, Vantage infused Php250M capital in Yehey in 2007.
- engaged in the fund transfer and remittance services, both domestic and abroad. E-Business has an existing Representation Agreement with Western Union Financial Services, Inc. (top 3 among its direct agents) covering its fund transfer and remittance services for 7 years (Sept 2007 to Aug 2014). Subsidiary, eBiz Financial handles the financing business.
2.) iCurrencies, Inc. (100%)
- organized primarily to engage in the business of buying and selling foreign currencies. However in 2001, a new circular issued by the Central Bank required for additional documentation including a minimum paid-up capital of Php50 Million. iCurrencies decided to stop its business as a Foreign Exchange Corporation (FxCorps) due to the regulatory changes. In the meantime, iCurrencies is sustained by income on its investments and interest income on its funds.
- an Asset Management company with about Php3B in assets under management at end of 2008.
4.) Unlaunched Funds as of Dec 2012 (100%)
- Philequity Balanced Fund, Inc
- Philequity Foreign Currency Fixed Income, Inc
- Philequity Dividend Yield Fund, Inc
- engaged in the business of internet online related products relating to database search engine, such as, but not limited to , conceptualizing, designing, illustrating, processing, and editing web sites. From a pioneering web portal in the late 90's, Yehey has grown into a leading digital on-line marketing solutions provider in the country. To support its growth, Vantage infused Php250M capital in Yehey in 2007.
Key People
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| Valentino Sy - also a Philstar columnist for Philequity Corner. Owns 3%. |
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| Wilson Sy - Brother of the Chairman/CEO Valentino Sy. Owns 8.77% |
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| WillyN. Ocier - Also involved with Belle Corporation. Owns 0.31% |
1.) Valentino L. Sy - Chairman and CEO, Director since 2002. Holds top positions on businesses that are into steel trade. BS Industrial Management Engineering graduate from DLSU.
2.) Edmundo P. Bunyi - President and COO, Director since 2006. Pres & CEO of e-Business Services and Pres & COO of Philequity Management. Former Senior Vice President and Treasurer of International Exchange Bank, AVP and Head of FX Sales of UCPB, Asst Manager for Corporate Banking for Far East Bank & Union Bank. BS Management Engineering graduate from Ateneo.
3.) Ignacio B. Gimenez - Director since 2003. Treasurer of I.B. Gimenez Securities, a stock brokerage firm. President of several Mutual Funds: Philequity Fund, Philequity Dollar Income Fund, Philequity PSE Index Fund, and Philequity Peso Bond Fund. Also Sales and Marketing Manager of Society Publishing. Earned an MBA from AIM.
4.) Willy N. Ocier - Chairman & President, Director since 1999. Co-Vice Chair of Belle Corporation and Highlands Prime. Chairman of APC Group, Sinophil Corporation.
5.) Wilson L. Sy - Reelected to the Board in 2005. Brother of Valentino Sy. Vice Chair of Asian Alliance Holdings, Director of Philequity Management. Independent Director of Tagaytay Highlands. Former Chairman of the Philippine Stock Exchange. Director, Basic Petroleum & Minerals, Belle Corp, A. Brown Corporation, Jollibee Foods, among others. Management Engineering graduate from Ateneo.2.) Edmundo P. Bunyi - President and COO, Director since 2006. Pres & CEO of e-Business Services and Pres & COO of Philequity Management. Former Senior Vice President and Treasurer of International Exchange Bank, AVP and Head of FX Sales of UCPB, Asst Manager for Corporate Banking for Far East Bank & Union Bank. BS Management Engineering graduate from Ateneo.
3.) Ignacio B. Gimenez - Director since 2003. Treasurer of I.B. Gimenez Securities, a stock brokerage firm. President of several Mutual Funds: Philequity Fund, Philequity Dollar Income Fund, Philequity PSE Index Fund, and Philequity Peso Bond Fund. Also Sales and Marketing Manager of Society Publishing. Earned an MBA from AIM.
4.) Willy N. Ocier - Chairman & President, Director since 1999. Co-Vice Chair of Belle Corporation and Highlands Prime. Chairman of APC Group, Sinophil Corporation.
6.) Antonio Samson - Director since 2005. Group Chairman/ Chief Business Strategist of DDB Worldwide Communications Group, an advertising company. Former EVP in PLDT and concurrently President and CEO of MediaQuest Holdings. MBA from AIM, Masters in Business Economics from UAP, Economics from Ateneo.
7.) Gregorio Kilayko - Independent Director in 2012, also for SMPH, BELLE, HP. Former PSE Governor in 1996 and 2000. MBA from Wharton.
8.) A. Bayani K. Tan - Corporate Secretary, also with other companies: First Abacus Financial, BELLE, Sinophil Corp, Tagaytay Highlands, Touch Solutions, I-Remit, Philequity Funds, TKC Steel Corporation, among others. Managing Partner of Tan Venturanza Valdez Law Offices. Director/Corporate Secretary of Private Companies such as : Sterling Bank, Medicare Plus, etc. Master of Laws from New York University, Bachelor of Laws from UP.
Dividend Policy
No cash dividends have ever been declared. In 2008, 5% property dividend was brought out distributing Yehey stocks to its shareholders, paving way to Yehey's listing by way of introduction to the PSE.Quick Numbers
Fundamentals
Book Value of Equity (AR 2012): ~Php6.6B
Outstanding Shares: ~2.24B
BV/share: Php 2.97
Debt Ratio (Long term): 0%
Beta: 0.48
Cost of Capital: 8.4%
Net Income (Realized):
2012 : Php 570M
2011: Php 530M
2010: Php 716M
time-weighted average NI: Php 587M
Net Income (Takes account of increase in market value of Assets For Sale):
2012 : Php 1.09B
2011: Php 668M
2010: Php 893M
time-weighted average NI: Php 926M
A conservative assumption of long-term growth (3% yearly), would put the fair value of the company (based on earnings - DCF analysis) between:
Fair Value/share: Php 5.13 to 8.02
Debt Ratio (Long term): 0%
Beta: 0.48
Cost of Capital: 8.4%
Net Income (Realized):
2012 : Php 570M
2011: Php 530M
2010: Php 716M
time-weighted average NI: Php 587M
Net Income (Takes account of increase in market value of Assets For Sale):
2012 : Php 1.09B
2011: Php 668M
2010: Php 893M
time-weighted average NI: Php 926M
A conservative assumption of long-term growth (3% yearly), would put the fair value of the company (based on earnings - DCF analysis) between:
Fair Value/share: Php 5.13 to 8.02
The lower FV estimate is computed from the realized Net Income while the higher FV (8.02) uses the Net Income that takes into account the market value of Assets For Sale. Take note that in 2012, unrealized gains reached to as much as 500M due to its equity investments on a bullish environment. For conservative purposes, I would still base my decision on the realized income having sustainable growth at 3% yearly. At current market price of 2.58, this gives us a 99% upside in the future. This is even below current book value.
Another factor that boosts our fair value estimate is the low Beta (0.47) which makes this stock a good addition to my portfolio.
Another factor that boosts our fair value estimate is the low Beta (0.47) which makes this stock a good addition to my portfolio.
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Technicals
Nothing impressive with the charts and so I mapped it with the timing of disclosures. The decline in May coincided with the breakdown of the market and has nothing to do with the earnings results. Earnings were actually good with a potential 500M increase if all AFS were sold. Thus, May-June was a good opportunity to buy for value investors. V has no history of giving out dividends, instead the company prefers share buybacks as evident on the recent activities. Starting August, the company already had bought back at prices averaging at 2.60.
Analysis
Bulk of the company's gains are basically coming from its direct investments to equity and fixed income assets. Because of this, I believe the performance of this company is tied to general market conditions of our local market. This is not a heavily traded stock; thus, does not move along the directions of the market. Investing into this stock is just like getting a free ride on the investments of the Finance professionals in this company. However, we wouldn't expect getting cash dividends but could rather gain through capital appreciation.
I'm not a fan of Yehey but I wouldn't be too much concerned with it as it is just a small part of the company. It may be possible that they plan to leverage their digital services with their remittance/fx business soon. Given that performance of the company's investments are good and the stock remains undervalued, I believe this is a good buy; thus, would personally include into my portfolio. I already have a starting position on this for my speculative port and plan to increase it more.
I'm not a fan of Yehey but I wouldn't be too much concerned with it as it is just a small part of the company. It may be possible that they plan to leverage their digital services with their remittance/fx business soon. Given that performance of the company's investments are good and the stock remains undervalued, I believe this is a good buy; thus, would personally include into my portfolio. I already have a starting position on this for my speculative port and plan to increase it more.
Images via Google search
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This post does not give a comprehensive analysis on the company/industry. This is only a summary or a company snapshot as of the date it was posted. Spotlight stocks featured in this blog are being chosen arbitrarily, and are only intended for the blog owner's personal consumption; not as a form of solicitation to buy or to sell. Comments from readers who would like to point out errors, to share ideas, etc are most welcome.
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