Last weekend, I pointed out that the government’s measure of construction material prices - retail (CMRPI) and wholesale (CMWPI) – revealed weakness in the construction industry. And if these numbers showed signs of relevance to reality, then such would likewise be manifested in the financial performance of construction and construction related companies. I zoomed in on the cement industry.
By next month, the major cement manufacturers will be disclosing their performance for the second quarter. We should see if quarterly revenues of these companies will resonate with the quarter’s price activities.
Construction BOOM? The Government’s Construction Material Prices Have Been On a Swoon, Why??? July 24, 2017
Holcim Philippines published their 2Q and 1H activities today.
There you have it.
HLCM’s gross revenues plunged a staggering 20.84% in the 2Q! The 2Q sales crash weighed on the 1H performance, which recorded an enormous 16.74% dive in revenues. 1Q sales tumbled 12.5%.
HLCM’s published 2Q and 1H eps almost halved.
This quarter’s dismal financial performance represents an extension of the previous 2.
The difference has been that the deterioration for the 2Q has only exacerbated.
Now, one company’s misfortune may not reflect on the industry. So I’d have to wait for disclosures from HLCM’speers, namely Aboitiz, Cemex, and Eagle.
Property Fueled Phisix 8,037
After Friday’s wonderful magic of turning ore into gold, the establishment’s campaign for the Phisix to attain a new record comes as no surprise.
Nevertheless, the weight of such task has been borne mostly by the property index.
Today, properties surged by 1.68% on the back of considerable gains by all PSEi components, specifically ALI +1.74%, SMPH +1.76%, MEG +5.5% and RLC +1.62%.
Ayala Land’s fresh record has been an outcome of a gamut of violent pumping (lower window). Prices of many firms have been subjected to similar dynamics. Vertical prices are signs of price instability.
Curiously, today’s early pumping was met by a mark on close DUMP (right window)!
Pumps and dumps are a healthy sign of markets????
More…
Gains from the top 4 of the 5 biggest issues accounted for about 40% of today’s .83% advance. (upper window)
Gains of the sixth to the tenth ranked issues represented about 12%.
In gist, 7 issues delivered more than 50% of the day’s activities, and thereby, Phisix 8,037.
Put differently, the thrust to forcibly heave the Phisix above 8,000 has mostly emanated from a few issues being violently pumped.
By the way, SCC also hit a record high today.
As one would note in the lower window, the cargo of the PSEi’s PER distribution has been focused on a limited set of issues.
The PSEi’s AVERAGE PER was last at 20.8 while the free float weighted PER was at an exorbitant 1996 level of 25.45!
Back Up The Truck at Phisix 8,000?
Greed has come a long way.
I came across a sell-side article promoting the PSEi, despite being very expensive, as a buy!
As a side note, when experts talk about forward PERs expect these to (ritually) overestimate actual performance. Take for example HLCM. Given the infrastructure meme, has anyone predicted a crash in actual financial performance??? Yet, HLCM’s share prices, which apparently remains anchored on the infrastructure story, has hardly reflected on these developments/
Well, articles like these hardly ever say explain why ‘expensive’ merits a buy - of course, except for the overblown G-R-O-W-T-H story.
Such spins never dwell on WHY the PSEi has been ridiculously overpriced in the FIRST PLACE. In spite of evidence, extravagance has been assumed as an anomaly. Such is a manifestation of how theory and empirics have been overwhelmed by blind faith.
There hardly have ever been discussions of HOW marking-the-close PUMPS have contributed to the current valuation levels.
Barely will any of such articles deal with the repercussions of violent price pumps and of excessive speculations!
Additionally, buying very expensive stocks comes with GREATER risk of losses. But for them, risk has mostly been consigned to the dustbin. Free money is unbounded.
Also, the public has been made to believe that there are endless numbers of greater fools.
More importantly, for fiduciary entities, authors hardly ever disclose that buying lavishly priced stocks BENEFIT these institutions at the expense of their clients.
Finally, if there is one notable development, the surge to 8.000 comes with significantly DIMINISHING volume compared to 2016.
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