Happy Thursday, Barkada --
The PSE gained 68 points to 6430 ▲1.1%
Are there any registered shareholders of
Xurpass,
Boulevard Holdings, or
House of Investments, that are willing to volunteer to send me your notes on the upcoming shareholders' meetings?
Thanks to
John Y., and
G for the meme appreesh, to
Leandro for writing to let me know that the SRO dates for Solar Philippines are no longer "tentative", and to /@afj92 for reminding me of AC's planned dividend of ACEN shares (a move that is possibly designed to sneakily satisfy the PSEi's new 20% public ownership rule).
Shout-outs to John Y., G, Joe Gambiste, stat lynks, Jonathan Burac, Volts Sanchez, Makisig Tan, Stephen Chiong, Pao, Just’n, LanAustria, burito, Dividend Pinoy | PGG, Palaboy Trader, Spyfrat's Call, mArQo, leaf, Lance Nazal, arkitrader, StockBytesPH, meloi, Rolex Jodieres, Chip Sillesa, and Jing for the retweets, and to Marvin Quezon, Marvin Rodriguez Gonzaga, Evolves.co, and Mike Ting for the FB shares!
- Semirara Q2 profit ▲170% y/y, but ▼28% from last quarter
- Century Pacific Q2 profit ▲8% y/y, and ▲10% q/q
- PLUS: Quick takes on PX, FLI, and the mining industry
▌Top 3 MB indices:
Code:
Fast Food ▲2.61%
NEET ▲1.33%
Casino Tourism ▲1.09%
▌Bottom 3 MB indices:
Code:
Hedgy Metal ▼1.98%
Power Gen. ▼0.99%
MiddleClass ▼0.50%
▌Main stories covered:
- [Q2] Semirara Mining and Power Q2 profit ▲170% y/y, but ▼28% from last quarter... Semirara Mining and Power [SCC 40.85 ▲0.74%] [link] published a pre-earnings teaser to report a Q2/22 profit of ₱10.8 billion, up 170% from Q2/21 profit of ₱4 billion, and down 28% from Q1/22 profit of ₱15 billion. SCC attributed the performance to “all-time high coal selling prices”, combined with a larger quantity of spot electricity sold at higher-than-normal rates. SCC’s H1 net income was up 311% y/y to ₱25.8 billion. SCC said that its quarter-on-quarter performance was weaker (“as expected”) due to the lockdowns in China, which reduced demand for SCC’s coal shipments. The company said that its Q2 coal shipments fell by 25% as China imposed lockdowns and “shifted to Russian coal,” but that the reduced shipments were somewhat off-set by the 126% increase in the selling price of coal.
- MB: I really want to know more about that somewhat ominous line, about how the 25% dip in coal shipments was caused, in part, to China’s shift to Russian coal. As far back as April, newsrooms have been publishing stories about China’s opportunistic approach to buying the steeply discounted coal that Russia has been selling since many of its traditional coal buyers moved to ban imports of Russian fuel exports like coal and oil. China is SCC’s largest market when it comes to coal sales, so I’m curious whether this 25% dip is stable, or if that was just the tip of the iceberg? Will SCC pivot away from China to sell coal to other international buyers at prices that are closer to the “everything except Russia” elevated spot price, or will SCC try to compete with the “double dirty” discounted Russian coal? It doesn’t look like the Russia/Ukraine conflict is ending any time soon, and the same goes for all of the sanctions imposed against Russia as a result of its actions in the region. The discounted coal problem could be one that persists for a long time. What are SCC’s plans to deal with this?
- [Q2] Century Pacific Q2 profit ▲8% y/y, and ▲10% q/q... Century Pacific [CNPF 24.50 ▲4.93%] [link] posted a Q2/22 profit of ₱1.54 billion, up 8% from Q2/21 profit of ₱1.43 billion, and up 10% from Q1/22 profit of ₱1.41 billion. First half results showed CNPF’s consolidated net revenue was up 15% y/y to ₱31.1 billion, and despite higher input prices due to inflation and supply chain issues, CNPF saw its gross margins grow by 20 basis points to 25.1%. It’s H1/22 net profit of ₱3 billion was 9% higher than H1/21. CNPF’s largest business segment, the branded business, grew sales by over 18% in the first half of the year, while the Tuna and Coconut OEM Exports segment grew 6%, due in large part to forex pricing benefits and the easing of some supply chain issues. Looking forward, CNPF’s Executive Chairman, Christopher Po, said that the company expects to see lower prices for some of its key inputs, “like tuna, packaging, and freight.”
- MB: The company looks poised to deliver yet another year of increased profitability, as earnings per share have grown from ₱0.72 in 2017 to ₱1.32 in 2021. If we do some rough math and annualize their H1 results, we can see that if they maintain the pace they set, they’d deliver an EPS of ₱1.67 for 2022. That’s an incredible 27% y/y growth. Now, there’s a lot of life between now and then, and a lot of things can push and drag CNPF’s earnings, but it seems like CNPF is doing a great job of consistently delivering earnings growth in a hyper-competitive market. It’s not like they’re just squatting on dominated markets, either; the group is making educated bets in new product areas to build future shareholder value. There was a time where I was dismissive of what the Po Family had accomplished, especially during the pandemic when the rush to shelf-stable products really boosted CNPF’s bottom-line, but I think we’re seeing that the force majeure windfall of the pandemic was just a layer of good fortune for CNPF shareholders that rested on top of a powerful upward trend that existed both before and after the depths of the pandemic.
- [NOTES] Quick takes from around the market...
- Philex Mining [PX 3.16 ▼0.94%] [link] listed its 842 million SRO shares yesterday morning, which shareholders of record had the chance to purchase at ₱3.15/share. The share price tipped lower by a percent, closing at ₱3.16/share, just ₱0.01 higher than the SRO’s price. Trading volume was unusually heavy (1.8 million shares) as compared to the ~1 million shares that PX averaged in daily trade volume since the end of June. This suggests to me that (some) PX SRO buyers might not have a lot of conviction about PX’s medium- and long-term prospects, and may have only been in it to flip it.
- Filinvest Land [FLI 0.91 unch] [link] teases a 7% increase in H1 y/y consolidated revenues, to ₱9.1 billion. FLI attributed the growth to “accelerated construction progress and strong performance of its housing projects”. Noticeably, FLI was silent on the net income/loss that it managed to squeeze out of this single-digit growth. Sure, FLI’s Q2/22 revenue beat its Q2/21 revenue by 7%, but it made a ₱1.09 billion profit off that Q2/21 lower revenue last year. So far, this year, FLI has made ₱678 million off of ₱4.14 billion in Q1/22. If FLI’s profitability is in-line with its “historical” Q2 performance, it would have generated about ₱1.4 billion in profit, but if the performance more closely resembles what it did in the first quarter of 2022, then we’d expect about ₱0.81 billion in profit. That’s a pretty wide margin, but the lack of data on net income leads me to suspect that it’s closer to the lower of the two (super) rough estimates.
- Department of Finance (DoF) [link] has a new-found crush on mining. DoF Secretary Diokno said that the mining industry holds the “greatest potential to be a key driver in our economic recovery and long-term growth”, due in part to our country’s “rich endowment” of mineral resources, but also to the uncharacteristically-high prices of metals and minerals in the global market. The Secretary isn’t wrong, but we (and many other countries around the world) have a pretty terrible track record when it comes to exploiting these resources in a way that doesn’t end up feeling kind of gross and near-sighted. Should we prepare for another generational blossom of mining companies that will become the backdoor listing shell companies when the price of metal inevitably goes in the other direction? At least we’ll add to our crop of non-operational shell companies.
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