Some Questions From My Readers
Jack Galt,
Is it true that your target for CMT is P1.50
Victory Joe
I never mentioned any target price for Southeast Asia Cement (CMT – P0.71). All I said is that the proper way to value CMT is to divide the share price of RCM by 4.3. Currently RCM trades at P3.30. This means that the fair value for CMT is around P0.76 per share.
I am still bullish on Republic Cement (RCM – P3.30). I strongly believe that there should not be any valuation disparity between Holcim (HLCM – P7.20) and RCM. It defies logic since both companies have 1/3 each of the local cement market carved out between them. What’s good for HLCM is good for RCM. What’s good for RCM is good for CMT.
Sir Jack,
I love your blog! I find it a very informative and well-researched view of the current market situation. KUTGW! Your views made me go invest in MWC. Over the past year, my timing was almost always off. I can never properly time my trades cuz I am only a part-time stock trader. That's why I guess MWC is a good bet, doesn't need much following unlike the speculative bets I've made. ... I'm learning though.
Maybe you can also share your views on the current situation of URC and PCOR. Thanks a lot for your blog.
William Antonio
Universal Robina (URC – P19.25) is a well-managed company. It has several winning brands under its stable. Most notable are Jack N’ Jill and C2. I love how Gokongwei manages his companies. He runs a tight ship and generates tons of cash. However, it will take a lot more convincing for the market to pay a premium on Gokongwei owned companies. As it is, URC is already trading at 16.0x PER to 09/07 earnings. Upside might be limited considering that the market is trading at 15x PER to 12/07 earnings. Please note that Gokongwei related stocks used to trade at 30–50% discount to average market multiples.
Petron (PCOR – P4.05) has been battered by series of bad press lately. First the company did not manage the Guimaras oil spill properly. Second, 3Q06 earnings came in below expectations. I think these issues are just a hiccups for the company. In the long run, I do believe that Petron will be trading at better valuations. Petron is currently trading at 6.5x PER to 12/06 earnings. The valuation reflects the cyclical nature of its business but it does not take into the account the franchise value of the company. Petron has the widest distribution reach in the country and owns almost 38% of the domestic petroleum market. The stock might continue to underperform in the short term but in the long run things will definitely be ok.
Is it true that your target for CMT is P1.50
Victory Joe
I never mentioned any target price for Southeast Asia Cement (CMT – P0.71). All I said is that the proper way to value CMT is to divide the share price of RCM by 4.3. Currently RCM trades at P3.30. This means that the fair value for CMT is around P0.76 per share.
I am still bullish on Republic Cement (RCM – P3.30). I strongly believe that there should not be any valuation disparity between Holcim (HLCM – P7.20) and RCM. It defies logic since both companies have 1/3 each of the local cement market carved out between them. What’s good for HLCM is good for RCM. What’s good for RCM is good for CMT.
Sir Jack,
I love your blog! I find it a very informative and well-researched view of the current market situation. KUTGW! Your views made me go invest in MWC. Over the past year, my timing was almost always off. I can never properly time my trades cuz I am only a part-time stock trader. That's why I guess MWC is a good bet, doesn't need much following unlike the speculative bets I've made. ... I'm learning though.
Maybe you can also share your views on the current situation of URC and PCOR. Thanks a lot for your blog.
William Antonio
Universal Robina (URC – P19.25) is a well-managed company. It has several winning brands under its stable. Most notable are Jack N’ Jill and C2. I love how Gokongwei manages his companies. He runs a tight ship and generates tons of cash. However, it will take a lot more convincing for the market to pay a premium on Gokongwei owned companies. As it is, URC is already trading at 16.0x PER to 09/07 earnings. Upside might be limited considering that the market is trading at 15x PER to 12/07 earnings. Please note that Gokongwei related stocks used to trade at 30–50% discount to average market multiples.
Petron (PCOR – P4.05) has been battered by series of bad press lately. First the company did not manage the Guimaras oil spill properly. Second, 3Q06 earnings came in below expectations. I think these issues are just a hiccups for the company. In the long run, I do believe that Petron will be trading at better valuations. Petron is currently trading at 6.5x PER to 12/06 earnings. The valuation reflects the cyclical nature of its business but it does not take into the account the franchise value of the company. Petron has the widest distribution reach in the country and owns almost 38% of the domestic petroleum market. The stock might continue to underperform in the short term but in the long run things will definitely be ok.
posted by jack galt at
5:11 PM
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