MANILA, Philippines – Investor excitement over corporate earnings is expected to give the local stock market a boost in the coming week.
“Earnings excitement may fuel next week’s market performance. But overall, we still expect the PSEi (Philippine Stock Exchange Index) to consolidate and find support at 5,140,” AB Capital Securities Inc. said in its weekly report.
The local earnings season started last week with property firms among the first ones to report.
According to AB Capital equities analyst Maria Arlysa Narcisco, first-quarter results were “very rosy,” which helped the PSEi post a new intraday high of 5,247.14.
The index closed at 5,169.05 on Friday or up 0.24% week-on-week, with the Mining and Oil sub-index recording the most gains of 5.52%.
Among the few surprises for the week, Narciso said, are the surge in share prices of Atok-Big Wedge Co. (up 34%), Philex Mining Corp. (up 19.6%) and its subsidiary Philex Petroleum Corp. (up 129.8%).
“All three rose on news that results of a seismic study proved that Service Contract 72, or commonly known as Recto Bank, holds vast natural gas reserves that surpasses that of Malampaya's,” Narciso said. “This would pave the way for the country to be less dependent on imported fuel.”
Meanwhile, (SMPH) and SM Development Corp. (SMDC) reported “robust” operating results, with SMPH earnings up 15% for the period due to opening of new malls, growth in same store sales, and increasing contribution from its China operations. SMDC, for its part, disclosed that it doubled its sales target for the period by recording a 59% increase in value of pre-sold units while volume of pre-sold units went up 51%.
“Interest in property firms is likely to be sustained due to the low interest rate environment, which is favorable to the industry,” Narciso said.
Narciso said the PSEi’s behavior last week was “a fresh relief from its consolidation phase after rallying and reaching high levels in the past quarter.”
In terms of individual stocks, she said Philex Mining is more of a “long term hold.”
“If the stock continues its descent (this) week, one may consider accumulating PX shares in view of its future potential,” she said.
AB Capital also has a “buy” recommendation on GT Capital Holdings Inc., the listed flagship firm of businessman George S.K. Ty, which debuted on the PSE two weeks ago.
On Friday’s close, the stock gained 10% to P502.50 from its IPO price of P455 per share.
“We have determined that its robust growth story and compelling valuations are attractive,” she said, adding that it has a target price on GT Capital of P631 per share.
AB Capital said it is also keeping its previous recommendations on Marcventures Holdings Inc. and First Philippine Holdings Corp.