A lot of catching up, Free Accounting Course, Stock thoughts: VMC, BEL, MER

A lot of catching up

I have a lot of catching up to do for this blog. Currently, I only have one requirement left to submit for my MBA which gave me some time to do work for the blog.

 

Free Accounting Course

There is an accounting course in coursera right now:

https://www.coursera.org/course/accounting

To those who are interested to be educated by a professor in Penn University. 🙂

Make sure to take notes because you will surely apply it in your stock investing.

 

VMC

When I made a post on VMC, I cited one of the risks of investing in the company are insiders selling specifically CVI and Narra.

A few weeks ago, I was informed that one of the insiders has no plans in selling their VMC shares in the market. So that leaves only one seller to be aware of, sadly I do not know his broker. Lol

Considering that VMC is just a few km away from my home, I can attest that they were doing well.

Looking forward for their 2013 fiscal year report.

 

BEL

To those who are interested, I profiled BEL here:

https://fundamentalenthusiast.wordpress.com/2013/05/23/profiling-belle-corporation-pse-bel/

 

MER

MER had surpassed the intrinsic value of P380. MER will start trading electricity in June, we can expect favorable earnings growth for MER this year.

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Stock thoughts: VMC, APC, TA

VMC

Prepays debt:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-3262_VMC.pdf

More on VMC:

https://fundamentalenthusiast.wordpress.com/2013/01/17/victorias-milling-company-inc-pse-vmc/

 

APC

Sy group to consolidate power assets to APC:

http://www.philstar.com/business/2013/04/22/933301/sy-group-consolidate-energy-units-one-firm

But the Company (as usual) claim to have no knowledge about it:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-3268_APC.pdf

To those who are interested in the company:

https://fundamentalenthusiast.wordpress.com/2013/04/22/profiling-apc-group-inc-pse-apc/

 

TA

Phinma President and Vice-Chairman prepares for the property dividend of petroleum subsidiary:

http://www.philstar.com/business/2013/04/22/933311/ta-oil-finalizes-pepc-listing

The catch is its only for SC 55.

My complete rationale of buying TA:

https://fundamentalenthusiast.wordpress.com/2013/04/22/trans-asia-purchase-rationale/

North vs South Korea, Stock Thoughts: VMC, TA

North vs South Korea

There has been a fear that stock market will crash if war in Korea will push through.

Probably…. But should that happen it would be an opportunity to buy companies that you are interested in.

Ask a simple question before buying a battered stock (should a war happen):

In what way can a war in Korea disrupt the business of the companies that you are invested in?

Example: MER. Will people stop using electricity if there is war in Korea?

 

I would appreciate if anyone can share their thoughts on how a war in Korea could affect businesses here in the Philippines because I can’t think of any. 🙂

 

VMC

And VMC went up today closing in to my valuation of 1.70.

I sold VMC shares at a loss for my hypothetical conservative portfolio for the reason that insiders will keep on selling shares causing VMC’s stock price to continually trade at undervalued levels.

https://fundamentalenthusiast.wordpress.com/2013/01/17/victorias-milling-company-inc-pse-vmc/

 

TA

DOE threatens to cancel BHP Billiton’s service contract should it not fulfill its obligation in August:

http://www.philstar.com/business/2013/04/04/926607/doe-threatens-cancel-bhp-billiton-led-service-contract

A clarification from TA that the consortium did not seek extension:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-2704_TA.pdf

Recall that the delays of the drilling were caused by local permitting issues not BHP Billiton’s incapacity to fulfill its obligation.

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-2328_TA.pdf

 

TA’s plans to drill 3 oil wells:

http://manilastandardtoday.com/2013/04/02/trans-asia-plans-to-drill-3-oil-wells/

On the Money, Stock Thoughts: BSC, ROX, VMC

On the Money

Last Jan 23, I posted that on the money has an insightful guest. It’s now available here:

http://www.youtube.com/watch?v=cjV3I2YuiAs

BSC

BSC on the rise on this disclosure:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-1425_BSC.pdf

More on BSC here:

https://fundamentalenthusiast.wordpress.com/2013/02/12/basic-energy-corporation-pse-bsc/

 

ROX

Pedro E. Roxas bought 22,000 shares of ROX  last Feb 8:

http://www.pse.com.ph/resource/corpt/2013/ROX_23B_02122013.pdf

I would not be surprised if he was the one who bought plenty of shares yesterday.

 

VMC

VMC’s stock price is steadily declining despite plans for diversification:

http://business.inquirer.net/107003/victorias-milling-plans-diversification

Old shareholders kept on selling?

If that is the case, there is nothing to worry and I will not sell any of my clients’ shares in VMC but I will also not add.

Debt Ceiling, Stock Thoughts: VMC, ARA

Debt Ceiling

The date that I am waiting for, March 6, the debt ceiling deadline is moved to May 18.

A good article for those who are interested about it:

http://blogs.wsj.com/washwire/2013/02/04/obama-signs-debt-ceiling-law-now-what/

VMC

Results of annual stockholders meeting:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-1252_VMC.pdf

VMC has interesting amendments on its articles of incorporation:

  1. Co-generation
  2. Entry to ethanol production
  3. Participation to public-private partnership with the government

Entry of VMC to co-generation is expected but ethanol production and PPP was a surprise.

There are still strong sellers for VMC shares.

ARA

Nice price action for ARA.

https://fundamentalenthusiast.wordpress.com/2013/01/16/araneta-properties-inc-pse-ara/

Don’t confuse it with SLI with SLRDI ok?

https://fundamentalenthusiast.wordpress.com/2013/01/16/slrdi-pse-sli-confusion/

Amazing, My brother, Stock Thoughts: AT, VMC

Amazing

Do you have five minutes to spare? Watch Chris Camillo’s interview in Bloomberg, the guy who turned $20k to $2 million.

http://www.youtube.com/watch?v=MrEQFFfYFa0

Does his investment technique match your personality? Take only what is useful for your investment.

 

My brother

My brother is a mechanical engineer who now is already an MBA (he graduated last October). How can he take MBA despite his time demanding day job?!

Oh yeah right. I should start by not complaining about the constraints and be composed mentally and approach the problem at hand systematically. *inhale deep* *exhale slowly*

 

AT

Surprising disclosure from AT:

http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-0562_AT.pdf

Or is it really surprising?

89.92 million lbs. Cu and 12,333 troy oz. of gold will generate an EPS of P1.25~P1.30 for AT using the following assumptions:

Cu – $3.65

Gold – $1,600/ troy oz.

Profit margin – 20%

Forex rate – P40/$

 

Just meeting my projections here:

https://fundamentalenthusiast.wordpress.com/2012/12/17/atlas-cons-mining-and-devt-corp-pse-at/

Meeting my projected EPS yet valued way above my projected valuation. Definitely overvalued.

My opinion only.

Adjusting my hypothetical conservative portfolio.

 

VMC

The company attracted me due to its deleveraging activities and diversification of revenue source through its entry to the power industry. I discovered VMC’s plan of entry in the power industry while doing my due diligence in GREEN last December but I only initiated position after Premier Network bought 20%+ interest of VMC from a huge shareholder that has been selling down VMC shares since the lifting of trading suspension.

More here:

https://fundamentalenthusiast.wordpress.com/2013/01/17/victorias-milling-company-inc-pse-vmc/

Victorias Milling Company, Inc. (PSE: VMC)

Business Profile

Victorias Milling Company, Inc. (the “Company”, VMC) is engaged in integrated raw and refined sugar manufacturing in Negros Occidental since its incorporation in May 7, 1919. VMC operates in a cyclical industry. Milling season for a sugar company usually starts in October and ends in May with June, July, and August as off-season. VMC claims to be the leader in sugar production in Negros Occidental with 28.26% share.

VMC entered into a rehabilitation plan with its creditors for their P7.9 billion liability and interests in 1997. The rehabilitation plan includes the following:

  1. Restructuring of the P4.4 billion debt over a period of 15 years beginning September 1, 2003 with an annual interest of 8% for peso denominated loan and 5% for foreign CDU loan as amended on May 4, 2012.[1]
  2. Conversion of P2.4 billion debt into convertible notes bearing 8% annual interest.
  3. Conversion of P1.1 billion loans to equity.

As of August 2012, VMC has serviced its creditors a total of P2.17 billion in principal and P3.18 billion in interests. The Company had already converted P428 million worth of convertible notes under the rehabilitation plan. On January 15, 2013, the Company intends to pre-pay P1 billion of the restructured debt. [2]

As of December 2012, VMC’s Bagasse-Fired Cogeneration power plant with 18 MW installed capacity was approved by the DOE. [3]

VMC’s other subsidiaries are as follows:

VMC1

Comments:

VMC released their annual report on December 17, 2012, presenting earnings per share of P.28. Assuming that all the convertible debt as of the end of VMC’s fiscal year of August 31, 2012 will be converted into shares we can still arrive at a diluted earnings per share of P.17 rendering VMC undervalued at a PE ratio of 8.35x at the price of P1.42.

Trading of VMC shares were suspended in 1997 and was lifted in May 2012. VMC’s stock price action since the lifting of its trading suspension is seen below:

VMC2

VMC’s stock price initially shot up to an intraday high of P5.50 and settled to below P1.60 range for the good part of 2012. There is a valid reason for VMC’s share price to stay at an undervalued price: huge selling of shareholders who held for the illiquid VMC shares for 14 years. Notable shareholders are CVI GVF (LUX) Master S.A.R.L. (CVI) and Narra Capital Investment Corp. (Narra) which are top 2 shareholders of VMC as of March 31, 2012[4] with 516 million (25%) and 191 million shares (9%) respectively. Narra increased its shareholdings to 224 million shares on April 11, 2012.[5]

CVI and Narra had been selling their shares since the lifting of VMC trading suspension:

VMC3

On January 8, 2012, VMC disclosed the purchase of Premier Network International Limited (Premier) of 23% interest of the Company [10] which was bought from CVI.

Trading in a PE ratio below 10x using diluted earnings per share, additional revenue stream with their baggasse fired power plant, prepayment of liabilities, and absence of huge sellers, VMC is bound to realize its value of P1.70.

 

Risks in investing in VMC: CVI or Narra might sell more shares in the market.

Other data:

VMC4

Sources:

  1. Amendments to Alternative Rehabilitation Plan and Debt Restructuring Agreement, http://www.pse.com.ph/resource/disclosures/2012/pdf/dc2012-3394_VMC.pdf
  2. Conversion of notes into equity pursuant to Debt Restructuring Agreement, pre-payment of restructured loans, adoption of Election Manual and creation of Election Committee, nominees for Board of Directors, http://www.pse.com.ph/resource/disclosures/2012/pdf/dc2012-9067_VMC.pdf
  3. Awarded Biomass Projects as of December 2012, http://www.doe.gov.ph/RE%20Regis&accred/Awarded%20Contracts/Biomass/Biomass.pdf
  4. Top 100 Stockholders as of March 31, 2012, http://www.pse.com.ph/resource/corpt/2012/VMC_Top100_Mar2012.pdf
  5. Statement of Changes in Beneficial Ownership of Securities, http://www.pse.com.ph/resource/corpt/2012/VMC_23B_04192012.pdf
  6. Statement of Changes in Beneficial Ownership of Securities, http://www.pse.com.ph/resource/corpt/2012/VMC_23B_05302012.pdf
  7. Statement of Changes in Beneficial Ownership of Securities, http://www.pse.com.ph/resource/corpt/2012/VMC_23B_08152012.pdf
  8. Statement of Changes in Beneficial Ownership of Securities, http://www.pse.com.ph/resource/corpt/2012/VMC_23B_09192012.pdf
  9. Statement of Changes in Beneficial Ownership of Securities, http://www.pse.com.ph/resource/corpt/2013/VMC_23B_01102013.pdf
  10. Statement of Changes in Beneficial Ownership of Securities, http://www.pse.com.ph/resource/corpt/2013/VMC_23A_01082013.pdf

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.