Spotlight: Atlas Consolidated Mining and Development Corporation (AT)

Business Overview

Atlas Mining came from a merger between three pre-war mining firms (Masbate Consolidated, Antamok Goldfields and IXL).  A major restructuring of the Company's assets was undertaken in years 2004 and 2005 with the creation of 3 special purpose subsidiaries to develop the Toledo Copper Complex, Berong Nickel Project and the Toledo-Cebu Bulk Water and Reservoir Project.  As a result, Carmen Copper Corporation (CCC), Berong Nickel Corporation (BNC) and AquAtlas Inc (AI) were incorporated and, subsequently, were positioned to attract project financing as well as specialist management and operating expertise.  In addition, Atlas Exploration, Inc to host, explore, and develop more minerals, including but not limited to copper, gold and nickel. (source: Annual Report 2011)

Since most projects are being done through joint ventures and project financing, Carmen Copper, (which is now 100% owned by Atlas) is being considered as the lone significant subsidiary of the company.

Atlas Exploration Inc (100%) - searching, prospecting, exploring, and locating ores and other mineral resources

AquAtlas, Inc (100%) - provision and supply of bulk water to local water districts and other customers.  i.e. Toledo-Cebu Bulk Water and Reservoir Project.

Amosite Holdings, Inc (100%) - holds assets for investment purposes

Carmen Copper Corporation (100%) - country's largest exporter of copper concentrate

Ulugan Resources Holding, Inc (70%) -  URHI owns 60% of Nickeline Resources Holdings, Inc.  While NRHI owns 60% of Berong Nickel Corporation.

Significant stakeholders:

1.) Alakor Corporation (20%) - represented by Alfredo Ramos 

2.) SM Investments Corporation (18%) 

3.) BDO - credit line facility of 129M.  BDO also currently holds convertible debt instruments.

4.) Consunji Group - Just recently (April 2012), the group bought a 5.3% stake on AT, further expanding their business portfolio with mining.

Significant personalities:

1.) Alfredo C. Ramos - President and Chairman of AT since 2003.  Other companies he manages:

Carmen Copper, Berong Nickel, Alakor Corporation, National Bookstore, Anglo Philippine Holdings, Philodrill Corporation (OV), Vulcan Industrial (VUL), and United Paragon Mining (UPM).

2.) Hans Sy - Vice chairman of AT.  Director of SM Prime Holdings (SMPH), China bank (CHIB), Highlands Prime (HP), etc.

3.) Jose Sio - EVP and CFO of SM group. Director of AT, Belle Corporation, China Bank, Manila North Tollways, among others.

4.) Walter Wassmer - Director of AT since 2010. SVP of BDO and Director of BDO Leasing.

Quick Numbers:

Fundamentals

Book Value of Equity (AR 2011): ~Php26B

Outstanding Shares: ~ 1.76B

BV/share:  Php14.85

Debt Ratio: 18%

Beta: 1.21

Cost of Capital: 11.2%

Net Income:

2012 (estimate from CCC and Berong): Php2.48B

2011 (non-recurring): 1.37B

2010: -847M

2009: -2.22B

Assuming only conservative long term growth of 3%, the value of Atlas Mining based on its earnings would only be around:

Fair Value per share: 10.82

Current market value as of April 27,2012 is 19.3.  To justify current values, Atlas Mining should target higher long term growth at 7% for which target price by then would be at around 22 per share.

Based on AT's financial statements, income reached around Php 15B, however most of this just came from the increase in fair value coming from the increased stake of AT over Carmen Copper.  If we base our net income projections only on recurring income from its mines, we only get the above values.

Do take note that we only base our computations from existing operations, primarily on CCC and Berong Nickel mines.  Other significant sources of income for the firm should be included (if there are any).

From here, we would assess that AT is fairly valued at current market price.  AT is just starting to turnaround coming from negative earnings of previous years.

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Technicals:

The 2 year chart shows a major resistance at 19.8 while trying to maintain a positive long term trend.

Tightening of Bollinger bands has been observed at the start of April.  There has been a significant increase in volume transactions which favored the buy side, further pushing up prices towards 19.8 resistance.  Going past 19.8 would be a significant breakout as AT may continue further on its up trend move.  Meanwhile, a short term support is set at 18.9.

The increase in volume may be attributed to DHC (Consunji Group) having an interest on AT which eventually led to the buying of a minority stake of Atlas Mining.

Personal Disclosure: Bought AT last April 20 for an initial position after it went past 18.9 with significant volume.  This is more of a technical play and will be traded only for the short term.

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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. 

Spotlight: Vista Land & Lifescapes Inc. (VLL)

Business Overview:

This is an investment holding company of Senator Manny Villar, which concentrates mostly on Philippine Real Estate businesses.  VLL serves as the parent company to the following subsidiaries:

Brittany Corporation (100%) - Luxury houses for the high end market segment (Php9M++) in Mega Manila.  e.g. Portofino, Crosswinds, La Posada, Mosaic and Avant.

Crown Asia Properties (100%) - Middle market housing segment (Php3.5M-Php9M) in Mega Manila.  e.g. Citta Italia, Maia Alta, and Ponticelli.

Camella Homes (100%) - low cost (below Php1.3M) and affordable housing segment (Php1.3M-Php3.5M) in Mega Manila.  e.g. Tierra Nevada, Nova Romania, Cerritos, Pacific Residences, and Trevi Towers.

Communities Philippines formerly known as Crown Communities (100%) - residential properties outside MM; from low-cost to middle market segments. e.g. Savannah (Iloilo), Plantacion Meridienne (Batangas), Solariega (Davao), Frontera (Cagayan De Oro), Azienda Milan (Cebu), and Wedgewood (Pangasinan).

Vista Residences (100%) - Residential high-rise condominium projects across the Philippines.

Manny Villar started out this family business focusing on low cost housing (large-scale production) and initiated selling through house & lot packages.  Their business is now divided into different market segments and also involves vertical projects (condominiums).

Quick Numbers:

Fundamentals

Book Value of Equity (AR 2011): ~Php40.6B

Outstanding Shares: ~8.54B

BV/share: Php 4.77

Debt Ratio: 22%
Beta: 1.08

Net Income:
2011:  Php3.5B
2010: Php 3.0B
2009: Php 2.3B

Assuming conservative growth, fair value for the company based on earnings (DCF analysis) would be around:

Fair Value/share: Php5.32


As of 4/13/12, VLL closed at 4.3 which is still below book value.  Considering our estimated fair value of 5.32, we still have a potential upside of  +24%

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Technicals:

 Last thursday (April 12), price broke out from its consolidating range (Darvas Box), and is supported with good volume.  MACD indicator also shows signal for another uptrend, forming a higher low.  Creating a bullish flag pattern, next target would be around 4.7 which is close to book value.  However, RSI indicator signals that prices are on overbought conditions (due to its parabolic rise); but given the other bullish indicators, prices would have to consolidate a bit for a while before its next big push upwards.  At current price of 4.3, it is still halfway through initial BV target, so it's a possible Buy on Dips.

PD:  I wasn't able to buy due to my low bids.  Prices last Friday went straight up.  Will wait for further retracements, if ever given the chance.

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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. 

Spotlight: Alliance Global Group, Inc (AGI)

Business Overview:

AGI started out as a glass manufacturer before becoming a holding company, diversifying its business into 3 segments:  Real Estate, Food and Beverage, and Quick Service Restaurant Business.  Below are some of the subsidiaries under these business segments:

Real Estate (AGI interest): 

Megaworld Corporation  (57%) - publicly listed MEG
Global-Estate Resort (61%) - publicly listed GERI
Richmonde Hotel Group (57%)
Eastwood Cyber One (57%)
Empire East (33%) - publicly listed ELI

Food and Beverage (AGI interest):

Emperador Distillers, Inc (100%) - product:  Emperador Brandy
The Bar Beverages (100%) - product: The Bar
Alliance Global Brands (100%) - owns the foreign subsidiary handling Piknik potato snack products.

Quick Service Restaurants:

Golden Arches Development Corporation (49%) - operations and franchising of McDonalds in the Philippines.

AGI is owned and managed by Andrew Tan, counted among the top billionaires in the country.
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Quick Numbers:

Fundamentals:

Book Value of Equity (3Q 2011): ~ Php 122B**
Outstanding Shares: ~10.3B

BV/share: Php 11.90/share

Debt Ratio: 25%
Beta: 1.28

Net Income:
2011:  Php16B
2010: Php 7.5B

Assuming conservative growth, fair value for the company mainly based on earnings using DCF analysis would be :
Fair Value/share: Php18.4 


As of 4/4/12, AGI's market price is at 12.22/share which is already a little above its book value; however, considering conservative growth (sustainable and long-term), it still has a potential upside of 51% towards FV.

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Technicals:

AGI has corrected back down after teasing to break 13.04 (major resistance - previous high since Dec 2010).  The company's stock price has just been moving sideways ever since. A short term uptrend can be seen starting Oct 2011 (Green line).  50 day moving average (blue line) may stand as support while its MACD will try to form a higher low, bouncing back up hoping to finally break out from its more than 1 year resistance line.


** Special thanks to gunther of FM for pointing out that I was using Total Assets and not Shareholders' Equity as the book value.  I edited this post to modify the book value computations.
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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. 

March 2012

ScIoN Fund (mid-long term)

YTD:  +18.20%
Benchmark: +16.2%

March was a generally good trading month for me since my portfolio increased for another 6% in just 2 weeks.  I was able to realize gains from ANI, TEL and PXP.  TA cash dividends has also arrived.  Biggest portfolio movers maintain to be FDC and MARC.  However, on the latter part of the month, MARC had a big correction going down to 3.  I'm currently 2% above my benchmark, so I'm happy with my first quarter performance so far.

I'm still bullish for our local market; however, I'm waiting for another correction of the market.  Index was able to maintain the positive trend channel which started January this year.  But, comparing it with the MACD indicator, there seems to be a negative divergence.  The ScIoN fund is currently 21% cash, so if ever there would be a major dip, I'd have enough ammo to buy.


AJC Fund (short term fund)
YTD (2 months):  -0.68%
Benchmark: +4.4%

The AJC Fund reached its all-time high of a +4.17% mid-March thanks to MARC (High of 3.52); however, as mentioned earlier, it went back down to 3. Since the portfolio is less diversified as compared to the ScIoN fund, volatility is higher at this point. I exited MARC at 3 with a gain of around 8%.  Last month's losses (-2.97%) were recovered and now, portfolio is at a near break-even (-0.68%). 


The challenge here is to beat the benchmark portfolio.  It includes EDC, BEL and MPI which were big gainers for March; thus, having a good run this month (4.4%).  I had entered AGI; however, price movement turned out to be a bull trap.  I'm having Cash ready at 70%, waiting to jump in when the market corrects.  

February 2012

ScIoN Fund (mid-long term)


YTD: 12.64%
Benchmark (PSEi): 11.4%

The following is the composition of my trading portfolio: (as of Feb 29, 2012)

February saw the rise of FDC and I hope that it will still continue.  With its book value still far below market, plus the planned IPO of EWB, I am still holding this stock perhaps before or after a planned secondary IPO or private placement will be announced.

I have repositioned my portfolio a little bit away from mining stocks (PX, LC/B) and slowly diversified to other sectors.  My exposure to mining is now limited to MARC which seems to be a good prospect as based on its report on earnings and operations.

Oil has now been an issue due to the news on Iran. I choose PXP to be a good mid-long term stock.  I just hope that they would no longer require equity financing as it would shake down the stock's market prices.  A lot of companies had been undergoing private placements lately, and the market has not responded too well on such kind of news, at least for the short-term.

Unexpectedly, TA announced another SRO this year which dragged down the prices; thus, hitting my sell indicators.  Seems like TA is maintaining a debt-capital ratio of around 40:60 (max).  I still like this stock since it is both Power and Oil play.  Although I expect market prices to go down as effect to the news on SRO.

February was a good month as it extended gains.  My portfolio reached a max YTD of 15% until profit-taking happened during the latter days of the month.  I think we'll be under a consolidaton phase for 1-2 more weeks before we get to see any action.  Good thing I'm 20% cash right now, I'll practice range trading and will also start accumulating for the strong index stocks.

AJC Fund (short term)

YTD: -2.97%
Benchmark: -1.4%

Much of the loss was attributed to the sudden SRO news on TA which caused it to drop to as low as 1.12 from 1.31.  Fundamentals of TA is still good and intact, however, my strategy for the AJC Fund would be more on short-mid term unlike the ScIoN fund which is mid-long term.

The run-up of stocks was for those who already had positions at the end of January.  Positioning in February was a bit tricky, a lot of setups became bull/bear traps.  For now, I have positioned the fund into 30% MARC, short term on SLI (15%) and the rest on cash.  There are still oddlots on EDC and BEL which I can't dispose, so I'll just leave them there for now.

The Benchmark portfolio is based on the original portfolio when it was handed over to me.  Assuming if I did not change anything, YTD is at -1.4%.

Personal Finance (Start of 2012)

As part of my quest in properly managing my finances, I aim to monitor my whole personal portfolio and see to it that I am properly diversified.  I have created this composition chart for easier visualization.  I don't have any fixed assets (real estate/ condo) nor have a business portfolio yet.  Basically, my personal portfolio is wholly an investment portfolio.

Components:

ScIoN Fund - this is my trading portfolio wherein I invest and trade on Philippine equities.  Right now, YTD performance (>1 month) is at 12%.  If I am able to consistently outperform the PSE index and most MF/UITFs, then I'd consider increasing my allocation of funds here.

Equity Managed Funds - A larger chunk invested in professionally managed Funds such as BDO Equity (YTD: 6.5%)and ATR Kim Eng Mutual Fund (YTD: 1%).  I only plan to place funds here when I am bullish; thus, only for the short term.  Clearly, ATR MF is underperforming that I plan to shift funds from it to somewhere better.

Bond Funds - A safety measure for me as I have already invested almost 70% of my portfolio into equities.  Bond Funds will provide a hedge against too much volatility in the market.  Bond Funds are good for medium term investments which can give around 5-10% annual yields.  (YTD: 0.4%)

Money Market - In terms of liquidity, this is the best alternative for me than putting money into Time Deposits/SDAs or worse, Savings accounts which only give negligible interest rates.  Although right now,  allocation is at 0% since I am still transitioning funds into the other accounts.  Most of my money in the bank is also in BDO, and it is comparatively harder to shift funds from savings accounts to their other bank products such as UITFs.  Unlike with BPI, they have done a great job with their online investment capability.

Savings - My main bank is currently BDO since it's very near my current residence and also due to sentimental reasons (been with PCI Bank since the late 90s).  Convenience and availability is OK, but innovation is lacking.  There is a chance I might have a major shift to BPI due to more efficient systems and processes such as their online banking.  Savings account will only be maintained for emergency and liquidity purposes; thus, I plan to minimize exposure here.

January 2012

ScIoN Fund

The following is the composition for my trading portfolio as of Feb 3, 2012:

I am happy to say that except for FDC which I still have a cost at 3.94, all of the other stocks are on a positive.  The Philippine Index is doing good that only a few funds have exceeded its current 8.81% YTD gain.  The ScIoN fund registers 9.01%, just a few notches above the index'.

AJC Fund

Starting this February, I will also hold another portfolio which is being handed over to me by a friend.  He was not able to monitor his stocks and was already around 12% down.  I'll be rebalancing his portfolio which can take a few more trading days to sell the losers and hopefully buy the winners.    He has already lost a total of around Php60,000 and it would be my pleasure to turn this loss into a gain.    We're in a bullish market nowadays, and that's why I'm confident that I can do it! :D

This is his portfolio when it was given to me.  Average price is his cost, while Market price was the current price during that day.



As of Feb 3, 2012,  I have already sold APC@.72 and BEL@4.73.  Bought TA@1.31.

Portfolio down by 0.76% relative to its market value on day 1.