Weekly Notes Philstocks Research

Date: February 03 –07, 2020 JUSTINO B. CALAYCAY, JR

Ref: Japhet O. Tantiangco, 8588-1927 AVP-Head, Research & Engagement
+63 (2) 8588-1962
TECHNICAL VIEW JAPHET LOUIS O. TANTIANGCO
Sr. Research Analyst
Trade cautiously as the bearish bias +63 (2) 8588-1927
remains, seen to be partially tempered
by episodes of bargain hunting in the PIPER CHAUCER E. TAN
Engagement Officer/Research Associate
short term. The PSEi’s 14-day RSI has
+63 (2) 8588-1928
already hit oversold levels. The MACD
however points the market towards CLAIRE T. ALVIAR
south. The local bourse trading range is Research Associate
seen from its 7,150 support line to its +63 (2) 8588-1925
7,300 - 7,350 resistance range. Ground Floor, East Tower
PSE Center, Tektite Towers
Ortigas Center, Pasig City
PHILIPPINES
OUR VIEW
DISCLAIMER
Sell shares at week’s start as heightened Coronavirus worries is seen to plunge the The opinion, views and
market deeper into the negative zone. Hunt for bargains once the outbreak fears have recommendations contained in this
subsided. material were prepared by the
Philstocks Research Team, individually
Risks remain tilted to the downside amid epidemic and regulatory woes. Still, attractive and separately, based on their specific
valuations and 2019 earnings anticipation provide buying opportunities. But these must sector assignments, contextual
be taken at the right time, best when progress appears on addressing the Wuhan Virus. framework, personal judgments, biases
and prejudices, time horizons, methods
January inflation figures and BSP’s 1st policy meeting is also up next week. With the
tightening labor market and expected pick up in inflation however (Philstocks forecasts and other factors. The reader is
January inflation at 2.8%), BSP may keep policy rates unchanged. This would be neutral enjoined to take this into account when
for the market. perusing and considering the contents
of the report as a basis for their stock
investment or trading decisions.
MARKET WRAP Furthermore, projection made and
presented in this report may change or
be updated in between the periods of
Coronavirus fears with the 1st recorded case in the Philippines plunged the local market
deeper into the negative territory by 5.54% w/w at 7,200.79. Month-to-date, the market release. Ergo, the validity of the
was down by 7.86% bucking its performance on the months cases SARS and MERS virus projections and/or estimates
were 1st recorded in the country where it posted gains of 2.74% and 0.53% respectively. mentioned are good as of the date
indicated and may be changed without
Average net value turnover was anemic shrinking 15% w/w at P5.1 billion as most immediate notification.
investors stayed on the sidelines. Foreign fund exodus continued posting net foreign This report is primarily intended for
outflows of P3.04 billion for the week. information purposes only and should
not be considered as an exclusive basis
Industrials, down 8.30% w/w, led a broad based decline with losers outpointing gainers by
for making investment decision. The
a wide margin, 190 to 39 with only 18 remaining unchanged.
recommendations contained in this
Last week’s bargain hunting was able to lift only three index members into the positive report is not tailored-fit any particular
zone led by Semirara Mining and Power Corporation [PSE: SCC] climbing 0.92%. Manila investor type, situation, or objective
Electric Company [PSE: MER] led losers plummeting 15.34% as dimming economic and must not be taken as such.
prospects weigh on the electricity sector. Determining the suitability of an
investment remains within the province
Overall, the current epidemic raised prospects for pharmaceutical company Euro-Med of the investor. Our estimates are
Laboratories Philippine, Inc. [PSE: EURO] making it the biggest gainer in the market, based on information we believe to be
surging 42.60% w/w. reliable. Nevertheless, nothing in this
report shall be construed as an offer of
a guarantee of a return of any kind and
at any time.

Philstocks Research 2020 1 |Page

 WEEKLY MARKET STATS
LOCAL NEWS
INDEX VALUE PTS PCT YTD

Philstocks forecast January 2020 Inflation at 2.8% brought by the lag effect of the increase PSEI 7,200.79 (422.62) -5.54% -7.86%

in money supply, the slight depreciation of the peso, and the higher excise taxes on ALL 4,292.21 (231.36) -5.11% -7.69%

tobacco. The projection is biased to the lower end of the BSP’s 2.5% to 3.3% range FIN 1,724.93 (85.44) -4.72% -7.44%

projection. If inflation picks up, it may discourage the BSP from downwardly adjusting the IND 8,921.44 (807.28) -8.30% -7.41%
policy rates on its Feb. 6 meeting. HDG 6,900.31 (448.05) -6.10% -9.11%

PRO 3,838.74 (123.58) -3.12% -7.60%

SVC 1,475.16 (69.50) -4.50% -3.65%

M&O 7,663.26 (304.93) -3.83% -5.30%

GLOBAL NEWS ASIAN MARKETS

INDEX VALUE PTS PCT YTD
The Coronavirus could bring down China’s 1Q 2020 GDP growth down to 4.5% as per Nikkei 225 23,205.18 (622.00) -2.61% -1.91%
Bloomberg. Being an integral part of the global supply chain, the slowdown in China’s
Hang Seng 27,949.64 (1,637.01) -5.86% -6.66%
economy would drag the world economy in general, and the Philippines in particular. China
Shanghai 2,976.53 - - -2.41%
has been one of the Philippines’ top trading and investment partners. From January to
KOSPI 2,119.01 (127.12) -5.66% -3.58%
November 2019, China absorbed 13.6% of our exports (4th) while being the top supplier of
HCM 936.32 (55.14) -5.56% -2.57%
our imports, contributing 22.7%. Also, From January to October 2019, China had the 2nd
biggest net FDI inflow to the Philippines at $103.36 million. SET 1,514.14 (55.41) -3.53% -4.16%

STI 3,153.73 (86.29) -2.66% -2.14%

KLCI 1,531.06 (41.75) -2.65% -3.63%

COMPANY NEWS
JCI 5,940.05 (304.06) -4.87% -5.71%

Cebu Air, Inc. [PSE:CEB] INTERNALS

TOTAL VAL 27,443,621,052.02 ADV 39
Cebu Pacific has cancelled all of its flights between the Philippines and China until March 29, AVE VAL 5,488,724,210.4 DEC 190
2020 amid the epidemic concerns. The flight cancellations would result to forgone revenues
BLOCK 2,182,031,887.09 UNCH 18
which will weigh on CEB’s earnings. At the same time, amid the ongoing outbreak,
COMMODITIES & CURRENCIES
passengers will most likely abstain from traveling or at least limit it to essential trips. This in
turn would lead to less sales for CEB which would result to lower bottomline figures at least Brent Crude 56.65 -6.55%

for the 1st quarter of 2020. WTI Crude 51.62 -4.76%

Gold 1,588.70 1.12%

Sell CEB’s shares as its chart signals a bearish bias with the recent appearance of the Death
Silver 18.03 -0.49%
Cross. Its MACD continues to decline showing no upward momentum for CEB. The share is
Copper 2.51 -6.37%
currently trading in the 72.00 - 80.00 range. The 72.00 support line is expected to be tested
US$:Php 50.89 0.20%
next week with a possibility of being breached. If so, its next support would be on 66.00.
TOP 5 GAINERS TOP 5 LOSERS
Target price: P72.00
SCC 0.92% MER –15.34%

ALI 0.48% GTCAP –14.66%

BPI 0.30% BLOOM –12.79%

JFC –11.89%

MBT –11.15%

Rating Definitions:
BUY - More than 15% upside base on the target price
in the next 9-12 months

HOLD - 15% or less upside or downside in the next

9-12 months

SELL - More than 15% downside base on the target

price in the next 9-12 months
TRADE - A potential 10% and above short-term upside
base on entry price and selling price.

Source: Tradingview

Philstocks Research 2020 2 |Page

TABLES

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