Spotlight: Southeast Asia Cement Holdings, Inc (CMT)

Business Overview

SeaCem (CMT) is a holdings company which is primarily invested in 26.59% of Republic Cement Corporation.  CMT have merged its previous subsidiaries into one, Seacem Silos , Inc (SSI); however, it has no commercial operations for now.

Significant Holders:
1.) Calumboyan Holdings, Inc  - 53.01%
2.) Lafarge Holdings (Philippines), Inc - 29.07%

The company's earnings rely mainly on Republic Cement.  Other income comes from interest income on banks and money market placements.

Quick Numbers

Fundamentals

Book Value of Equity (AR 2011): ~Php6.8B

Outstanding Shares: ~6.45B

BV/share: Php 1.06


Debt Ratio (Long term): 0%
Beta: 0.95
Cost of Capital: 11.1%


Net Income:  
2012 (1H):  Php 415M            
2011:  Php 669M        
2010: Php 1.114B      
2009: Php 1.028B      


Assuming conservative long-term growth (3% yearly), fair value for the company based on earnings (DCF analysis) would be around:

Fair Value/share: Php1.70  (conservative)

Since current price (2.37 as of 8/24/12) is already way beyond our conservative fair value, the next target would be Php 2.78/share, assuming 6% LT growth, which is double our conservative assumption.  If the moderate assumption is correct, there would still be around 17% upside for this stock.

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Technicals

The prices form a bullish flag or pennant which gives us a possible target price of 3.1.  Chart indicators show that CMT maintains a strong positive momentum.

Analysis

The company's lackluster income for last year was due to the minimal government spending for infrastructure projects.  Main driver for CMT's growth this year would be the PPP projects for which the Aquino administration had promised to deliver. Increased spending may also be fueled by the fact that 2013 will be another election year.

Technicals show that the stock's prices are in a favorable positive momentum; however, the earlier valuation may indicate that the stock is already fairly valued.  CMT is in my portfolio but I am no longer looking into buying more.  I will just wait for sell signals; then, that would be the time I would take profit.  It's a HOLD for me.

Reference: CMT Financial Reports (2011 and 1H 2012)

June - July 2012

This may serve as my June and July update since I have been busy at work lately and I don't think I can religiously update this blog regularly (at least bi-monthly).  It is unfortunate that I got busy the same time when the market has corrected, and that I can no longer keep up with the daily monitoring that I got used to for the last 2 years.

ScIoN Fund (mid-long term)

YTD:  +4.28%

Benchmark: +18.5%

The start of the year was great since I was able to outperform the index; however, during the correction last May, I realized that my stops were too low (100 MA) as my paper profits went back to almost zero.    PSE market is still quite shaky these days as I am trying to re-enter.  My portfolio above shows a lot of entries because most of them are test buys.  Only FGEN and CMT seem to show a continuity on its uptrend.

Currently, my portfolio is clearly underperforming; I hope, I can manage to steer it back to beat the benchmark.  Still, the good thing is it is still on the positive.

AJC Fund (short term fund)

YTD (3 months):  -2.59%

Benchmark: -0.70%

AJC Fund is still on the negative although the gap from the benchmark is closer (< 3%) now  than what was last reported (~ 5%).  Both portfolios suffered from the inclusion of Lepanto which backfired when the Mining EO signed by PNoy still gave uncertainty to the mining sector.  

PSE Index Weekly

Looking at the PSEi weekly chart, seems like it is on a positive channel uptrend.  However, note the divergence as revealed in the MACD.  This may indicate that the uptrend is not sustainable; we can expect further consolidation in the future.  Seems like our market will trade at a range for the meantime. Next month would be the so-called ghost month, so it is possible that we may experience further selldowns.  Might be best to stay at the sidelines for now.

Left Behind

My original plan of selling CMT and shifting it to SCC (or DGTL) was a good one.  Unfortunately, today's gap up for SCC (at around 10 pesos higher!) got me left behind.  SCC was consolidating and so I thought it would take a day or two for movement yet.  I guess, prices below EMA should be a good buy sign for SCC from now on.  I am hearing tp's ranging from 200-250, still far way off at the current price.  I still vow to enter, probably on the next wave.

Aside from not being able to ride SCC, my next bet was DGTL and I had my order posted at 1.56.  The fish didn't bite as it only went down to 1.57.  I'll probably wait for Tuesday again to enter.

Unfortunately for my CMT, it even went up high today reaching 2 levels!  Damn, call that an insult hehehe.  Well, it happens.

Tuesday, Oct 26 will be the debut of Cebu Pac's IPO in the stock market.  I hope it does well as I have URC in my portfolio.  My professor isn't attracted with CEB, and advised to go away for the meantime from Gokongwei stocks due to this.  Let's see what happens.

Next week, is another busy one for me!  5 more case studies (will be presenting 2) and our very first exam on a Saturday.  Wish me luck! :)

Cement Stuck

Got into a bull trap with CMT almost a month ago, after buying the stock in response to its long green candle the previous day.  Right now, as the market is consolidating, I have decided to take my loss and hopefully position to a more reliable stock.  I am starting to analyze some financial reports on these companies, and cement stocks like CMT may be as speculative as the mining stocks.  With the bull market today, I would rather place my bets on the usual winners.

Earlier this morning, there was a bomb threat at the PSE building; thus, trading got halted.  I have posted my sale order for CMT at 1.86, then suddenly Asia Sec bought up at the close, from the trading price of 1.81 to 1.88.  I think this had also happened during the past few days as CMT was trading at low volume, but maintained green candles at the close.  Something's cooking in here, but I'd rather stay away from now.  It may be possible that CMT will go high in the coming days, but this may just be because of a jockey.

Meanwhile, my "buy on the news" ORE have reached a max paper gain of 11% on its 3rd day!  Although it has already retracted back at 3.43 at the close.  When I was still monitoring the market this morning, ORE was at the 3.53 level.  It would have stayed that way if only PSE did not resume trading at 1pm hehe. 

Checking on the time sales, looks like JAP has started unloading his ORE.  hmm...  or maybe the weak hands are starting to fall off? ;)  ORE shows a shooting star. :-?

EDC seems to be still in consolidation.  pfffft.

URC seems to be another bull trap for me.  Although at least I got in with the first dip, so so far, not yet too far away from my entry.  Low volume trades put this into a Trade the Range.


Prospects (shift from CMT loss):
SCC - foreigns are still selling (JPMorgan & ATR).  Temporary gains might still be weak.  Trade the Range.
DGTL - I still want to take revenge on this stock. hehehe.  Formed a hangman on today's trade, showing indecisiveness.  It might be up or down for tomorrow.  Macquarie seems to be accumulating.  I am buying on the first dip.

New Challengers

Prospects:
Missed the ICT train today.  Seems like resting for a bigger push.  Bounced back down after meeting its first resistance.

MPI completes a dark cloud cover plus a MACD sell.  Currently signaling a downtrend.

SCC ended with a shooting star. Let's wait at 152.39.

PD:
Bought URC at 45.25 (buy signal from CSO), buying the dips after a long candle.  1st support from the pivot point was correct, being the lowest trade for the day.  Candlestick forms somewhat like a harami, but still maintaining on the top half of the previous day's long candle.  Buy signal from CSO, was confirmed from a MACD buy and a bullish BOS.  This trade is meant for the short term-medium term only.

AP continuing on its ascent, faced the upper resistance at 26.31. Swing traders would have sold along with doyts.  The stock ended backing down further from the lower resistance @25.23.  Currently closed at 24.8. 

EDC is still having support from foreign buys (doyts and CLSA) although JPMorgan was selling.  Still a bit 50-50 on unloading tomorrow.

CMT on a lull.  I hope I wouldn't face a cut-loss here.  It should hold at 1.8 then hopefully will shoot up breaking out at 2. :P

Can't resist, bought some milk today :)

Composition:  (Oh no, I am now holding 5 stocks.)
AMC - 12% 
AP - 18.4%  
CMT - 13.5%
EDC - 32.7%
URC- 22.7%

Today, I have increased my cash investment for another 25%.  Greedy me.  Well, this is to give way to my long term plans on certain stocks, retaining my cash investments for short term trading.

AP, AP and Away!

My "shooting star" call yesterday on AP was a dud.  Shooting stars should have long tails.  Good thing I was able to monitor the market today as AP had a blast raising the roof up to 20.45, to a close of 20.35.  I plan to hold as permissible, probably buying the dips on this stock.  AP outperformed my other "Power bets", EDC and FGEN.  Right now, I should be comfortable to hold on to this stock and hopefully be able to correctly read the candlesticks before pulling out.

SCC: I was able to get off SCC at 157 since i noticed Doyts has been unloading piece by piece on the ticker.  Did a good thing as the stock closed at 154.8 today.  I'll be waiting at 150.95 to reenter.

FGEN: At around 11am, FGEN charts still feeling the resistance at 14.44, and so I decided to sell at 14.12.  Will wait for MACD charts to tell a buy signal before re-entering.

EDC shows a small hammer.  I hope this pushes the stock price up by tomorrow! MACD suggests it is still in consolidation mode.  If ever price increases by tomorrow, it might generate a buy signal.

CMT is the black sheep on my portfolio.  Seems like not much is happening with the cement stocks.

PD:
EDC - 1/3
AP - 1/6
CMT - 1/6
cash 1/3

Window for Selling

Some comments of my portfolio:

CMT is still consolidating.  Wrong move since funds used here came from my sale of MPI which has increased to 4.11 today.  MPI has now a buy signal based on MACD.

AP shows a shooting star, sell asap for a swing.  Currently at 22.15, plan is to submit a sell order at 22.3 (yesterday's trading price with 17% volume) or higher.

EDC, still consolidating.  Plan to sell shares bought at 5.99 (50%) to reduce some load.

It was a good thing I still have some SCC left in my portfolio.  Buy the dips on the first rung of fibonacci. 4 consecutive green candles.  Perhaps tomorrow would be its last run.  Just waiting for a sell signal.

FGEN, slight gap up but with a shooting star.  Still trading sideways.

Looks like tomorrow is a selling spree for me!  :) 

Pivot Points

I am now trying to make use of pivot points to determine my buy and sell signals.  I also confirm if these signals would act as support or resistances by using Fibonacci Retracements.

For my first try, I felt that MPI would reach a resistance and would eventually go back down.MPI pivot point was at 3.92, but I mistakenly saw Doyts selling MPI on the ticker, making me sell at 3.87.  The stock price actually reached 3.95 before going down to 3.80 at the close.

On the buy side, I waited for the nearest lower pivot point to be my buy signal.  As I left the terminal at around 11am, I was no longer expecting my orders to be hit.  As I have finally arrived back home, I'm surprised that my portfolio is currently brimming with new stocks: AP, CMT and additional shares of EDC. Since I started posting these orders at around 1030am, my entry prices are more or less equivalent to closing prices.

I am still bullish with the power sector as evidenced by my more than half of my stocks: EDC, FGEN and AP.  CMT is a "cement stock" which are currently in play right now.  This time, I wouldn't want to miss the train (assuming it still remains on the green).

So far, my portfolio is still on the green thanks to my hold with EDC and FGEN.  By tomorrow, we shall see if my decision of entering to AP and CMT would actually pay off.up:gucci handbags

PD: (considering 50% increase in cash investment)
EDC - 30%
AP- less than 20%
CMT - less than 20%
FGEN - less than 20%
SCC - more than 5%
cash - more than 5%