who is who in the phil stock market-1

8/3/2019 Who is Who in the Phil Stock Market-1

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WHO IS WHO IN THE PHILIPPINE STOCK MARKET?(WHY WILL YOU INVEST YOUR MONEY IN THEIR COMPANY?)

A paper for MBA in CAPITAL MARKET Submitted by: Mr. Gerry Badillo, Mr. Joel Dela Pena, Ms. Claire Quiray.

INTRODUCTION

Risk comes from not knowing what you are doing! Warren Buffett.

Stock picking is the most challenging part in stock market investing. There are just too many strategies to try

and so much data and information to understand as well as sophisticated mathematical models to adopt in

order to arrive at the right valuation and predict where prices are going.

But once you know the simple ways of selecting stocks, you will discover that brilliance is not an edge in stock

market picking or investing. This is simply because, stock market is really just a matter of common sense.

Thus, mind-breaking analysis, although impressive, is not always needed in making a good stock appraisal.

As, Warren Buffet, the most successful investor of all time, says the simpler the better .

This study will show who is who in the Philippine Stock Market by just looking closely at the lists of top 50

companies ranked in various ways. Through this, you will know that risk in stock market can be managed and

anyone can be knowledgeable in picking winners.

For comparative growth analysis, i.e., fundamental growth vs. capital growth, we will use as support data -

the ranking of the biggest gainers covering a 5-yr period stock price. This is intended to further understand

that the biggest companies do not automatically be the best market performers by capital gains and vice

versa.

Profit guide.

Investors can profit in the stock market in various ways::


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Companies which usually do these capital actions are the fundamentally good firms with consistent income

record. Finding these stocks is the most challenging pat. Again, the secret is stock selection.

But knowing who is who in the stock market is equally important as understanding the equities industry due to

various factors that affect share prices. Thus, a good understanding about how the exchange works should be

a good start.

PROFILE OF THE PHILIPPINE STOCK MARKET

PSE is the lone bourse in the

Philippines. It was established

in 1927 and is now composed

of 247 listed companies. It is

one of the largest in Southeast

Asia with a total combined

equity of Php3.18 trillion and

Php6.81 trillion market

capitalization.

A. Capital Gains - Through stock price appreciation. This is the difference between the buying price

and the selling price.

B. Cash Dividend - Through share in the company profits by way of a cash dividend. The number of

shares held multiplied by the amount of cash dividend declared by the company.

C. Stock Dividend - By way of a stock dividend. This will increase the number of shares held

depending on the percentage declared by the company.

D. Stock Rights - By way of buying stock rights. Stock rights are usually being offered to existing

stockholders at a discount.

Ticker Total Equity LF Market Cap

Philippines (247securities)

Minimum (8,034,920,960.00) 65,078,500.00

Maximum 287,829,000,192.00 473,101,697,024.00

Average 13,325,605,320.21 31,107,018,006.16

Std. Deviation 32,473,829,746.24 68,120,678,015.18

Sum 3,184,819,671,530.00 6,812,436,943,348.00

Market Cap WeightedAverage 67,303,924,128.12 180,283,219,303.24


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Indicators. To track the market performance,

the PSE use gauges like the PSE INDEX or

PSEi, which is the main index; the ALL

SHARES INDEX, which is the broader index and

SECTOR INDICES such as Financials Index,

the Industrial Index, the Holding Firms index, the

Property Index, the Services Index, and the

Mining & Oil Index.

Computation of indices are based on weighted

capitalization.

PSEi Index, is made up of 30 companies (see

table above) which are the stocks representative of the six (6) PSE sectors. The index has a base value of

2922.21 as of September 30, 1994. Free-float adjusted as of 4/3/06*New industry classification effective

1/2/2006. Its old name was PSE Composite Index. All SHARES INDEX, on the other hand, includes all

common stocks in its composition, thus, it was called the broader index.

Management

The Philippine Stock Exchange or PSE is being managed by a 15-member board. Currently, the incumbent

President is HANS SICAT. At least 51% of the Board members must always remain non-brokers as per the

rule set by the Securities Regulation Code. The remaining Board members are broker-directors who represent

brokerage firms.


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The PSE management are mainly the President/CEO and the Professional managers who oversee the

implementation of the Board policies/resolutions and management of PSE activities and operations to ensure

that the investing public is protected.

Regulator

The Securities and Exchange Commission or SEC oversees the industry but PSE can police its own ranks

under its Self Regulatory Organization status or SRO.

PSE Organizational Chart

Trading System.


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PSE has adopted a New Trading System for trading execution and an online daily disclosure system to

promote transparency among listed companies and to make sure that there is full, fair, timely and accurate

disclosure of price sensitive and material information from all listed companies.

Who are the biggest PSE brokers.

Be it online or conventional way of trading, investors can only buy an d sell stocks through a broker or Market

Participant (MP). Any legal aged person can open a trading account with one or more brokers as they please.

Filled up Customer Account Information Form or CAIF, two valid Identifications and trading funds are the basic

requirements before a client can start trading.

PSE has 134 MPs, ten (10) of which, are foreign. The complete list can be extracted from www.pse.org.ph.

Investors may choose their broker according to their needs. Usually, local brokers are the ones catering for

retail accounts while the big ones have local and foreign institutions for clients. Brokers size are usually

measured through the size of their transactions.

But whether big or small brokers, their main responsibility is only to execute the transaction of clients.

TOP 2O PSE BROKERS (ranking by peso value for the month of May2011)

RANK F-Foreign;L-Local

BROKERAGE FIRM % to totalmarket pesotransactions

FOREIGNBROKERS

LOCALBROKERS

1 F ATR KIMENG SECURITIES,INC.

11.42 11.42

2 F CREDIT SUISSE SECURITIES(PHILIPPINES), INC.

10.94 10.94

3 F DEUTSCHE REGISPARTNERS, INC.

8.87 8.87

4 F CLSA PHILIPPINES, INC. 6.78 6.78

5 F MACQUARIE CAPITALSECURITIES (PHILIPPINES),INC.

4.92 4.92

6 F UBS SECURITIES 4.82 4.82
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PHILIPPINES INC.

7 F PHILIPPINE EQUITYPARTNERS, INC.

4.11 4.11

8 L CITISECONLINE.COM., INC. 3.85 3.85

9 F J. P. MORGAN SECURITIESPHILIPPINES, INC.

3.81 3.81

10 F DBP-DAIWA CAPITALMARKETS PHILIPPINES, INC.

3.37 3.37

11 L SB EQUITIES, INC. 3.25 3.25

12 L ABACUS SECURITIESCORPORATION

2.55 2.55

13 L BDO SECURITIES, INC. 2.34 2.34

14 L FIRST METRO SECURITIESBROKERAGE CORPORATION

2.04 2.04

15 L PAPA SECURITIESCORPORATION

1.79 1.79

16 L RCBC SECURITIES, INC. 1.65 1.65

17 L BPI SECURITIESCORPORATION

1.61 1.61

18 L WEALTH SECURITIES, INC. 1.31 1.3119 F DW CAPITAL, INC. 1.07 1.07

20 L BA SECURITIES, INC. 1.04 1.04

TOTAL MARKETVALUE

262,275,569,527 81.54 60.11 21.43

Be it monthly or yearly ranking, the above top twenty brokers are always in the list. Out of 134 brokers,

twenty of them accounts for over eighty percent of the total market transaction. Ten of these twenty brokers

are foreign while the other half, locals. And with the over eighty percent contribution to the total market

turnovers, over sixty percent are foreign money, which comes from only 7% of the PSE membership. These

are the biggest names in the Stock Brokerage Industry. Looking at the list closely, you will notice that

some of the MPs are also listed companies.

Kinds of Trading Stocks

These are the brokers with

online trading facility.

Investors who want to manage

their own accounts employ the

services of these brokerage

houses. This way of trading is

beneficial for investors who

are trading, a help from a live

person will always be

beneficial.
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As opposed to online, the conventional way of trading is being done by calling the broker/s to execute trades

on behalf of the investor. This kind of trading is called Broker-Assisted.

Listed Companies

The 247 listed companies are classified under the First Board, Second Board or the Small and Medium

Enterprises Board which are further segregated into the following sectors: Financial, Industrial, Holding Firms,

Property, Services, and Mining and Oil.

Data Limitation

Matrix of Top 50 Listed Companies chosen out of the 247 firms are supplied for this study and presented on

separate annexes. Data shown included the codes and short names of listed companies, company

description/business models, Key people, Total Equity, Total Market Capitalization, Book Value, PE Ratios,

Dividend Yields, Trailing 12mos Net Income, 5-yr closing prices, Relative Strength Index, 52-wk High/Low.

Except for the closing prices, other data are for 2011.

Who are the biggest companies in the stock market based on Total Equities

TOP 50 COMPANIES BASED ON TOTAL EQUITIES.

This table shows the top 50 most solid companies listed in the Philippine Stock Market based on Total Equity.


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Total Equity is also known as book

value or net asset value. It is

computed as follows:

Common equity+Minority interest +

Preferred Equity.

Total Equity is what will be left to the

owners or stockholders after all the

liabilities are paid.

If total equity is divided by the

number of outstanding shares,

BOOK VALUE PER SHARE will be

revealed. Book Value per share is

usually being compared to the

Market Value to know if the stock is

trading at a discount or at a premium

or to know if the stock is cheap or

expensive. If a stock is discounted,

you are actually getting more than

what you are paying for.

Conversely, if the stock is trading at

a premium, you are paying more

than the value of the share.

If BV is > the MV = the stock is discounted

if BV is < the MV = the stock is trading at a premium.


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Common sense dictates that, discounted stocks are good picks than those which are trading at a premium.

However, factors why the stock is discounted should also be taken into account. If the reason of its low price

is due to illiquidity or inactive trading, then this stock is not a good pick after all. Look for the ones which are

discounted, actively traded and liquid.


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HOW THEY MAKE PROFITS AND WHO OWNS & MANAGES THEM(BIGGEST COMPANIES BY EQUITY)

Ticker Short Co. Name BUSINESS MODEL KEY PEOPLE

1.SMC PMEquity

SAN MIGUEL San Miguel Corporation, through itssubsidiaries, operates food, beverage andpackaging businesses. The Company'sproducts include beer, wine and spirits, softdrinks, mineral water, chicken and porkproducts. San Miguel markets its productsboth in the domestic and overseas markets.

The Company also manufactures glass,metal, plastic, paper and compositespackaging products.

Eduardo M.cojuanco Jr.-Chairman,CeoRamon S. Ang-President,Coo

2.SM PMEquity

SM INVESTMENTS SM Investments Corporation is an investmentholding company. The Company operatesretail business and develops shopping malland other real estate property. The Companyalso provides tourism services.

Henry Sy, Sr.-ChairmanTeresita T. Sy- ViceChairman

3.AC PMEquity

AYALA CORP Ayala Corporation, through its subsidiaries,develops real estate properties. The Companyalso provides financial services, insurance,and information technology andtelecommunications services. In addition,

Ayala manufactures and sells passenger carsas well as having operations in the food andagriculture industries.

Jaime AugustoZobel de Ayala-Chairman, CeoFernando Zobel de

Ayala- Prsident, Coo

4.JGS PMEquity

JG SUMMIT HLDG JG Summit Holdings Inc. operates in theconsumer foods, agro-industrial andcommodity food products, and textilesindustries. The Company also invests in realestate, manages hotel, and providesapartment management services. In addition,JG also provides banking and financialservices, and invests in telecommunications,petrochemicals, and air transportationbusinesses.

James L. Go-Chairman, CeoLance Y.Gokongwei-President ,Coo

5.MBT PMEquity METRO BANK & TR Metropolitan Bank & Trust Company offerscommercial and investment banking services.The Bank's business activities includeborrowing and lending, trade finance,remittances, treasury, investment banking andsavings.

Dr. George S.K. Ty-Founder, ChairmanMr. Antonio S.

Abacan, Jr.- ViceChairman, President

6.AGI PMEquity

ALLIANCE GLOBAL Alliance Global Group, Inc. is a holdingcompany with interests in food and beverage,real estate development, and fast foodrestaurant businesses. The Company distillsbrandy, manufactures glass containers,distributes wines and snacks, developsplanned mixed-use communities, and eitheroperates or sub-franchises hamburgerrestaurants.

Andrew L. Tan-Chairman, PresidentSergio R. Ortiz-Luis, Jr.- ViceChairman, Director

7.FPH PMEquity

FIRST PHILIP HLD First Philippine Holdings Corporation, throughits subsidiaries, invests in the energy sector.The Company also operates in the properties,road infrastructure, construction,manufacturing, and securities transferservices.

Federico R. Lopez-Chairman, CeoElpidio L. Ibanez-President, Coo

8.BDO PMEquity

BANCO DE ORO UNI Banco de Oro Unibank, Inc. is a full-serviceuniversal bank. The Bank's services includedeposits and placements in local and foreigncurrencies, loans and discounts, tradefinancing, foreign exchange and securitiesdealing, trust and investment services, cash

management services, investment banking,and insurance products.

Teresita T. Sy-ChairpersonCorazon S. delaPaz-Bernardo- ViceChairperson

-


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Who produces the highest Net Income?

A real efficient managers are the ones who

produces bigger profits for the company with

lesser capital.

Although SMC is biggest by equity, they only

ranked second to PLDT which posted the

highest net income.

A review on the source of profits should,

however, take into consideration. In some

cases, extraordinary income or income from

sale of assets inflate the bottom lines figures.

Just make sure that income were from the

operations and that non-recurring items are

noted to make a more balanced analysis.

Dividends

There is no rule on giving dividends even the

company raked in profits. But this is

acceptable as long as the company is reverting the income back into the business operation since the

valuation of its stock will also improve.


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Once noticed by

investors, the

improved valuation will

always trigger a

demand for the shares

and this will push the

market price. Thus,

even if there is no

profits from dividends,

there will be income

from the capital gains.

Increase in market

price will eventually

lead higher market

capitalization of the

company.

Who are the biggest

listed companies by

Market Capitalization

Market capitalization is the measure of corporate size. Majority of these companies are also in the list of

biggest companies by equity with even bigger amounts of market capitalization.


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These figures can be computed by multiplying the market price by the number of shares outstanding.

Thus, if the stock is trading at a premium, its market capitalization is also higher compared to its equity.

Since market price is vacillating daily or even every minute, market capitalization is also changing depending

on the direction of the share price. During bear markets or when prices are down, Market cap is possible to

become smaller than the equity.

While Equity is more conservative and solid to use as a measure of stability, size and value, Market Cap is a

good measure of stock growth.

Who gives the highest dividend yield?

Yield or dividend yield is the percentage of money or dividend received on investment.

This is a measure of how much cash flow you are getting relative to each peso invested in a stock. Intelligent

investors choose companies who give the highest yield and compare it from the bank interest rate. Of course

the yield should be, the higher, the better.

The diagram below simply explains the dividend yield ranking.

There are some solid companies which are slow on capital gains but consistent and generous on the yields.


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Dividend yield is calculated by dividing the ANNUAL DIVIDENDS PER SHARE AGAINST PRICE PER

SHARE.

PE RATIO

Although PER information will not give

you earnings from investment, it will

show you if the stock is overvalued or

undervalued.

Thus, knowing this, its like having a

price guide to be able to buy at a

reasoble price or sell near the

maximum price at the time.

PER if compared with a company from

the same industry, it will give you a

clearer answer as to which stock is

much cheaper or expensive.

PER is the lower the better, but it will be

very imprtant to know why the stock

price is cheap or why the PER is low.

The reason for the low price should not

be due to illiquidity.

Moreover, although companies with high PERs can be considered expensive, the quality of the stock must

also speak as to why its PER is low or high. Stocks with high PER does not necessarily bad stocks.


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CONCLUSION:

From the rankings presented, stocks were screened using the fundamental analysis.

Fundamental analysis is being used by investors who tend to be more long term on their portfolio and employs

the Warren Buffett kind of strategy, value investing.

Fundamental analysis answers the what of stock investing as opposed to technical analysis which answers

the question when to buy and sell stocks.

The selection is not guaranteed to give the highest ROI, but can be assured that these are the most resilent

stocks or companies in the market.

By resilience, it meant that these stocks have proven , through the cycles of bull and bear, that they are the

last to go down on bad times and the first to go up on good times. Putting it differently, slow to go down but

quick to rebound!

Ultimately, a good investment manager or a wise investor should know who is who in the Philippine Stock

Market to be able to have a clear guidance in setting up a good portfolio. This line up should not only give the

potential maximum profits but most importantly, a portfolio which will also provide the utmost capital

protection.

What a companys stock sell for today, tomorrow, next week or next year does not matter. What counts is

how the company does over a 5 to 10 year period. It has nothing to do with charts or numbers. It has to do

with business and management.Warren Buffet, Berkshire Hathaway

Sources: Bloomberg, PSE website, own computation


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DISCLAIMER: This Research is for educational purposes only and is not intended as an offer to sell or

solicitation to buy securities. The writers accepts no liability whatsoever for any direct or consequential loss

arising from any use of this publication. The information contained in this publication is based on sources we

believed to be reliable.

who is who in the phil stock market-1

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