Looking at Phoenix Petroleum (PSE: PNX)

Phoenix Petroleum Philippines, Inc. (PSE: PNX, the “Company”) derives most of its revenues from trading refined petroleum products. In 2005 until the first half of 2009, PNX sourced its petroleum products mainly from PTT Philippines Corporation and Total Philippines Corporation. Starting from the second half of 2009 until the present, PNX imports refined petroleum products from Singapore, Taiwan and various foreign traders from Thailand, Korea, and China.

PNX has witnessed its revenue growing since 2006 albeit with low and declining profit margins:PNX1

As of the end of 2013, PNX has 209 stations in Mindanao, 47 in Visayas, and 112 in Luzon. Below is the growth of PNX’s retail stations:

PNX2

PNX source substantial amount of revenues from sale of jet A1 fuel to Cebu Air, Inc. (PSE: CEB). PNX supplies more than 50% of CEB’s fuel requirements and handles all the logistical needs of CEB in Mindanao and partly in Visayas. [1] Logistical service involves the use of oil depots and storage facilities. [2] Relying on the numbers provided in PNX’s press release, it would mean that PNX derives a total of not less than 8.7 billion (half of CEB’s estimated fuel costs of P17 billion) sales from CEB or 20% of PNX fuel sales.

It would then be reasonable to assume that PNX’s revenue growth will be positively affected with the fleet growth of CEB and the increase in economic activity in Mindanao. A major threat for the business of the Company is that as an importation Company, PNX is at the disadvantage in the weakening of the peso.

PNX stock price and reason for plunge

PNX historically trades at 16.5x to 17x PE ratio. However, PNX’s stock price plunged from a 52-week high of P11 to just P4.90 range of a PE ratio of just 10.88x. The reason for the plunge in stock price is the smuggling case filed against the President and CEO of PNX, Dennis A. Uy.[3]

PNX3

In the information statement disclosed by the Company, PNX is very cooperative with the authorities by executing a Waiver of the Statute of Limitation (granting the BIR to assess the tax liabilities of the Company) and application for the Voluntary Disclosure Program of the Bureau of Customs on the period questioned (June 2010 – July 2012). [4]

The current P5-billion smuggling case filed was first filed against the President of PNX in 2011 but was later dismissed in January 2012 and the decision in January 2012 was affirmed by the DOJ in November 2012. I understand that there were new details that surfaced which enable the revival of the smuggling case against Dennis Uy in April 2013. In my opinion, the President and CEO of the Company is probably not being guilty taking hints from how cooperative the Company is in the smuggling case investigation.

In any way, guilty or not guilty, I believe that the Company will continue their dividend policy of declaring 30% of prior year net income as dividends will continue:

PNX4

I expect dividends to be the same as last year (.10 cash dividend and 30% stock dividend) given that PNX only managed to grow net profit by 2%.

Comment:
CLSA is selling huge number of shares in the market. Willing buyers of this stock should not go beyond P4.90.

Source:

  1. Press release, http://goo.gl/NnvJtB
  2. SEC 17-A 2012, note 28, p. 163
  3. DOJ reveses ruling, recommends smuggling case against Phoenix Petroleum, http://www.interaksyon.com/business/60351/doj-reverses-ruling-recommends-smuggling-case-against-phoenix-petroleum
  4. Information statement (SEC Form IS-20 DIS), Acts and Resolutions of the Board of Directors, p. 36,  http://goo.gl/65k5ZL

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell. Read more in the ABOUT page.

Disclosure: No position

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Investment Video for Kids, Funny, Social Proof, Stock Thoughts: Strengthening Peso Follow Up, BDO vs BPI

Investment Video for Kids

Will your kids be interested about investing if he/she will be able to watch this 3 min video?

http://www.youtube.com/watch?v=foaYpoH0Fnk&feature=player_detailpage

 

Funny

A BABY doing his own trade!!!!

http://www.youtube.com/watch?feature=player_detailpage&v=l_R4bPGjDTc

Not to mention he’s talking.lol

 

Social Proof

Did you notice social proof in stock investing?

“Oh, Mr. X a super rich guy, is investing in the same stock I am invested in, I should be on the right stock.”

“Mr. A is investing in stock x, mr. B my friend is also in stock x, ms. Y is ALSO in stock x. There should be something wrong with me.”

Be aware on that psychological pitfall. 🙂

Think independently; invest only on stocks that YOU understand.
social proof

Even the angel fell on social proof! lol

Strengthening Peso Follow Up

A follow-up on my Jan 22 post:

https://fundamentalenthusiast.wordpress.com/2013/01/22/funny-stock-thoughts-ore-strengthened-peso/

Strengthening peso will benefit the following importing companies:

PCOR

PNX

SGI

 

Strengthening peso will benefit the following company with large foreign denominated debt:

EDC

 

BDO vs BPI

Is it just here in Bacolod that BPI service is ‘not so good’?

You got to know somebody or you should be what they consider as VIP for you to be accommodated well.

In contrast, BDO employees are very professional. They work fast and respect the time of their clients regardless of their net worth. They seem to be well trained in terms of client relationship. Idle employees had the initiative to accommodate waiting clients if the queue is already too long.

I like BDO’s service much better.
Tell me what you think about BDO or BPI’s service.

Can anyone tell me about china Bank? I only like their valuations, dividend yield, and balance sheet but I have no firsthand experience with their services.

Stock thoughts: PAL, PNX, MER, LPZ, FGEN, TA, PRIM

PAL

An example of par reduction that would not result to increase in number of shares:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-0787_PAL.pdf

PAL decrease the amount of authorized capital while maintaining the number of shares:

Current par = P 16B / 20 B shs = P.80

New par = P 4B / 20 B shs = P.20

 

PNX

Many weeks ago, somebody gave me a heads up on this stock regarding their consistency in declaring stock div.

2012 – 50%

2011 – 30%

2010 – 40%

2009 – 40%

2008 – 30%

And now, 30% stock div:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-0788_PNX.pdf

Congrats! 🙂

 

MER

MER attaining its short term valuation of 300.

More here:

https://fundamentalenthusiast.wordpress.com/2012/11/10/manila-electric-company-pse-mer/

 

LPZ

Wohoo! LPZ realized its value of 7.35. Oh yeah!

Sold all at 7.35 (not my own account)

 

FGEN

Finally, somebody is seeing the value of FGEN. 🙂

 

TA

Adjusted short term valuation of TA of 1.60 is reached.

Back-of-the-napkin calculation here:

https://fundamentalenthusiast.wordpress.com/2013/01/02/fiscal-cliff-stock-thoughts-agi-ta/

 

Not-so-back- of-the-napkin calculation here:

https://fundamentalenthusiast.wordpress.com/2012/10/29/investing-in-trans-asia-oil-and-energy-development-corporation/

The funny question is why did I not buy TA for my personal account if I know its real value?

Answer: I fell to anchoring bias. 🙂

A way of thinking influenced by anchoring bias goes like this: “TA has gone up 30%, it should go down and it shall be the best opportunity to buy if it happens.”

I based by decision to a known fact (30% increase) that has no bearing to my decision.

Proper thinking should be: “TA is still undervalued at 1.30, if its short term value is 1.60 then I can still expect 20% return.”

More here:

http://www.investopedia.com/terms/a/anchoring.asp#axzz2JQgGLGr1

My mistake, charge to experience. 🙂

 

Now, why will I not buy TA if I know its long term value is 2.13?

I REALLY find my current holdings undervalued….. too. Lol

 

PRIM

Talking about speculation, PRIM stock price soared ahead of its extension of corporate life:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-0955_PRIM.pdf

The thesis is that the market will speculate as PRIM will extend its corporate life. The majority shareholders may change the purpose of the company from banking to media.

PRIM is majority owned by MVP group so there is a possibility that TV5 will be listed through this stock.

Heard about this since last year but had no liberty to share since the idea did not originate from me. Now, the person who told me about this is taking his profits. Congrats! 🙂