Investors buy then sell DMCI on record profits

By Bernadette Therese Mr Gadon, Searcher

INVESTORS bought DMCI Holdings, Inc. last week and then sold it on the back of a strong earnings report, but the market is turning bullish for the company amid soaring commodity prices.

A total of 86.80 million DMCI shares worth 807.86 million pula were traded from March 7 to 11, according to data from the Philippine Stock Exchange (PSE).

The shares were down 2.8% week-on-week, ending at P8.94 apiece on Friday from its close at P9.20 on March 4. For the year, the stock gained 13%.

In an email interview, PNB Securities, Inc. President Manuel Antonio G. Lisbona referred to the stock price move last week as a “buy the rumour, sell the news” move. in which investors bought on DMCI based on its windfall earnings.

“Based on the price charts, DMCI was consolidating between P8.10 and P8.70 before rallying back to P9.85 on March 8, the day [it] announcement [its] results. Currently the stock is trading below P9.00 as investors sold on the news,” he said.

Anna Corenne M. Agravio, equity analyst at Regina Capital Development Corp., said in a separate email that investors were anticipating upbeat earnings, buying stocks and reaping the rewards as they come.

“As prices began to cool towards the second half of the week, it appears the market is turning more bullish on DMCI given the continued surge in commodity prices – which will be beneficial for SCC,” a- she declared, referring to the ticker symbol. of its coal and power unit Semirara Mining and Power Corp. (SMPC).

In a March 8 posting, DMCI said its net profit more than tripled to 18.396 billion pesos last year amid stronger-than-expected coal, power and nickel markets, as well as of higher construction achievements.

Last year, his basic net income nearly tripled to a record 17.365 billion pesos.

In the fourth quarter alone, its net profit more than doubled to 4.921 billion pesos amid record coal prices, strong demand for electricity and real estate.

In 2021, the Philippines slowly recovered from the effects of the Coronavirus disease 2019 pandemic on the economy by slowly opening borders locally and reopening businesses from a relaxed quarantine status due to the rollout of vaccination in all the countries. This allowed a resumption of operations for DMCI’s subsidiaries.

SMPC contributed the most to the net income of the group last year with 9.234 billion pesos, followed by DMCI Project Developers, Inc. or DMCI Homes (4.397 billion pesos), DMCI Mining Corp. (1.206 billion pesos) and DMCI Power Corp. (P580 million).

PNB Research equity research analyst Jose Rafael Mendoza expects DMCI to bring in 28.6 billion pesos this year, led mainly by SMPC (41.8% share), then followed by DMCI Homes (32.7%), DM Consunji, Inc. (11.8%), DMCI Mining (7%), Maynilad Water Services, Inc. (4%) and DMCI Power (2.7%).

Mr Mendoza said that apart from the volatility which is expected to affect the market as a whole, the company is raising its target price for DMCI by 5% to P10.00 from P9.50 per share.

Ms Agravio said that since there are still many unknowns surrounding the Russia-Ukraine crisis, investors are becoming extremely cautious.

“DMCI’s share price volatility is significantly high at this point, so market participants are likely to continue to profit from [its] attractive trading range,” she said.

Ms Agravio estimated the stock’s first quarter earnings around P4.6-5.75 billion and its annual net income around P20-25 billion, based on their bullish view, being as business improvement continues this year.

She placed her support and resistance levels at P8.50 and P9.90, respectively.

For Mr. Lisbona, resistance at P9.85, while support at P8.75, mainly affected by the movement of coal and nickel prices in the short term.

“Given that the Russian-Ukrainian conflict is a developing story, it is difficult to say how the DMCI stock will perform. It has outperformed the index so far, but no one knows if it will until the end of the year,” Ms Agravio said.

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