PSEi 30 1Q 2017 EPS Suffered Massive Underperformance! More Signs of Construction Weakness

PSEi 30 1Q 2017 EPS Suffered Massive Underperformance! More Signs of Construction Weakness

The remaining 13 of the entire Phisix 30 firms published its earnings report for 1Q 2017 during the last two days. The table below shows the complete set.

 

After all the touted stratospheric G-R-O-W-T-H expectations and the gamut of frantic vertical pumping in the 1Q, it turned out the PSEi 30 has VASTLY underperformed!

And I believe that underperformance in the 2015 episode was eclipsed by 2017!

Earnings were significantly down by -5.38% on an aggregate basis!

It was a negative 20 cents (nominal peso) based on market cap weighted earnings (as of Friday)!

One could object by saying cumulative figures were slanted towards the bigger nominal figures.

So I presented earnings calculated on the average change. The outcome remained at a positive 7.7%. However, aggregate numbers don’t show the true context.

That’s because the titanic (outlier) gains by PCOR (+152.94%), SCC (+52.57%) and ICT (+42.86%) materially skewed the output. Excluding the three, the average gains would have been -.66%!

A better perspective would be from the distribution of earnings changes over the said period. I made three categories for this.

One is NEGATIVE change. This group consisted of a shocking 11 issues or 37% of the PSEi 30!

The next class is the 7% and below eps growth. I chose 7% because it “represents” GDP (although on the nominal basis real GDP should be about 9% NGDP). Six issues or 20% belonged to this classification.

Lastly, the G-R-OW-T-H segment comprised 13 firms or 43.33%.

The more significant revelation has not only been the negative EPS, which snared a considerable share of thepie, but the below 7% class of which when included would mean that underperformers accounted for a SUBSTANTIAL majority or 57% of the PSEi 30!!!

Some G-R-O-W-T-H eh?

And here’s the thing.

SMIC, the leader of the massive vertical pumping spree, generated 13% return in 2016 even when the eps growth was only 8%.

As of today’s close, y-t-d return was at a staggering 18.8% even when 1Q eps has only been 8%. This eps growth comes as total revenues grew by a measly 7.71% (the same number as 2015) in the face of massive capacity expansion.

SMIC has broken three records this year! Either such streak points to a likely remarkable surge in 2Q EPS or all these have signified hot air!

On the other hand, AC which has resoundingly trounced SM in the year 2016 (17.67% versus 7.6%) and 1Q 2017 (20.89% vis-à-vis 8.31%) has yet hit a record!

 

This is not to imply that AC has to follow suit. Instead the above simply exhibits how dysfunctional the market has become as a result of prices being forced or manipulated upwards just to levitate the index!

Finally, two carryover topics from last weekend (see email Wow! Mall Vacancies Surfaces in Mainstream Media! Cement Industry’s 1Q woes! 1Q PSEi’s EPS Growth in Dire Straits! May 15, 2017)

Curiously, GDP week has failed to produce the traditional wild pumps. Perhaps, the pumps a few weeks back already incorporated this. Or that GDP will surprise tomorrow and the party will belatedly commence.

Also, I’d like to make an adjustment on what I wrote about on CEMEX. I noted that CHP revenues fell 9% in 1Q 2017.  CHP reported an even worse performance than HLCM; its revenues CRASHED by a staggering 15.3%! Some economic boom eh! Remember, cement is not used only by the construction industry!

As for construction boom, the revenues of key contractors of property developers have been indicative of the cement woes!

 

An astounding showcase of grand misperceptions!