Happy Tuesday, Barkada --
The PSE closed up 121 points (!!) to 6019 ▲2%.
Thanks go out to AJ for emailing me about a potential way to get revenue-neutral for MB, and to /@eknekron for thinking that readers would like more personal insights from me, aside from the BOTTOM-LINE reactions that I give to each story. Those that know me IRL would probably say "careful what you wish for." Still, the suggestion made my day!
Daily meme | Join MB | Today's email
COVID Update
Code:
WW: 40284990
PH: 356531
Top 3 MB indices:
Code:
Fast Food ▲4.23%
#COVID-19 ▲3.04%
POGO Prop. ▲2.36%
Bottom 3 MB indices:
Code:
Media ▼2.38%
POGO Gaming ▼1.48%
MiddleClass ▼0.66%
Main stories covered:
- [UPDATE] PH Resorts [PHR 2.54 ▼5.58%] asks PSE for 10-day voluntary suspension... to prevent “artificial market manipulations” on the “market price” of PHR shares, to allow the investing public to make a decision on PHR “without being influenced by fluctuations in the trading price” caused by such manipulations. PHR’s proposed suspension would last from October 21 at 9am until November 5 at 9am, which is the listing day of PHR’s follow-on offer (“FOO”). PHR’s theory is that its FOO is like an IPO, and that since an IPO doesn’t allow trading during the offer period prior to its listing (because it doesn’t exist), neither should the PSE allow trading in PHR’s stock during the offer period prior to the FOO’s listing.
- MB: There’s a lot to unpack here, and not all of the low-hanging fruit juice is going to be worth the squeeze. For starters, it’s crazy to think that the price on the PSE is anything other than the market price; the price on the board is the grand result of every single little manipulation that every actor could work on the price of the stock, both positive and negative. There is no “real” market price, aside from the price that you could sell your shares for on the PSE right this minute. That’s the market price. There are thousands of long-term investors right now crying about how so many companies are trading at 50% book value or whatever, but at the end of the day, what matters is the price that someone right now is willing to pay for the share that you own. Companies use lots of tricks to prop up their share price during periods of instability, but PHR lacks the funds to carry-out a buy-back program (hence the FOO). Then, there’s the issue that most of the follow-on offers that we’ve seen recently have not come with a trading suspension of the underlying stock; I’m thinking here of San Miguel [SMC 100.40 ▲0.50%], or even of DAU’s Phoenix Petroleum [PNX 14.88 ▲34.05%] which did a FOO late last year. Granted, in both of these cases, the FOO was for a new class of preferred share and not for additional common shares. No matter how you slice it, the FOO will dilute existing common shareholders by flooding the market with shares at a dirt-cheap price compared to “market” (PHR closed at P2.54/share on Monday, meaning the FOO comes at a steep 33% discount). In the words of Dennis Uy, “Achievement unlocked!”
- [NEWS] Robinsons Retail Holdings [RRHI 67.00 ▲2.29%] buys 100% of Rose Pharmacy... the acquisition of the Cebu-based pharmacy with 300 locations across Mindanao and Visayas fits RRH’s movement towards “multi-format” retailing, and combines well with RRH’s Southstar Drug. RRHI purchased 100% of the company for P4.5bn. Rose Pharmacy did P9bn in sales last year.
- MB: The Gokongweis were already very influential in the retail pharma space before this transaction, with a majority stake in The Generics Pharmacy (2000 branches), Southstar Drug, and now Rose Pharmacy. The deal helps RRHI strengthen its position outside of Luzon/NCR, and further builds a “moat of scale” around its growing retail pharmacy empire. But the Gokongweis are not alone. Ayala Corp [AC 706.00 ▲2.32%] has been busy in the downmarket pharmacy space as well, buying up Generika and reinvesting to build its footprint from 1,000 stores to 2,000 stores. SM Prime Holdings [SMPH 31.40 ▲3.12%] also has skin in the pharmacy game, as it franchised Watsons Pharmacy and has about 800 stores. All the big players know that as our middle class grows, so too will the amount of money we spend on medical services and pharmaceuticals, and they all want a piece of that action.
- [NEWS] Globe Telecom [GLO 2002.00 ▲0.50%] offering free broadband fiber upgrades... as part of its movement from copper wires to fiber-optic cable. GLO said the upgrade would give copper users a huge boost from 15 Mbps (copper) to 1 Gbps (fiber), and that it would be free to consumers.
- MB: It wasn’t that long ago (around the time of the San Miguel [SMC 100.40 ▲0.50%] / Telstra rumors) that the big broadband players were out in the market offering “free” upgrades. The catch at that time was a 2 or 3 year contract. So, while the upgrade itself was “free”, the subscriber was locked down and isolated from any marketshare push from a potential SMC/Telstra competitor. Perhaps GLO is calling the same play in response to Converge’s [CNVRG 16.80] high-profile push into the market? This kind of tactic is exactly what makes fighting an incumbent duopoly especially difficult, and why I view Dito Telecom and CNVRG projections with a grain of salt: the densest areas are already in the GLO/TEL sales funnel, and they aren’t coming out of that funnel for nothing.
MB is posted to /r/PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.